The future of cash is hotly debated around the world. Despite being firmly attached to notes and coins, even Germany is slowly moving towards embracing card and online payments. Yet, according to a Bundesbank study, 53 percent of private purchases in Germany are still made in cash.
Electronic chains Saturn and Media Markt led the charge by accepting credit cards from May this year. Now Discount retailers Aldi and Lidl are getting on board, with their announcement this month that they too will start taking Visa and MasterCard.
Renowned economists such as the Harvard professor Kenneth Rogoff would happily dispense with banknotes. Yet in Upper Bavaria, there’s a difference of opinion.
“Cash continues to be a modern method of payment,” said Ralf Wintergerst, a member of the management board at Giesecke & Devrient and the man in charge of the storied company’s banknote business unit.
Giesecke & Devrient have 160 years of experience in this field. The company, originally founded in Leipzig, began life as a banknote printer. While making money is still very much part of its business, it has grown to include card technology, electronic payment systems, security technologies and mobile payment systems. According to its company website, it is a key supplier of cash processing systems to U.S. casinos.
Mr. Wintergast rejects the oft-heard argument that it would be harder to engage in illegal activities in a cashless society. Illegal activities are much easier with online payments, he said.
Mr. Wintergast is biased in favor of cash for a good reason – his company produces an estimated 160 billion banknotes every year, which go into global circulation.
The company won’t confirm how many of these bills come from the Munich production plant. It is clear from a visit to its paper mill in rural Louisenthal near Munich that security and discretion are an obsession. Visitors may enter the mill, where the paper for the bills is made, only after a rigorous security check involving palm scanners.
It costs less than €100, or $110.32, to manufacture 1,000 banknotes.
Thick, fluffy balls of cotton are delivered here to be processed into a lint-like cotton fiber, often of organic quality. It passes through machines that wash, chop, bleach and strain it, until it is dried on rollers, pressed, given a special security thread and coated with chemicals. The machines run around the clock for 362 days a year, serviced only on Christmas and Easter.
Eventually, they spit out paper in rolls up to three meters in size, which then are cut into sheet format. Computers check to assure are no imperfections in the paper. The bills are cheap to produce. It costs less than €100 ($110.32) to manufacture 1,000 banknotes, said plant manager Alfred Kraxenberger.
According to the company’s annual report for 2014, out of annual net sales of €1.8 billion, almost half came from the banknote manufacturing arm of the business – €887.5 million. Mobile security contributed €777.8 million.
The company will make no official comment on who their clients are, but the security threads hanging on the wall of one large production hall show that Myanmar, South Africa, Iraq and Taiwan appear to have ordered banknotes.
Our visit was cut short sooner than expected, when a pungent-smelling chemical leaked in the chemical coating hall. Everyone present fleed the production facility as the company fire department moved in.
The banknotes there are far from finished when they leave the paper mill. The sheets won’t be printed with monetary values until they reach Munich.
Sadly, entry to the Munich printing plant requires the highest security clearance. Even chief executive Walter Schlebusch was only allowed into the printing plant after he had signed his own employment agreement.
Kerstin Leitel is based in the Munich bureau where she covers the banking and insurance industries. To contact: email@example.com