Government Pushes Mandatory Card Payment in All Shops

Digital Payments to Become Compulsory in Germany

Germany’s next federal government, expected to be formed by a coalition of the SPD and CDU/CSU, is preparing a significant change in how transactions are conducted nationwide. Under a policy plan revealed during coalition negotiations, all businesses in Germany will soon be legally required to offer at least one electronic payment method—alongside cash. The move, championed by SPD financial expert Michael Schrodi, aims to increase transparency and curb tax evasion, particularly in sectors where cash is dominant.

This new obligation would affect all sectors, including small retailers, restaurants, and bakeries. According to the coalition’s working group on finance, tax, and budgeting, the proposal is already written into the preliminary results of the negotiations. If enacted, it would mark a profound shift in Germany’s traditionally cash-heavy payment culture.

Targeting Tax Fraud Through Digital Traceability

The stated goal of the initiative is to close loopholes that enable tax evasion. Schrodi emphasized that industries like hospitality are especially prone to undeclared income due to the high use of cash. By requiring electronic payment options, authorities could better enforce existing tax laws and protect compliant businesses.

The coalition also intends to introduce a mandatory use of electronic cash registers, phasing out open cash drawers that allow untaxed sales to go unnoticed. With these combined measures, the government hopes to reduce estimated annual losses from tax fraud in cash-intensive sectors. Currently, up to €15 billion in income and sales tax is lost each year, with the total fiscal damage, including unreported wages and unpaid social contributions, potentially reaching €70 billion annually.

Mixed Reactions from Industry Groups

The reaction from industry organizations is divided. The German Hotel and Restaurant Association (Dehoga) has raised concerns, warning that small businesses could face additional financial and administrative burdens due to the new payment infrastructure requirements. For many in the hospitality sector, where margins are already tight, the costs of card terminals, service fees, and accounting adjustments are not insignificant.

In contrast, the German Tax Union supports the proposal, arguing that increased card payments would lead to much higher and more accurate tax revenues. Its chairman, Florian Köbler, highlighted that a shift to traceable transactions would significantly strengthen compliance and fairness within the business community.

Card Payments Still Lag Behind in Germany

Despite the increasing availability of card terminals, Germany remains behind other European countries in electronic payment adoption. A study from the Boston Consulting Group shows that in 2023, the average German made 304 electronic transactions, placing the country well behind others like Norway (815), Luxembourg (753), and Ireland (705). Even neighboring Austria, where similar cultural preferences for cash exist, recorded slightly fewer transactions (300) per person.

Historically, Germans have valued the privacy and simplicity of cash. However, this trend is shifting. According to a Deutsche Bundesbank study, the share of cash transactions fell from 83 percent in 2008 to 51 percent in 2023. The decline is driven partly by the decreasing number of physical bank branches, making it increasingly difficult for people to withdraw cash in their own communities.

Access, Equality, and the Road Ahead

While large urban businesses are often already equipped with card readers, rural and independent shops are less likely to have made the transition. For many customers—especially elderly citizens or those with limited mobility—the ability to use cards in every store could significantly reduce everyday barriers.

The government’s proposal does not eliminate cash, but rather seeks to ensure “true choice” in payment methods. This dual system is expected to benefit consumers while also modernizing Germany’s retail infrastructure in line with broader European trends.

Debates continue within the CDU, where full consensus on the plan has yet to be reached. However, the SPD appears fully committed to including the electronic payment requirement in the final coalition agreement.

If adopted, the measure would likely be implemented gradually, giving businesses time to comply. While the policy is seen by supporters as essential for tax fairness and modernization, its rollout and reception among small businesses will be key to its success.