Cash or Card Payment?

Until recently, German-speaking Europe had always been different, compared to other European countries, when it came to cash versus card payment. France, Spain, and Italy were always far more receptive to credit or debit card payment, while Germany, Austria, and Switzerland were more of a challenge. What a difference time and a pandemic make!

The German contactless Mastercard debit card will gradually replace the old Maestro debit card that is being phased out in Germany. Unlike the old card, the new Mastercard debit card can also be used online and outside of Germany. The Maestro card was already replaced by the debit Mastercard in Austria in 2019. PHOTO: mastercard.com/de

As I recently wrote, the payment situation in Germany changed radically during the Covid-19 pandemic years. Cash-loving Germans, faced with virus-laden coins and bills, rapidly turned to card and contactless payment in droves. During my latest trip to Germany in May/June 2023, waiters in bars and restaurants did not hesitate when I answered “Karte” in response to their “Bar oder Karte?” (“Cash or card?”) question. Taxi drivers no longer rolled their eyes when I pulled out my US credit card for payment. Apple Pay with my iPhone? No problem. I could even purchase public transport tickets in Berlin using the BVG mobile app – with Apple Pay or a US credit card! Unfortunately, the MVV app for Munich was not as easy or convenient. You have to register first or manually enter card details to pay. But the MVV ticket machines did accept card payment and worked well.

A nice self-serve beer garden we visited with friends in Berlin had signs (in English) stating “Card only!” At the checkout stand in grocery stores and drugstores (Rossmann, DM, Müller), my wife and I discovered that our US contactless debit or credit cards worked faster and better in Germany than they did at home! It was a pleasant shock.

Debit Cards Beat Out Cash in 2021
The Covid pandemic helped bring about a landmark change in the way Germans pay for things. 2021 was the first year in German history when debit cards beat out cash payments by German consumers. In the first six months of 2022, the use of the German debit card called a “Girocard” for purchases increased by 17 percent compared to the previous year. New data also indicate that Germans are increasingly taking advantage of contactless payment, using that function on their card, or paying via mobile phone or smartwatch. In the first half of 2022, an amazing 74 percent of Girocard payment transactions were contactless, up from 64 percent in 2021.

Caution! Keep Some Cash on Hand
As dramatic a change as the new payment climate in Germany is, both residents and visitors are wise to keep at least some cash on hand. Although cash-only has become far less common, every once in a while it is still possible to encounter situations in the German-speaking countries where card payment may not be possible. While there may be a Geldautomat (ATM/Cashpoint) nearby, some charge higher fees and/or exchange rates than others. Having some euros in your pocket could save you time and money.

For example, during a visit to Herrenchiemsee Palace, Bavarian King Ludwig II’s architectural homage to the French King Louis XIV, boat tickets could only be purchased onsite with cash. Signs in German stated that even German EC/Girocard payment was not possible! (That would have been a bit unusual even in the recent past.) Since the only way to visit this palace located on an island is by boat, this was a vital part of the experience. We had to pay cash for roundtrip tickets for four people, from Gstadt to the two main islands, a total of just under 47 euros. On the other hand, time-specific admission tickets for the palace tour (€10 each, including the Ludwig-II-Museum and the Augustiner Chorherrenstift) could be purchased by credit or debit card at the on-site ticket office. The boat service is run by a private company, while the castle tours are operated by a Bavarian government agency.

Apple Pay has been in Germany since 2018. It has become a popular way to make contactless payments with a mobile phone or smartwatch. PHOTO: apple.com/de

No Personal Checks/Cheques
Expats in Germany already know that Germans don’t use personal checks. Even in the US, paper checks are rapidly becoming a relic of the past.

A check drawn on a US bank account is virtually useless in Germany. It takes a lot of effort, a German bank account, and some financial savvy to cash or even just deposit a US check at a German bank. It was only in recent years that Germany fully adopted the international IBAN numbering system for bank accounts that is used in the US and most other countries.

The German equivalent of a personal check is called a Geldüberweisung (“money transfer”), but these days you never see the paper variety. You usually send or receive an Überweisung electronically online or via a bank app, transferring funds to or from your German bank account.

Credit Cards and Schulden (Debt)
Despite the changes mentioned above, credit cards (but not debit cards) remain unpopular in Germany. One reason for this is that a German Visa card or Mastercard is usually NOT really a credit card. It functions like a debit card. All monthly charges are deducted from the cardholder’s bank account at the end of the month. There is no “credit” (a loan). Unless special arrangements are made, there is no option to pay off the card charges over time (and thus no interest charges). In part, this has to do with the German word Schuld, which means both “debt” and “guilt”! Debt is thus a double negative in German, something Germans avoid at all costs. While Americans or Canadians are less reluctant to use credit and pay the resulting interest charges, Germans are more “pay as you go” oriented. All of this helps explain why only 36 percent of adult Germans even have a credit card, compared with 62 percent in the US, according to the World Bank.

Now let’s look at the various types of debit cards commonly used in Germany, Austria, and Switzerland.

A Girocard (debit card), the most popular way of making electronic payments in Germany, is similar to an American bank debit card, but there are some important differences. The Girocard requires a German bank account and does not work well (often not at all) outside of Germany. It has a chip and the contactless payment icon, but it is not a credit card. Most Germans only use a credit card (Mastercard, Visa, AmEx) when they travel to North America or other foreign destinations. PHOTO: girocard.eu

Girocard
Many Germans still call the most common German debit card eine EC-Karte, an EC card, despite the fact that the old term (EC for “electronic cash”) was officially dropped back in 2007! The Girocard (pronounced ZHEE-ro card) means “checking/current account card,” and it is always connected to a bank transfer/checking account (Girokonto) that is debited for each transaction with the Girocard. It’s essentially a debit card – and only a debit card. Unlike a US debit card, it can’t also be used as a credit card. Any amount charged to a Girocard is immediately deducted from your bank account. To obtain a Girocard you have to have a German bank account. (See our guide: How To Open a Bank Account in Germany.)

The Girocard is the most popular debit card in Germany because it is free with many German bank accounts, and it also charges a lower fee for merchants (0.2%) than most other debit cards (about 1.0%) in Germany. It is the most accepted debit card in Germany, even at many places that don’t take credit cards or the Maestro or V Pay debit cards.

Maestro and V Pay
These two debit cards are related to Mastercard (Maestro) and Visa (V Pay). They work the same way as the Girocard, but they are being phased out in Europe. They were always less popular because they charged merchants a higher fee than the Girocard, and some financial institutions charged an additional annual fee for them. A Girocard that also has a Maestro or V Pay logo on it could be used for debit card payments outside of Germany. However, as we explain below, both the Maestro and V Pay card brands in Germany are being phased out in favor of standard debit cards issued by Mastercard and Visa. See the image below.

An Austrian Mastercard debit card displaying its numbered features (1-6) front and back. The German debit card from Mastercard is the same. 1. 16-digit card number. 2. Expiration date. 3. Cardholder. 4. DEBIT label. 5. CVC security number. 6. IBAN number (AT = Austria). IMAGE: mastercard.at

Mastercard and Visa
Yes, Germans can and do use credit cards, but rarely in Germany. Most Germans who have a credit card use it only for travel outside of Germany. Germans traveling to the USA or Canada know they will need a credit card from Mastercard, Visa, or American Express for hotels, airlines, rental cars, gas stations, and shopping. They also know that the German Girocard is generally not accepted outside of Germany.

But a German “credit” card is rarely a true credit card. Unlike a typical American credit card, a German credit card is often a “charge card” that only delays payment until the end of the current billing cycle. The entire amount charged on a German “credit” card will be deducted from the holder’s bank account. If Germans want a true credit card, they have to arrange for that with their bank and be willing to pay interest on the balance if it is not paid in full at the end of the monthly billing cycle. Germans tend to be debt-averse and interest-averse. If they have a real credit card, it usually will be paid off as rapidly as possible. Remember, the German word Schuld means both “guilt” and “debt.”

Using Your US or Other Bank Account Funds
Most expats want to keep using their US or other bank accounts while in Germany. Thanks to online banking, you can still manage your US bank account from Germany, but that won’t help you transfer funds from your US to your German account, or vice versa. There are several ways to do that, all of which will cost you. (PayPal is popular in Germany, but there are other options.) However, that’s a bigger topic than we can cover here. See these German Way pages for more:
Money Transfers: International Fund Transfers page for an introduction and more information.
German Bank Account: How To Open a Bank Account in Germany

Which Banks Offer Which Cards?
There are two basic kinds of financial institutions in Germany: (1) traditional brick-and-mortar banks or savings institutions and (2) online-only banks (Direktbanken) or fintechs. Although most German financial institutions offer a free Girocard account, not all of them do. Some charge a monthly fee for a transfer account (Girokonto), while others do not. Some offer a free Mastercard debit card, others don’t. There are many different options from different banks or fintechs. Apple Pay is an option from some banks, but not all. It definitely pays to compare. See our guide below.

Sparkassen
Before we proceed, a brief word about Germany’s Sparkassen (“savings banks”). The Sparkassen-Finanzgruppe (“Savings Banks Financial Group”) is a network of not-for-profit savings banks that together form the largest financial services group in Germany and in all of Europe. It is uniquely German in its structure and functions, and dates back to the 18th century and the Ersparungscasse der Hamburgischen Allgemeinen Versorgungsanstalt in Hamburg. In 1801 the first savings bank with a municipal guarantor was founded in Göttingen to fight poverty. Since that time almost every German city of any size has its own independent Sparkasse that is part of the financial group. Sparkassen today are popular and often regarded as a good alternative to traditional banks. But with the advent of fintechs and direct banks, the Sparkasse advantage has diminished somewhat. But your local Sparkasse, one of 376 all across Germany, still has advantages and disadvantages you may want to consider.

Below is a sample of selected German banks and fintechs with card offerings and fees (as of September 2022). The banks and fintechs below may also have additional account options not listed here. See a financial institution’s website for details. This information is subject to change, so always verify the current options.

TRADITIONAL BANKS
Berliner Sparkasse
“Giro Digital”: €3.00 per month. Free Girocard. No debit card. Credit card: €3.25 per month. Note: Other Sparkassen may have different options. Check locally.

Berliner Volksbank
“Privatgiro”: Monthly fee varies from zero to €13.00. Free Girocard. No debit card. Credit card: €2.50 per month.

Commerzbank
“Girokonto (Basic)”: Free or €9.90 monthly. Girocard: free or €3.50 monthly, depending on certain conditions. Debit card: €40 annually. Credit card: €2.50 per month.

Deutsche Bank
“Aktivkonto”: €6.90 monthly fee, with Girocard included. No debit card. Credit card: €3.25 monthly fee.

HypoVereinsbank
“HVB Plus”: Free or €9.90 monthly fee, including a Girocard. No extra fee for a debit or credit card.

Postbank*
“Giro direct”: Zero or €2.90, including Girocard. No debit card. Credit card: about €2.49 per month.
*Formerly owned by the Deutsche Post postal service and later Deutsche Bank, in 2018 Postbank merged with the DB Privat- und Firmenkundenbank as a subsidiary of Deutsche Bank.

DIGITAL BANKS • FINTECHS
1822direkt
“Girokonto Klassik”: Monthly fee of zero or €3.90. Girocard: €0.50 per month. No debit card. Credit card: under €2.49 per month.

Bunq
“Easy Money”: Monthly fee of €2.99. Free Girocard. Free debit card. No credit card.

C24
“Smart”: No monthly account fee. Girocard: free or €1.90 per month. Free debit card. No credit card.

Comdirect
“Girokonto”: Monthly fee of zero or €4.90 with free Girocard. Free debit card. Credit card for €1.90 per month.

Consors Bank
“Girokonto”: Monthly fee of zero or €4.00. Girocard for €1.00 monthly. Free debit card. Credit card: €60.00 per year.

DKB
“Girokonto”: No monthly fee (with €700 minimum monthly deposit). Optional Girocard: €0.99 monthly. Free Visa debit card. Visa credit card: €2.49 per month.

ING
“Girokonto”: Monthly fee of zero or €4.90. Girocard: €0.99 monthly. Free debit card. No credit card.

N26
“Smart”: Monthly fee of €4.90. No Girocard. Free Mastercard debit card. No credit card. Note: Also offers an English-language banking interface (website/app) and support. N26 also offers a free “Standard” account with a virtual MC debit card. See this GW page for more: About N26 – The Mobile Bank

Norisbank
“Top Girokonto”: Monthly fee of zero or €3.90. Free Girocard. MC debit card: €2.00 monthly. Free Mastercard credit card.

Tomorrow
“Now”: Monthly fee of €3.00. No Girocard. Free Visa debit card. No credit card.
“Changes”: €7.00 per month, choice of three card designs, plus features of Now account.
More: Tomorrow accounts (in English)

Vivid
“Now” and “Prime” current accounts, some with Visa debit/credit cards
More: Vivid Now (in English)

SOURCES (in German): Apple Pay in Deutschland (apple.com/de) – About using Apple Pay in Germany, Kreditkarten (finanzvergleich.com), Girocard, Debitkarte, Kreditkarte: Alle Unterschiede (2022) (finanzvergleich.com), Warum sich dieser Maestro nach 30 Jahren zur Ruhe setzt (Mastercard.com, in German) – About the phaseout of the Maestro card in Germany that began in July 2023

Also see these bank and money-related German Way pages:

• How To Open a Bank Account in Germany
• Expat How To Guides for Germany – Step-by-step guides for many topics related to living and working in Germany
• Money and banking
• Transferring funds
• Dining out in Germany
• The euro

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