Why is cash so important to Austrians?
Austria’s love for cash payments can be seen through the saying “Nur Bares ist Wahres” (only cash is true), which captures a prevalent sentiment across the country. But why, in a digital age, is Austria so keen on cash payments?
Unlike Scandinavia, the Benelux countries, Italy, Greece, Ireland or the UK, 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.
Austrians love to carry large wads of cash around to make all kinds of payments - just one of many similarities your average Austrian has with gangsters and hip-hop musicians.
Austria loves cash so much that it tried to make a right to cash payments part of the constitution in 2019.
While the effort ultimately failed, it showed just how much Austria is enamoured with coins and paper money.
How widespread is cash usage in Austria?
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.
As recently as May 2021, prominent Austrian figures have publicly pushed back against EU efforts to cap cash payments at €10,000
Finance Minister Gernot Blümel emphasised the national preference for cash payments - no matter what was being purchased.
“We will not accept a creeping abolition of cash", Blümel explained, saying that cash was "still the most important and preferred means of payment, especially in Austria".
Why do Austrians love cash payment so much?
There are a number of reasons Austrians still stubbornly prefer paying by cash.
One is freedom - i.e. the freedom that comes from not having to rely on a bank, funds transfer, a card, a card payment system or even your smartphone battery staying charged enough to pay.
According to Alexander Hahn from Austria’s Der Standard newspaper, cash means you can go it alone.
“In contrast to deposit money in accounts, which is used for electronic payments, citizens do not need service providers such as banks, who keep account registers in the background, for custody or transfers.”
Another is anonymity.
German-speaking Europe is sceptical of any system which allows payments to be tracked, i.e. with the risk that this information could fall into the hands of governments, private companies or even your partner (does your wife really need to know how much you spend on ice cream?)
It’s one reason why pre-paid card schemes for public transport have tended to fail at the first hurdle in German-speaking countries.
According to Hahn, Austrians don’t want people seeing what they spend their cash on.
“Many citizens generally appreciate this, but especially when it comes to buying unhealthy stimulants such as tobacco or alcohol. The payment platform Paysafe reports that 51 percent of Austrians do not like to give their data when paying.”
A final reason is control.
Austrians feel that cash payments give them a lot more control over what is being bought, rather than online payments and direct debits.
The value of cash is driven into Austrians from a young age when they are given pocket money, which experts argue build an emotional bond with cash and encourage financial responsibility.
While paying in cash can make you think twice about spending as you realise you are quite literally making your wallet lighter, paying with card “makes spending easier”.
How has this changed in the pandemic?
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.
Concerns over the cleanliness of cash and a desire to avoid trips to the ATM have been flagged as major reasons 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.
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.”
What will happen after the pandemic?
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 suggest it is only a temporary trend.
Analysts suggest that despite similar shifts in Germany, cash is likely to experience a resurgence if and when the pandemic ends.
Another big change is the lack of tourist traffic, making it hard to determine if any shift is actually permanent.
Security issues around card payment remain a major concern in Austria - and this is unlikely to change significantly as a result of the pandemic.
Writing in Austria’s Der Standard, 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?”