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Contactless payment: Criticism of cash: How Corona drives Wirecard & Co. ‘s business message


Contactless payment is becoming increasingly popular
Numerous profiteers on the market
In addition to Wirecard and credit card providers, tech giants with advantages

Even before the outbreak of the corona pandemic, cashless payment was a big issue. But while it is customary in many countries to pay even small amounts with the card, many Germans hold onto cash. Although around 94 percent of Germans have a Girocard, people in the 45+ age group in particular preferred to use bills and coins rather than their checking or credit cards last year, according to a survey by the Institut für Demoskopie Allensbach. The changeover to a purely cashless payment would be particularly difficult for the older generation: Almost three quarters of them said they had a hard time dealing with it, while 67 percent of the 16 to 29 year olds had no problem with it, the survey continued. “The way of paying in Germany seems to be a question of generations,” the study concluded.

Corona as a catalyst

But the change to cashless payments is also noticeable in this country. As technology advances, the number of people using it has continued to increase. Apple is also active on the German market with its Apple Pay payment system, and Google Pay has also been available in Germany for some time. Credit cards have been around for decades, and the checking card can be found in almost every German wallet.

The new type of coronavirus COVID-19 could bring a real boost for cashless payments. Because for fear of infection, many people currently do without cash. According to current knowledge, the virus is primarily spread via droplet infection, but smear infections are conceivable. The European Central Bank does not consider the risk of infection from cash to be particularly great, and the Federal Institute for Risk Assessment recently emphasized: “Due to the relatively low stability of coronaviruses in the environment, this is only likely to occur in the short period after contamination.” However, fear and uncertainty remain with many people.

This is why there are now initial reactions at supermarket checkouts: In some supermarkets, operators are appealing to their customers to avoid paying cash if possible.

Companies benefit from the new trend

In spite of the fact that so far there are no officially known cases in which people infected with viruses that were found on cash, a rethink has already occurred among many Germans. In the past few days, more than half of all Girocard payments were made contactless, a spokeswoman for the German credit industry (DK) told the German press agency. In December this share was still 35 percent.

The new trend could possibly trigger a sustainable rethink in Germany and continue to Corona. Development benefited in particular from companies that made their money in the field of payment services.

One of the largest companies in this area is the payment service provider Wirecard. The DAX Group is also one of the few companies that has not yet questioned its annual forecast. Because business is going well, as Wirecard boss Markus Braun had recently confirmed. The company is benefiting from the consequences of the pandemic in two ways: Given the lockdown in many countries around the world, there is a strong development in the online retail sector. On the homepage in the relatively newly created transparency area, it says that a strong additional increase in online transactions in Asia and Europe has been observed.

At the same time, it is the trend towards digital payment methods that Wirecard benefits from. Because this is how the company earns money: by taking over payment services for companies that are not only active in online business, but also offer services off the Internet.

Credit card providers such as MasterCard and American Express are also benefiting from the current aversion to cash. If more people pay for services and goods with their credit cards, the customer base is likely to grow on the one hand, and on the other hand this will also have a positive impact on sales, because every time customers pay for a product or service with their credit card the providers of the cards have an agreed sales share from the respective retailer. In addition, there may be an annual fee on the part of the customer, even if there are many free credit card offers in the meantime. If, for example, a German bank offers a card with Visa, MasterCard or American Express branding, the credit card providers can also pay for this again.

In addition to the obvious profiteers of the cashless trend, there are also companies outside the financial sector that could emerge as winners from current developments. On the technical side, there is NXP Semiconductors, for example. The Dutch group specializes in the field of near field communication, a technology that enables contactless data transfer and is used by numerous payment service providers in the digital field. NFC is the global technology standard for this area, and Wirecard also uses NFC solutions.

And even tech giants like Apple or Google could profit from the corona crisis – even though factories around the world are at a standstill and Google may have to cope with an enormous slump in its advertising business. As a provider of payment systems such as Apple Pay and Google Pay, the US giants are benefiting from the trend towards contactless payment solutions. So far, only a few customers in this country have been using the app services of the US corporations: That could change now and after Corona, possibly the pandemic may finally help the services for the smartphone to make a breakthrough.

It is unclear to what extent Germans in particular will change their payment preferences if the pandemic is contained and cash can be used again without criticism. However, it can be assumed that at least some of the customers will permanently change their payment and purchasing behavior – especially if the companies in the industry take the opportunity and get rid of concerns about data protection and security.

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Image sources: Wirecard, CHRISTOF STACHE / AFP / Getty Images

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