Why Do You Have to Pay in Cash in Germany?
So you're out on the town, and reach into your wallet, pulling out your card to pay off your tab at the local Kneipe (pub), and the bartender shakes their head at you. What gives? In Germany, it's exceedingly common for most small businesses, bars, and restaurants to be cash only, and if they do accept plastic, it's probably only Girocard (or EC card; debit card). But why would this be the case, when everything down to farmers' market stands in the U.S. tend to take cards? Good question!
There's a number of schools of thought pertaining to why Germans prefer paying cash over card, ranging from everything to cultural preference due to massive postwar inflation in the 1920s, to a desire to stay out of debt (which is helpfully reinforced by the fact that German credit cards almost universally debit your account at the end of every month, instead you choosing the amount to pay off and being able to accrue debt). Regardless of the reason for the choice of payment method, carrying cash, and often much more than a typical American would be used to, is common practice in Germany.
Generally speaking, it's safe to assume that grocery stores, most retail shops, and larger restaurants will take card, particularly if you're in a larger city, but it's always best practice to double check when you arrive if the particular place you've arrived at will take your card if you're not using a German debit card. It's also more than a sure bet to assume that all of the numerous bakeries that Germany is so well known for work on a cash only basis, regardless of how busy they are, or the size of the city that you're in.
Although the number of places which accept (debit) cards is increasing as time goeMs on (even Ikea takes credit cards nowadays), I'd still highly recommend that if you're taking a trip, or if you're going out for the night, that you take enough cash for the night, just in case. Few things are more, at best, annoying, or at worst, embarrassing, as not having enough cash at a place that you did not realize was cash only.
In terms of the small stands that you see out and about, perhaps at the Christmas markets, which are in full force this time of year, whether or not they accept card is a matter of, "it depends." In the case of stands which are extensions of existing shops or may be selling things like clothing or other more expensive items, you may see a small sign somewhere on the stand which says "EC" or "Girocard", letting you know that debit cards and occasionally credit cards are accepted. It appears that as time goes on, the prevalence of people paying with cards, and by extension the availability of places which accept cards is increasing, but until there's a more substantial rise in the ability to pay by card, the best advice to follow is to hit up the ATM regularly, and accept that you'll end up carrying a bit more cash.
That being said, German ATMs give you the option often to choose the denominations that your withdrawal will be given in, with a couple of options given based on the size of your withdrawal and the particular amount of each note that the machine may have ready. Even though most shops will readily take 50 and 100 Euro notes without a fuss, it's worthwhile to choose an option at the ATM which limits the amount of these large bills that you take out, as small shops and stands will sometimes refuse the bills if they don't have a bill-checker on hand to double check that the note is legitimate.