Plastic cards exist and are very cheap.
True of the person buying something or sending money. However, the person receiving money through a card payment still needs an Internet connection.
No, they generally don't. Perhaps because of less-reliable telecoms infrastructure, 20-30 years ago Europe moved aggressively to chip cards, and the chip is trusted to authorize a lot of transactions entirely offline. The payment terminal must go online eventually to upload the transactions, of course, and there are various triggers in the card-side and terminal-side logic that will force the transaction online, but this rarely happens for small-value transactions. Or at least, that's how it was when I worked in that space 15+ years ago, and I doubt it has changed much because it worked very well and the move to mandatory chip + PIN was making it even better.
As I understand it, the same approach has carried forward with phone-based payments. iOS uses exactly the the same sort of chip (called a Secure Element, when it's embedded in a phone) with the same sort of applets and logic running on it. Android is a more complicated story, but it also works offline.
Aside: Although I didn't work on the Google Wallet team I actually designed the security scheme used by Google Wallet to secure the keys used to authorize payments. It's an ugly hack I came up with to work around the lack of secure elements in Android devices circa 2014, and it has been partially superseded with the use of secure elements today (using the SE APIs I built). The basic idea had two parts. The first was to reduce the value of the secrets by making them single-use. The second was that data held in RAM was fairly hard to extract since most compromises that enable access to data in DRAM require a reboot, after which the targeted data would be lost. There are ways around this, like "chip-off" attacks where you freeze the device so that the RAM contents will persist for a few minutes even after power is removed, then you quickly -- and without warming the chip! -- desolder the RAM and pop it into a device that will dump the contents, but they're sufficiently difficult to execute that the risk is acceptable given all of the other fraud mitigation present in the payment systems.
I figured we could safely store payment keys in RAM for a few years until SEs became common enough, then we could switch. As it turns out, the RAM-based security scheme is still working just fine over a decade later, mostly because chip-off attacks and similar actually got harder due to increased hardware integration. In 2014, DRAM was discrete parts soldered to the mainboard. By 2018 or so and new flagship SoCs included the DRAM in the SoC in a package-on-package configuration. So it's still the case that the best way to extract secrets from RAM on an Android device is a remote software compromise -- but thanks to Android manufacturers' once-abysmal record of delivering security patches, the Android OS adopted a deeply-layered defense-in-depth security strategy that makes effective remote software compromise surprisingly hard even on devices with lots of known security vulnerabilities. Google gradually got Android OEMs to do a better job of delivering security patches, but the defensive security architecture is still there.
Obviously, the downside of the "keep your secrets in RAM" strategy is that they get lost on reboot. This was the defense against attack, but it's a problem for use, too. The solution is that after boot you need a network connection to re-retrieve the secrets from the server (that also pushes the problem to one of preventing attackers from getting the secrets from the server, but Google has good server-side mitigations). So if you're standing in the checkout line in a building that blocks cell service and your phone reboots for some reason, you're screwed when you get to the payment terminal. That was rare enough not to be a big problem, but it was a problem. Now, of course, most devices have SEs, so secrets can be stashed there, protected by user authetication -- and the secrets are still single-use and so relatively low-value. The obvious downside of single-use keys is that you can theoretically exhaust your supply before getting a network connection. AFAICT that basically never happens, though.
Anyway, enough history...
garage sales are illegal in much of Germany
I was not aware of that.
You instead take your stuff to a flea market and rent a table. I think most of Europe is like this, except I don't think most areas actually ban individual garage sales; it's just not what people do.
Which means you need to store enough stuff that you can afford to rent a table for a day, and you can't have one member of the household watching and the others performing household tasks (such as cooking and cleaning) while there are no customers. How often does each neighborhood hold a flea market? Or do customers in a particular city need to go out of their way to attend a flea market that might be on the other side of town?
I am unfamiliar with flea market customs in European countries that might affect the viability of electronic payments smaller than a euro. "Flea market" on Wikipedia didn't give even a ballpark estimate for where they are held, how often, and cost to rent a table. What keywords should I put into DuckDuckGo to learn more about this? I tried europe bans garage sales which returned irrelevant results about the transition from petrol vehicles to electric vehicles.
In Germany they're called "Flohmärkte", which literally means fleamarket. In most other European countries it's less of a regimented commercial operation (how characteristically German, makes me chuckle) and more of a big community event. I've seen it in France, where a few times per year they close off a bunch of streets and the whole town brings out all their stuff and sets up tables. It was 20 years ago that I saw this, and at that time it the French community "garage sale" events were all-cash, but according to Gemini (grain of salt, but it's believable) today there are a lot of digital transactions at these events, all mobile phone-based. PayPal, direct digital bank transfers (e.g. Wero) or contactless tap (Apple Pay, Google Wallet on the buyer side), using an app the seller can download (Zettle, Square, Viva).
There's undoubtedly still a lot of cash used, but it's apparently declining fast. According to the European Central Bank, in 2024, 52% of small-value and person-to-person payments in Europe were made with cash, but they expected that by the next report (due end of 2026), this would continue falling and cash would be fall to a minority position. In 2024, 62% of Europeans felt like it was important to have cash as a payment option. That's still a significant majority, but I think it's actually quite striking that a third apparently don't think they need cash at all.
Wow, this ended up being a long post.