What do you always carry with you: your smartphone,
keys and some cash? Or keys, smartphone and credit card? Germans are increasingly
split on this one. Cash was long king here, but
more and more people are switching to credit
and debit cards. In part, due to the
coronavirus crisis. By card. Contactless! By card! I’m someone who prefers
cash because it gives me a better idea of how much I’m spending. But COVID-19 has changed that.
Now I pay with plastic. You have to ask yourself — why do people want to abolish cash? Some banks have turned their
backs on cash completely. They don’t have any
bricks-and-mortar branches or ATMs. Cashless payments
are on the rise. But experts warn: we're
paying with our data. Visa, Mastercard or Acxiom, Google,
Facebook, Twitter interfaces — that’s surveillance capitalism. Cash is competing with
electronic payment systems. Could it get knocked
out of the ring? A former head of Interpol
says it would be risky to abolish cash completely. What happens if the Russians, Putin
or somebody switches off the system? We have no defense! The coronavirus pandemic has
boosted cashless payments. Who’s profiting? And what
price are we paying? A life without bills and coins..
What might that be like? In Scandinavia, it’s
already a reality. I decide to take the ferry and a
hire car — and go and find out. It seems safer to me than
flying in the light of the coronavirus pandemic. In Denmark, Finland, Norway and
here in Sweden, in particular, cash has practically become
a thing of the past. The first thing that I do after
arriving is to go in search of an ATM. In Sweden, that’s not so easy.
They're few and far between. Then when I go to the
newsagents to buy some water and peppermints, I’m
told I have to pay by card. I’m going to meet Till, a
German who has been living in Sweden for many years and
who works at the university. He can’t quite remember
the last time that he actually held a
banknote in his hand. Social distancing has
become a habit for me — but my attempts don’t
really work here. At the moment, few people in Stockholm are
wearing face masks either. We’re going to Till’s favorite
bakery — which has everything— — apart from a cash till! What shall we buy? I’d recommend Bullar (boo-laah).
They’re good here. What are they? They’re cinnamon buns
made with cardamon. I can really recommend them. Lukas puts our pastries in a box
and I get out my card to pay — because he hasn’t got a cash till. Lukas is surprised at my surprise. You use cash in Germany? Yes, we use in Cash in
Germany still, yes — mainly cash! Why? Why?! Because people are
used to it, I guess. And they trust it somehow... And not everyone has a
credit card or debit card. In bakeries you typically
cannot pay by card at all. Which is often really — I
mean: for me living here — it‘s annoying going back to
Germany, and then I am stuck and walk around five
blocks to search an ATM. You can come in here with 500 Kronas
and the money is not worth anything — you can have as much
money as you like, but it‘s not worth
anything in our store. Lukas says that having no cash
in the store is much safer. I can be completely calm, that
no one can take anything. If you want to
steal our loaves — it‘s no problem, that‘s
not worth that much. It‘s been good now in Corona
times to have no cash! Do you feel safer? So you don‘t have to reach
out and grab the cash? No, we can keep the
distance at all times. At least when it comes to paying,
people keep their distance. We take our pastries
and go on our way. Till would like to buy some
strawberries at the market. In Germany, paying by cash
would be the only option. But Till does it the Swedish way. He just has his mobile
phone with him — so he’s going to use a
payments app called Swish. It's a much-used Swedish
mobile payment system. It transfers the payment to the
trader’s phone number or QR code. A pop-up graphic of a bursting
bubble confirms it’s arrived. Ah! And then here
you can ?: Ding! What’s the bubble for? It proves it’s not just a photo. That I’m actually
sending him the money. I’m impressed. But it's not the quickest
way to buy strawberries — it does take time. Yes, it does! Swedish banks and payment
services have almost phased out cash completely. Most banks don’t provide cash
anymore — it’s too much trouble. And paying with smartphone
apps is booming especially among
young people here. Transferring money from one
mobile phone to another is as easy as sending a
text message or an email. Here, money has become
merely digital information. This also means that Swedish
electronic payment systems can track most people’s
financial transactions — Big Brother is watching you! Till can keep close tabs on
his kids’ spending behavior. Of course, Till doesn’t give
his two children their pocket money in cash —
it’s all digital. The system gives him a good
idea of what his son Miles is buying with his allowance. I can see every transaction and
the stores that he's visited, plus the times of purchase
and the sums he spends. And do you see how
much money you have? I don’t know, but dad does. He can see how
much money I have. Do you kind of sense if
you have money left over? I know that I have
some money left. But when I buy something
for more than 20 krona, I kind of get the feeling that
I shouldn’t be doing that... Yes, that’s quite good. I saw that you stayed under
20 most of the time in June. But you went shopping
pretty regularly I don’t know if
you can see that. Really, every
purchase is listed. Till‘s daughter Lou only pays by card
and, occasionally, uses a mobile app. So your dad can see what money you
are transferring, or what you buy? I think he can see
where I shop, but not what I buy
with the bank card. And that doesn’t bother you? Not at the moment. But in a couple of years? I realize my cash isn't
much use here in Sweden. I wonder if I’ll even be able to
spend the krona that I withdrew. But then I come across a little Thai
eating place in the countryside where the owner is kind enough
to let me pay with real money. Is Sweden the shape
of things to come? A future in which cash
is a thing of the past — and every payment for
everything we buy can be traced and tracked? In Germany, things are
changing dramatically. Since the emergence
of the coronavirus the number of people paying by
card has increased by 26 percent. Is Germany following Sweden’s lead? I want to ask
Marion Labouré, a Harvard lecturer and research
analyst at Deutsche Bank. The French economist has conducted
a study recently on the subject. Do we have to say goodbye to cash? It’s not the end of cash yet. But what we have noticed since
the beginning of this year, and especially since the
start of the corona crisis. The amount of cash in circulation
has definitely increased because it's considered at safe
in terms of holding its value. However, if we consider
cash as a means of payment, it has definitely decreased. Fewer and fewer people
are paying by cash. In December, thirty percent of people made
contactless payments in Germany. And today, it’s almost 50 Percent. Many Germans are abandoning
cash and switching to card payments because
of the coronavirus. Other countries have
gone even further. South Korea and China
decided to quarantine and even destroy bank notes and just
one more example is the US: The Fed decided to quarantine
banknotes coming from Asia to make sure they were safe. Is this reasonable? The risk is very low. But
they felt it was necessary. Personal view,
how do you pay? I pay everything by
contactless. And this is the same
in Germany, actually. I must admit that I don‘t
have any cash on me — I am a cashless person. Putting cash into quarantine,
burning banknotes, going cash-free. It all sounds a
little crazy to me. Is the virus changing
our behavior? Since the spread of Covid, I’ve
got used to paying by card. I used to always have cash on me. During the pandemic it’s
recommended we pay by card. You’re at greater risk of
catching Covid, if you use cash. But is that really true? In Berlin I’m going to meet one
of Germany’s top money men: The executive board
member of the Bundesbank responsible for
cash management. I want to ask Johannes Beermann
whether bills or coins can spread Covid-19 and
whether Germany is likely to go cash-free any time soon. Many people are afraid that cash
could carry the coronavirus — and see it as risky. What do you think? Is
there research on this? I would say that's been
sufficiently disproven. If you look at the bank
notes, like the five-euro or ten-euro bills here — which are
in particularly heavy circulation, they have a special coating. We know from research that bills
and coins don’t play any role in the spread of infections. Banks stopped issuing
500-euro bills last year. Critics called them impractical. They were also linked to
corruption and money laundering. Is that the crux of the matter? There's an initiative called
Better than Cash that’s calling for
cash to be abolished. They say slush funds are a problem,
dirty money, money laundering, big sums that aren’t declared to
the tax authorities or the state? Of course, we have to combat
money laundering, tax evasion and the financing of terrorism
and I think cash has to be monitored as should
other payment methods. We have to ensure that. But I don’t think that this will
vanquish the underground economy. I ask Beermann if cash
has seen its day — he says he doesn't believe that cash
is about to be replaced by cards or mobile apps
any time soon. It's estimated that the German
state loses up to 10 billion euros in tax revenue each year as a
result of cash-in-hand payments. One particular problem: the high cash turnover in
the restaurant business. Berlin’s finance senator
complained in 2019 that up to 80 percent of
revenue in this sector was not declared to
the tax authorities. With her organic produce
and great location Sibel doesn’t need to
resort to low wages, cut-throat prices and
cash-in- hand payments. But she knows these practices
aren’t uncommon in her trade. It goes like this: I employ you to work on a
400-euro a month basis — with zero tax or
insurance deductions. In theory, you should
work 40 hours a month? for 10 euros an hour. But, in actual fact, you work
40 hours a week and get paid 400 euros A WEEK
cash in hand. But you're only registered as having
a 400 euro job with the authorities. So the state loses out? Yes. And I buy my French fries
at a budget supermarket and I don’t declare
that either. How do you mean? Well, I buy them, but I don’t
submit the receipt as an expense. I throw it away. So the tax office can’t estimate
what you might have earned. That’s right. They don’t know what
amount of French fries I’m selling. Electronic cash tills,
mandatory receipts and other types of monitoring are helping
to eliminate such practices. Sibel pays her employees
more than the minimum wage and it’s all above board. And fewer and fewer of her
customers are paying in cash. While just a year ago, only one
in ten payments were by card, now it’s almost one in three. She welcomes the development. Cashless payments are
a real boon for us. There aren’t any
disadvantages. We don’t have to gather
up the cash and take it to the bank every evening. That’s become far too dangerous. You can’t give anyone
the wrong change. We’re glad when people pay
by card, to be honest. Whenever I pay by card, I
leave digital footprints — for every beer and bag of
French fries that I buy. But who's interested in
this information and why — and what repercussions does that
have on our everyday lives? Vienna’s University of
Economics and Business is the largest university of
its kind in Europe. For many years, Professor Sarah Spiekermann has
been researching how our financial data trails are
observed and analyzed. She says credit card
information and data from electronic payments are feeding
an industry of data brokers. We know that credit card
companies pass on this data. In the meantime, they can
observe everyone in real time via all the digital media that they
use to create large-scale profiles. It’s almost become normal
to have 30 to 40 thousand pieces of data on each person. And with this high-resolution
history, they know what you do, the routes you take, what
you buy, what you pay for, where you go on vacation,
how much you pay. They know it all. ...how much alcohol you drink? ...How much alcohol you drink? You can calculate those
kinds of things, too, and sell that information
to the highest bidder. We've analyzed, for example,
how Oracle Blue Kai has described collecting 30,000 user
attributes from 200 data vendors which would allow them to create the
profiles of 700 million people. That’s probably the
entire western world... ...The entire western world. And if we look to see who’s
providing that data: Visa, Mastercard or Acxiom, Google,
Facebook, Twitter interfaces. That’s surveillance
capitalism. Surveillance capitalism
involves hundreds and thousands of companies with data
exchange agreements working together
behind the scenes. As a result, data about
our payment behavior is increasingly determining
our everyday lives. Without seeing or comprehending
what is going on, we can feel the effects — not
just when we are shopping. Ordinary people, people who are
quite similar to each other, might find themselves
paying different prices for flights, hotels,
all kinds of things. Or they might be refused insurance,
or passed over for a job offer. They might find all those negative
things happening to them, and put it down to
bad luck or fate. When in reality, it's
the result of databases making some sort of
prediction about them. And people behind the scenes
are earning money to create these profiles of people.
It’s disgraceful. Payment technologies are
developing rapidly. While we feel that we are at the
cutting edge here in Europe, if we pay by smartphone app, in
China, Chinese and US companies are testing “smile to pay” facial
recognition technology. A facial scan lets you to enter
a store and pay for goods. AI can recognize the person
and their credit rating. But it can do more — also detect emotions and
social affiliations. It can also tell whether
someone is under stress or might be coming
down with something. If I pay with a smile and I
start to connect smiling to economic transactions, then
this habit will also leave its imprint in my real world. I don't think we really want those
kinds of associations to develop. Our society and social
interactions would become subtly commercialized. Spiekermann would like
cash to be retained, and not only for data
protection reasons. Power can be rapidly knocked
out, as can IT systems. It's a matter of security.
We need a concrete backup. We still need cash —
for security reasons! As paying becomes increasingly
easy, contactless and — perhaps — more hygienic, we’re giving away more
and more information about ourselves. I will probably never know exactly
what companies know about me. Why are banks interested in what
I buy — where and how much? I'm going to visit N26, an
up-and-coming mobile bank, to find out. The Berlin-headquartered app-only
bank is growing rapidly, but it's already faced a fine for
breaching data protection laws as well as criticism from
Germany’s financial regulators. China’s tech giant Tencent
owns a big stake in N26. I’m meeting Georg Hauer,
general manager for Germany, Austria and Switzerland, because I
want to ask him whether "smile to pay" will be coming to us any time soon. At the moment, I can’t
really see that smile to pay or other Chinese products
will take hold in Germany. But other innovations will be
introduced into the German market. It’s quite clear that cashless
payments are on the rise. N26 prefers to let other banks do
things like keep reserves of cash, provide face-to-face
customer service and maintain
brick-and-mortar branches. The fintech startup is a digital bank. The company would like us to use our
mobile phones to manage our finances. You can see right off: How much did
you spend on clothes shopping? How much did you spend on insurance
this month or on eating out? What were your household expenses? Do customers feel that their spending
behavior is influenced by this? When you pay electronically
you can monitor more closely what you've spent than
when you pay by cash. Say a month after you have
spent 50 euros in a shop, you no longer know what
you spent that money on. If you make an electronic payment, you know exactly what
you bought last April. Data protection is
important to the EU. Do you, as a bank, share that concern? We give the customers this data. It’s an automated process. That means that none of our
employees see this data — it can only be accessed
by our customers. Being able to manage your finances
better sounds like an advantage. But does it really matter to me
what I spent where last April? And I’m still worried about
what happens to my data and who has access to it. A Berlin company called Barzahlen.de
is taking a different approach. It offers a modern payment system that
doesn’t leave behind data trails. The name might mean ‘pay by cash’, but
it’s not as old school as it sounds. Rather, it’s a kind of
digital-analogue hybrid. Not everyone who wants to
pay by cash is tech averse. There's a big group of people who
want to use cash in a digital context because they don’t want to reveal
their personal data online. Cash has many advantages. It’s flexible and anonymous. I don’t need to own a card, I don’t
need to be a customer somewhere. To me, a world without any cash, that
would mean that Europe and Germany would be dependent on two big
US credit card companies that control all our payment
transactions. Do I really want that?! So how does barzahlen.de work? For example, it works
via certain stores: It doesn’t matter if I want to
pay for an online purchase. Or if I want to pay an official bill
or receive money, for example... Or if I want to pay money
into my bank account, or get money out of my account... I always receive an encrypted barcode that I use to get money
or make a payment. The barcode stipulates how much
money is paid in, or paid out. It doesn’t involve the transfer of
any account or credit card data. And a fresh barcode is generated
for each transaction. You just scan this barcode at the
cash till and then the shop assistant will
give you 50 euros, for example. In this case it’s a withdrawal
from my checking account. But it could be a reimbursement
for a returned pair of shoes that I bought online, or a
credit from my electricity bill. I could also use it
to make a payment — to pay for a parking
ticket, for example. You can’t tell from the barcode
what transaction I've made. The information isn’t
passed on to third parties. Cash is a way of stopping everyone
from knowing all our business. Even in cash-free Sweden
there are a few people who want to keep
bills and coins. Björn Eriksson opposes going
completely cash-free. The former Interpol
president is acquainted with the underground economy,
cyber-attacks and money laundering — and still he’s battling for
the retention of cash. I'm for cash as an option, not as a
monopoly, which is a major difference. They would have a monopoly, I
want to have a possibility. Some people can't deal with
these modern digital systems. It's about one million
people in my country and they are looked
on as unprofitable. Just leave them. I don't
like that type of society. What happens if the Russians, Putin
or somebody switches off the system? We have no defense. How do you then
defend yourself if you just have this card
that doesn't function? Cash is a perfect option. And the third one, which
attracts a lot of young people, is what they see in China
and some other nations where you use these to
control your citizens. Because if you have
a system with card, you'll have a technology with cameras, you have a technology with
artificial intelligence, you're really going to be checked.
Young people don't like that. Eriksson also believes that it’s
important for digital natives to have access to cash. And he is annoyed by the
fact that the coronavirus seems to be being used as a pretext
for the switch to a cashless society. But there is no proof whatsoever
that cash is carrying that type of threat from Corona. It's easier for me with
businesspeople saying we dislike cash because we earn more money on cards. It's a good, solid
argument I could respect. But these type of arguments for me
are not particularly impressive. Eriksson tells me Sweden
has passed legislation obliging banks to provide certain
cash services from 2021. The struggle between
cash or card payments has become fiercer
due to Covid. Electronic payments are
easy, quick and feel safe. For banks and payment
service providers they’re immensely lucrative. The data broker industry is,
in turn, making huge revenues and penetrating our lives
in ways we barely suspect. For me cash represents
a form of freedom - a freedom I'd like to pass on to my
children for their digital future.
