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Could coronavirus end Austria’s love affair with cash?

Along with the rest of German-speaking Europe, cash payments have remained stubbornly popular in Austria. But with card payments on the rise due to the pandemic, could that be set to change permanently?

Could coronavirus end Austria’s love affair with cash?
Austria loves cash, but will the pandemic change all that? Photo: ALEX HALADA / AFP

Unlike Scandinavia, the Benelux countries or the British Isles, German-speaking Europe remains keen on cash. 

For a number of historical reasons, cash is still king in Austria, Germany and much of Switzerland – or at least until the onset of the coronavirus pandemic. 

Austria loves cash so much that it tried to make a right to cash payments part of the constitution in 2019. 

READ MORE: Austria's love of cash in poll campaign spotlight 

While the effort ultimately failed, it showed just how much Austria loves that cold, hard stuff. 

A pre-pandemic study showed that Austria are the kings of cash, with 83 percent of Austrians using cash regularly, compared with 75 percent of Germans and 71 percent of Swiss. 

This is compared with card leaders such as Sweden, where cash is expected to disappear completely by 2030. 

The number of domestic card payments increased by 20 percent in 2020 in Austria, rising from 900 million payments to 1.1 billion, according to Payment Services Austria (PSA). 

In the same period, foreign card transactions also increased in Austria in 2020, crossing the 1.2 billion mark for the first time. 

Contactless and mobile payments are also experiencing a dramatic rise in Austria. 

Similar trends have been observed in Germany and Switzerland, leading many to ask whether the shift is set to become permanent. 

Money, cash, woes?

Concerns over the cleanliness of cash and a desire to avoid trips to the ATM have been flagged as a major reason for the change. 

The number of cash withdrawals from ATMs in Austria fell significantly, from 137 million to 100 million in 2020. 

Contactless payments increased by 34 percent in 2020 compared to 2019, according to PSA. 

READ MORE: Could coronavirus end the Swiss love affair with cash? 

In March 2020, Austria also made it easier to pay with contactless cards by increasing the maximum amount to be paid without entering a pin from €25 to €50. 

Retailers pushed for the change in a bid to reduce the risk of coronavirus transmission and the limit looks to remain in place for the foreseeable future. 

According to the PSA, the card is here to stay, even when and if life returns to normal after the pandemic. 

Harald Flatscher, Managing Director of PSA, said “the steady upward trend also shows how much the use of the card has become part of people's everyday lives.”

A permanent shift to card?

There are however signs that the trends might be temporary. 

While 2020 saw an increase in card payments, it actually saw a decrease in the amount spent overall, which could amount to a temporary trend. 

Another big change is the lack of tourist traffic, making it hard to determine if any shift is actually permanent.  

READ MORE: Will the coronavirus pandemic speed up the end of cash in Germany? 

Writing in Austria’s Der Standard on Wednesday, January 27th, Muzayen Al-Youssef outlined the concerns of many Austrians when pointing to the traceability of card. 

“Transparency also has consequences. Think, for example, of so-called credit scoring, in which the creditworthiness of a customer is calculated based on the available data,” he said.

“If you drink too much alcohol, in extreme cases you could suddenly no longer finance your own apartment.

“Does a bank really always have to know when – and, by the way, where – its customers bought sex toys, alcohol or cigarettes?”

 

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COST OF LIVING

Gas bills set to soar in Austria

A worldwide hike in gas prices is set to be felt in Austria.

Gas bills set to soar in Austria
Gas prices are set to rise in Austria. Photo by Ilse Driessen on Unsplash

People who buy their household energy with a contract which is based on the monthly wholesale price will notice their gas bills increasing steeply in Austria, broadcaster ORF reports. 

The gas price index (ÖGPI), which is calculated by the Austrian Energy Agency, is five times as high in September as it was a year ago, which reflects the situation on the global gas market as the world recovers from the Covid-19 pandemic.

Gas prices have surged around the globe, with the burden being placed on consumers in several countries. 

Germany has already reported an increase in gas prices for autumn and winter, but in Austria price increases in the standard tariffs have not yet been publicly announced.

Living in Austria: Five things that are actually cheap

Karina Knaus, head of the Center for Economics, Consumers and Prices at the Austrian Energy Agency, told broadcaster ORF that it could be assumed prices would rise in Austria as well.

“Since the price movements of the past few months have been very pronounced and unusual and there is currently no trend reversal in sight, it can be assumed that prices may rise here in the coming weeks and months as well.”

Knaus however said sharp spikes should not be anticipated. 

“In general, household gas prices in Austria are rather sluggish, so temporary and short-term movements on the wholesale market – neither upwards nor downwards – are usually not Immediately passed on to the households, since procurement in this segment is also long-term.”

The reason for the higher prices was a greater than usual demand during the pandemic, which has cut into gas supply. 

Prices are not expected to go down until the spring of 2022. 

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