Germans buy more with plastic than cash for the first time


Interesting read (German language, but you should be able to decipher the diagrams)

Germany has long been a cash first society. For the first time ever, paying with plastic has exceeded paying in cash.

48.6% (209 short-scale billion* Euros) of transactions were made with credit, debit or “other” types of card (Maestro/V-Pay/MC Debit or store cards). 48.3% (208 short-scale billion Euros) was paid out with cash, with a further 2.5% on invoice and 0.6% “other”.

What is interesting is, even though 48.6% was plastic, 30.1% was with debit cards and 10% ELV (electronic direct debit), with credit cards only accountable for a total of 6.9% of all transactions. The plastic also, as far as I can see, also includes smartphone payments using NFC banking apps tied to a debit or credit card.

* Short scale (or US) billion is 1,000,000,000, also known as a milliard. An billion is 1,000,000,000,000.

Comments (13)

13 responses to “Germans buy more with plastic than cash for the first time”

  1. Greg Green

    I hardly even get cash from the ATM anymore, though it used to be a weekly event more than five years ago.

    And it’s a good sign that people are paying with debit rather than credit, too many people get in over their head with credit.

    • wright_is

      In reply to Greg Green:

      Exactly. I have never had problems with not paying credit cards off, but a lot of people do.

      In Germany, there is little incentive to using a credit card, as it is tied to the bank account and at the end of the month, the total balance of the card is automatically taken from your bank account (we are talking about Visa and Mastercard here). If you overspend, it goes on your overdraught.

      That means that you have only a few days grace, before the total is paid off anyway. If you need to make a big purchase just before pay-day, it can be useful, but otherwise there is no real benefit (also no points, no insurance or other perks that my credit cards in the UK had).

      • karlinhigh

        In reply to wright_is:

        I'd like to hear about merchant fees in Germany. USA norm is ~$0.29 + 2.5%. With fewer consumer perks in Germany, are merchant fees lower? And, is the monthly payoff behavior chosen by the card companies or the financial regulators?

        • wright_is

          In reply to karlinhigh:

          The monthly payoff is, AFAIK, set by the regulators. It certainly applies to every bank I have ever had to deal with. Even if you take a third-party credit card, it is still directly linked to your bank account and they take the full amount. In fact, my daughter is with ING Diba and the credit card there usually takes the money out of the current account within about 48 hours.

          As to merchant fees, I believe debit cards are markedly lower - the only report I could find quickly is that credit cards are 0.3% and debit card 0.2%.

          Up until a few years ago, it was very uncommon for anywhere, other than hotels, restaurants and gas stations to take credit card. When I had to change a tyre on my motorbike, when I still lived in the UK and was visiting friends in Germany, the tyre handler looked at me funny, then through my friends translation, informed me that they didn't accept credit cards, I'd need a German bank card or cash...

  2. cayo

    I live in Canada. Wife and I use cash or debit only if credit cards are not accepted. Now let me barber is cash-only, for everything else there is Visa or Mastercard... We pay balance in full every month.

    We get 4% back on our primary Visa for all gas and groceries (yearly fee for this card is $119). For everything else we have a different credit card that gives us 2% back (and 4.5% back on travel). Yearly fee for this one is waived if you keep a minimum of $5,000 on your chequing account ($120 if you do not). This cash back is more than enough for two return tickets to anywhere in Europe every year. On top of this, these are 'premium' cards, meaning they give us free travel medical insurance, trip cancellation/interruption insurance, common carrier travel accident insurance, delayed and lost baggage insurance, rental car collision/loss damage insurance... To get all this for free, you just need to use the card to pay for the trip.

    It's not just travel. You also get purchase security and extended warranty protection. This means that your credit card doubles your manufacturer's warranty. If you service your laptop after 23 months...make sure to send the receipt to the bank. Also, if within 90 days of purchase you drop your new expensive smartphone and it breaks, or it is stolen...the bank will cover this as well...

    Anyone with a decent credit score can get a cash-back credit card, but you need something like $60,000 personal or $100,000 household annual income to qualify for one of these premium cards.

  3. Simon Flynn

    It's odd how much it varies between countries. I would never use cash in the UK for example, always just a contactless card whether debit or credit. When I lived in Brazil contactless wasn't very common but everywhere at least took card. Now I'm in Portugal and it's crazy how many places are cash only.

    I've never lived in the US, but just from holidays it seems like contactless cards aren't really a thing there?

    • infloop

      In reply to SimonF:

      Yeah, the US is fairly behind on card tech. We're still in the middle of switching from mag stripes to chip. And even then, for chip, sometimes the security is not implemented properly. I remember reading a couple articles on Ars Technica about this...I think some were written by Peter Bright (Dr. Pizza).

      However, it is the case that there are some merchants that support things like NFC in addition to chip, so payment options like Apple Pay and Google Pay are available.

      So it also depends on the merchant. Some take cash only, to avoid the fees charged by the card companies for every transaction.

    • wright_is

      In reply to SimonF:

      My general rule is, anything under 50€ gets paid cash, bigger purchases with card. Although I took the family out to a restaurant and paid for that cash as well.

      Occassionally I won't have cash with me and pay by card. Up until a few years ago, many places had a 25€ minimum for card transaction - below that amount, the card fees would mean that they would make a loss on the transaction.

      • karlinhigh

        In reply to wright_is:  many places had a 25€ minimum for card transaction - below that amount, the card fees would mean that they would make a loss on the transaction.

        I'm not understanding something... an earlier response said that fees were 0.3% or 0.2%?

        So 25 X 0.003 = 0.08?

        Even assuming 3.0% instead of 0.3%

        25 X 0.03 = 0.75

        If a merchant won't give 8 euro-cents to collect 25 euros, that's a whole 'nother level of German frugality. :) I must have lost some of that from my German ancestors 12 generations ago.

        In the USA, I'd be seeing several different rates possible depending on cards used. The high ones would be 3.1% + 0.29 per transaction.

        25 X 0.031 = 0.78 + 0.29 = 1.07

        • wright_is

          In reply to karlinhigh:

          A few years back, the rates were much higher and companies just weren't willing to sacrifice already very thin margins on card transactions. It was only after banks sank the card transaction rates to their current level and increased the charge for paying in cash for businesses that many started to accept cards for smaller transactions.

    • cayo

      In reply to SimonF:

      Contactless is what most people in Canada use for purchases below $100. I use Apple Watch (and tap to pay" also works for transit).

  4. Bats

    People should be paying in plastic (credit)....PERIOD. 

    The other plastic (debit) is a WASTE. It really is.

    To be honest, I hardly do pay with in handing to whoever my credit card. Rather I pay mostly with my phone or my watch. LIFE IS JUST EASIER, when everything is one place. For me, it's my Pixel phone. 

    Going back to credit cards...

    People should be using credit cards to make purchases and paying them off immediately. Yes, it can be a hassle to do so, but the benefits and positives seriously outweighs the negatives. LOL...I have 15 credit cards. The average balance that I carry for each of them is zero (0). I haven't really counted how many points and miles I have for all my cards, but it's perhaps about a million. LOL...I'll tell ya this, I am never flying coach again. For me, the minimum is always going to business class. If one is not like me and doesn't care to fly or travel in pure luxury, then at least use your points and miles to get free flights. 

    As for Debit Cards, they are a big time waste. You get nothing back for all your purchases. Absolutely nothing. My advice to people is to grow up and be mature and obtain credit cards. Don't let anyone tell you that getting and using credit cards is a "trap." Maybe it is, so.....don't fall for it. Use the credit card and pay it off right away. Then your set your phone up to make payments just looks so cool paying with a phone (or watch). 

    Bats out.

    • wright_is

      In reply to Bats:

      It depends on where you are, over here there are no advantages to using a credit card. It doesn't bring anything, other than delaying the transaction being removed from your current account.

      Debit card is much better. The transaction appears within an hour on your current account, so you always know exactly how much you have left. With the banking app on the phone, I make a payment with that and it appears instantly on my current account.

      The other positive is that the banking app works with any Android phone with NFC and any NFC enabled terminal. GooglePay is still not widely accepted and ApplePay has only been around for about 6 months and is only available through 2 national banks (non of the big, common banks are supported) and very few merchants accept it.