> "of course, [the Germans] attitudes toward currency must owe something to Germany’s tumultuous monetary history. During the Weimar-era hyperinflation that peaked in 1923 [...]"
> "the German tendency to settle up in cash undeniably reflects the fact that for much of the last century, Germany has been either on the brink of, in the midst of, or struggling to recover from, disaster."
As a German I call that theory into question. Our currency has been stable for 60+ years. It would've been nice if other countries with recent disasters (war, hyperinflation, sanctions) and their attitude toward currency was compared against.
Your economy is much more stable than mine in the UK yet anecdotally I've observed we use cards to pay for everything. Even silly little things that only cost a couple of £.
In fact it is rare that I ever carry cash. The same is true for a fair number of my friends and family as well.
But otherwise I'm in the same boat. Amex for everything I can possibly use it for, Visa for places that don't take Amex, Visa debit when I'm under a CC limit.
Finding an operating cashpoint late at night isn't especially easy either (and the reason most are shut down is that operational ones tend to attract muggings). It's a pretty practical system IME; having a payment method on you is no harder than having cash; indeed in this age of phone payment it's easier.
Same here, though I think a lot more recently than a few years ago because of the growing ubiquity of contactless options which are very convenient for those small payments. Is that payment option as common in those countries at this point?
I'm pretty sure I used my UK (debit) card, the other day, to pay for something absurdly cheap - maybe 49p? I was about as surprised that they accepted it as I am when a shop requires me to pay a huge minimum - e.g. £10 - and it's not quite as straightforward as "big shops do this, small shops, that".
The "I only have my debit card on me. What's your minimum spend" conversation used to be annoying. Thankfully that's been less of an issue since contactless as shops now often expect you to pay for small items on card.
Contactless is wonderful, especially now the receipt for smaller items is effectively being phased out; couldn't the receipt-handling just get handed over to banks, ultimately? That could be really useful...
I still use cash, probably more than the average. There are just a handful of situations - paying for a newspaper, or at my local bakery - where it feels more 'natural' to me to use cash, but I'm sure that feeling will go eventually!
Did you learn about the inflation @ school? In the UK we weren't taught about the Weimar Republic's hyperinflation (in education up to 16 y/o). My friend who did history @ a more advanced level was, however.
Yes, I learned about the Weimarer Republik and it's economic issues in school in Germany. (I guess it was in 8th or 9th grade and that history class was mandatory.)
Looks like the Bitcoin laws are v favourable in DE. You can pay taxes in BTC(!) & BTC is a unit of account[0]. That makes sense if the memory of WR hyperinflation is written to the citizens' mind.
You can't pay your taxes with Bitcoin (the Wikipedia author probably means something else?). You can't even pay most tax in cash even if you wanted to. Bank transfer in EUR is the only way.
Debit card is pretty equivalent to cash, though. When my friends and family from my hometown (Istanbul) visit me the first time, they are usually quite shocked that most shops here do not accept credit cards at all. In Turkey (a place I call micro-USA), many credit cards automatically divide the payments for some transactions to 3+ months, whereas here in Germany, there's always some bureaucracy involved, even if you explicitly ask for it.
11 years ago, when I was living in Istanbul, I had bought bread from a supermarket and I paid with my credit-card, vendor of which had a deal with that supermarket-chain and automatically divided the payment of the bread to 10 months. If I remember correctly, they later banned the postponing of the payment of basic goods because it was getting ridiculous.
Not really. Debit cards are debit cards, not cash. You are comparing CC to DC as far as I can tell, but they are completely different products. There is a huge difference between having currency in your hand or use a medium to access money held by the private organization that can go bankrupt (and this happens much more often than, for example, governments with their currencies).
When paying with cash you are also only exposed to the risk of loosing what you have on hand. A debit card is a bit more akin to handing over the key to the vault with a contractual agreement as to how much can be taken.
Are there banks that provide credit card-like protections for debit cards? I thought you couldn't reverse debit card transactions. There are usually daily limits, though, which would limit how much you could lose.
I haven't had this problem with my bank just pointing out the inherent differences. With a debit card you are relying on the cyber security and data retention policy of the store, the bank, and the electronic network provider.
Now I realize that if your account is used without authorization most banks refund the money. This can take a certain amount of time and could lock up your remaining funds in the meantime.
Less than a month ago my card details (the magnetic stripe) got swiped. However my bank noticed the funky payments, automatically detected the issues, temporarily froze the card. Then when I noticed it didn't work and called them they temporarily locked up the card for a single use, and then blocked it permanently and sent out a new card.
I noticed it on Thursday, I had the new card and all unwanted transactions rolled back on Monday.
This for a debit/Visa hybrid card, which acts as Visa out of country and on the Internet.
Also, the bank requires me to temporarily unlock the card for 'unsafe' Internet purchases before usage, which basically is all purchases that don't involve 2FA.
The laws on liability are very different in Europe and the US. In the US a stolen card is the bank's problem. In Europe it is the consumer's problem. This difference in laws is critical to this discussion, both sides are saying "you are wrong" when in fact both sides are right in their respective country and wrong in the other.
This may be so. I often wonder though if this "disaster recovery plan" has been tested with any bank of significant size. Maybe that's where the whole too-big-to-fail thing comes in.
Depends what you consider significant. The UK's Financial Services Compensation Scheme, which handles depositor protection, paid out over 26 billion pounds in the 2006-2011 period.
At the same time, though, the govt did push Lloyds TSB to take over HBOS in 2008 rather than let the latter fail.
There is a distinction only if you mean holding all your cash in your own safe, when you say "cash". You will need to get a bank account anyway as transactions of a certain kind and size (like getting your monthly wage and buying a car) need to go through a bank.
There is zero practical difference if you withdraw from an ATM every other day or more often, so you can pay cash.
Some relevant info: In the USA average consumers are protected by the FDIC for the balances of their deposits up to $250,000. A large number of banks have consumer liability limits in place for protection from fraudulent charges on their credit cards.
>There is a huge difference between having currency in your hand or use a medium to access money held by the private organization that can go bankrupt (and this happens much more often than, for example, governments with their currencies)
From some aspects, yes. From others (no interest in purchases, directly reducing one's account balance, etc) they are the same.
>There is a huge difference between having currency in your hand or use a medium to access money held by the private organization that can go bankrupt (and this happens much more often than, for example, governments with their currencies).
Still not often enough to matter, especially since the cash one has at hand will be a limited amount anyway.
It's not like having $100 or $300 in your pocket to buy things (as opposed to using a debit card) really protects you from the "private organization that can go bankrupt", when the large majority of your money will be in some bank anyway.
Except if you propose we keep all our money in cash at all times. This has other issues, not just a government going bankrupt, but inflation, theft -- and those things are much more common than a bank going bankrupt.
I've never heard of anything like the dividing of payments you're describing. Are you saying that the CC company doesn't pay the merchant all at once, by default? That seems really shady. They should either have enough capital to pay the merchant in-full right away, or they should pay the merchant the interest they're collecting from the buyer if they buyer isn't paying the CC bill in full each month.
The bank pays the full amount immediately, unless they have a special agreement with the seller. You get different treatment according to your CC provider. Here is an example: http://www.gold.com.tr/BankaKampanya.aspx (Turkish). "Peşin fiyatına 3 Ay taksit" means "3 months payments without interest". They usually inflate the price beforehand to account for such payments, so you are disincentivized to use a debit card or to pay in cash. Such tactics are fought against by the national banking organization but they always find another way (like having ridiculously low, "symbolic" interests for specific sellers/goods). The whole situation used to be grim when I left Turkey many years ago, but I don't imagine it being better now.
Ah, I see. In the US a common marketing offer for credit cards is that they let you make one charge that will be interest-free for 6 or 12 months. You can pay it off whenever and however you like, but if you don't pay the whole thing before the deadline you'll owe all of the interest for the whole period. They make money off of this two ways:
1) People forget to pay it off before the final date. They're not always clear about when that date is; you know exactly how long it's been since the charge, but you don't know for sure when your payment will be applied. It's best to pay the total off at least a month before the final date, to be sure it's paid during the billing cycle before it is due.
2) If you use the card for anything else, there's fine-print that says that any payments will go towards non-promotional charges first. It can get very difficult to determine if you've paid the promotional charge off or not, and they typically do not assist you in figuring that out.
They also benefit from extending you more credit than you need for the one charge you want to make, especially since you're unlikely to use it in order to avoid trap #2. And they benefit from having an additional customer on the books. I'm sure these benefits make them money somehow too.
Exactly, I mean, maybe it's not clear from my comment but it was very hard to calculate how much disposable income I'd be left with after the monthly payments. In the statement, you see how many payments left for each transaction but when you buy practically everything like that, one would need dedicated software to figure out his/her financial situation.
The Turkish payment system really is an eye-opener for its sophistication. I used to work in credit cards and did a study tour to Istanbul in 2004 to see it first hand and talk to both merchants and the issuing banks.
One big difference in Turkey is many shops had 5 or more card terminals, each in the colour of the issuing bank. Banks competed for both merchants and consumers by offering value-added features unique to their terminal, such as instalment credit instantly accessible to only their customers.
Instalment credit was popular in Turkey following the economic crisis in 2001 (3000% interest rates) because many people simply didn't have the cash to pay up front for major purchases such as whitegoods or even shoes.
In most other countries, shops have only one payment terminal, supplied by the acquiring bank (acquiring = acquires payment transactions, as distinct from issuing = issuing payment cards to consumers). That terminal has to support all cards equally, using the base Visa/MasterCard standards. Hence there are no value-added payment options.
Yeah, what a silly theory. Not once have I thought "oh, gee, I better not pay with CC because remember what happened back in the 20s/30s". And yes, you could argue for some sort of cultural trait that stems from that time, but I don't know anyone who pays with cash because they inherently distrust the financial organisations.
As very few Germans even have credit cards, most Germans pay online (if they don’t use PayPal) via SEPA wire transfer or SEPA ELV. And even PayPal and Amazon support using SEPA ELV to pay for stuff.
Was waiting for this comment. I often ask myself, "Do I want any entity to have a copy of the exact dates and amounts of my entire daily consumer activity?". Whether anonymized or not there is a tremendous amount of knowledge that can be gleaned from non-itemized debit card ledgers.
But if banks wanted, they could actually track the serial codes on the bills around. And since often cash is used in only 1 hop (so ATM -> you -> shop -> bank) they could know pretty well where you spent your money.
E.g. about China: "According to schedule, by late 2015, the serial number of every Rmb100 note withdrawn from banks by members of the public can be traced."
> But if banks wanted, they could actually track the serial codes on the bills around. And since often cash is used in only 1 hop (so ATM -> you -> shop -> bank) they could know pretty well where you spent your money.
That doesn't include how much you spend exactly. And it only works most of the time (what if my money gets used as change for another customer?).
Also, been a couple of times in the situation where either the shop's card terminal was malfunctioning, or the bank had some issues, and the card payment was impossible. Without cash you'd be helpless in such a situation, whereas cash = power & independence.
No, the companies pay the cost of handling cash as well.
There's the labor costs of handling cash - counting it, moving it, organizing it, accounting for it, making sure there's enough change to run a shift; the cost of storing and transporting it - safes, cash draws, key management, money transport/money transport companies; and the cost of loss due to theft, mistakes, and mismanagement.
I'm not saying that the cost of cash is more than the cost of card, I'm simply saying its not anywhere near free.
>But new research from Tufts University aims to highlight the pain points of cash, where digital currency can break in. The use of physical bills costs US consumers, businesses and the government at least $200 billion each year—about $1,739 per household. Here are the main reasons why:
>Small businesses don’t lose much money by operating cash-only. But larger businesses spend a significant amount of money dealing with cash—collecting it, sorting it and getting it to the bank without it being stolen. US businesses lose $40 billion a year to cash theft and loss, about 1% of total revenues.
>larger businesses spend a significant amount of money dealing with cash—collecting it, sorting it and getting it to the bank without it being stolen. US businesses lose $40 billion a year to cash theft and loss, about 1% of total revenues.
As an american, I find it strange that cash is faster. Most people who pay cash need to wait to get the change back unless they know the total beforehand and happen to have exact change. In the US, credit card machines are very fast even the chip enabled ones.
Cash workflow:
- Cashier tells you the total amount
- You look in your wallet/purse
- You spend time counting exact change if you do have it
- If not, you take out a rounded bill/note (say $20)
- Cashier takes the bill/note, punches in the register and then spends a few seconds giving you the change back.
You missed the part when they are in holidays in Europa or Asia and realize that American whatever credit card is usually not accepted and they begin shouting at everyone what kind of third world country this is.
But Germans don't trust contactless payment because in theory anybody could hold a card reader against your wallet while you're innocently waiting in some line.
But why would they care? Stripe does payments every 3 days or so and you can easily create more accounts. I never ever checked my credit card history, and I assume many people who only use it as secondary payment system don't. It's easy as fuck therefore IMO a valid scenario.
The defence against that for me is that I have like 6 rfid enabled cards in my wallet, between my Oyster Card, student ID, library card, key card to access my work building, you can't scan any of them without taking it out individually.
I carry two contactless cards: the metro pass and an office key. They are just taped together (because I want to make sure I always have both) and still reliably work, so I doubt you are protected.
I tried to use android pay for a few months. In theory its great (and it's great when it works!) but like 30% of the time it doesn't really work the first time, you have to play around with it on the card reader. Then the phone vibrates like it worked but nothing happens. You look at the phone and it says "please hold the card to the reader again." and despite Subway accepting android pay (and the cashiers insisting that it works for everyone else) whenever I try to use it there I get a message "please insert card." I was never able to figure out the workflow to get it to work on a vending machine. Also the first time I used it I froze the register.
So 70% of the time it saves time and 30% of the time it wastes time. Then I broke my phone and bought a replacement without NFC so I don't have the option anymore anyways.
It's a great system, however, I think the kinks need to be worked out a little.
Contactless debit cards are a lot more reliable than phones, mainly because they have one unique job. My card plays up now and again but that is only since it went through the tumble dryer, which distorted the card and seems to have affected the reliability of the NFC chip, in practice this means I sometimes need to tap twice.
They do have PINs, just most people don't know what they are. You can use the PIN to withdraw cash from an ATM at a ridiculous interest rate. I recently was using my credit card in Iceland at a gas pump where I was prompted for a PIN.
Almost all credit cards are 0 liability to the consumer. Even if someone gets a hold of my card, I can call the credit card company and get all fraud charges reversed. That's why I personally always use a credit card EVERYWHERE. I hate cash and I hate to wait in lines. But sure, they have an electronic trail on me which frankly, I don't care too much about. If the Govt wants to get you, they WILL get you.
"Almost all credit cards are 0 liability to the consumer. Even if someone gets a hold of my card, I can call the credit card company and get all fraud charges reversed."
That's true only if you or the credit card company notice the fraudulent transactions and act on them within the limited grace period, which I believe is something like 3 months.
Many people don't actually keep their receipts or reconcile them with their credit card statement. So unless they get an unexpectedly huge credit card bill, they might not even notice that they were victims of fraud and in that case the "0 liability" credit card policies are worthless, because they get defrauded anyway.
Americans are used to entering PINs on debit cards, but not credit. However, in my recent experience in Iceland & Germany, most POS don't ask for a PIN on credit transactions either. The only time I was asked for a PIN on a credit card was at a gas pump.
This isn't shocking if you understand the different legal context around credit cards in the US.
Historically if in the US if someone gets a hold of your card, if I report it as soon as I know there is a problem you are legally out $50, and the credit card company and merchant has to eat the rest of the loss. In most cases the credit card companies figure since they have to take the rest of the loss they may as well get the customer service points by taking that $50 as well. As such it is only a minor inconvenience if someone gets a hold of your card, most of which is related to waiting for them to mail you a new one. Because of this people don't care about chip and pin being more secure: security was not their problem. This is also a factor in why the US is much more likely to use a credit card: there are no anecdotes about someone losing a lot of money because of their card.
By contrast in Europe you were liable for all amounts charged on your card before you report it, even if you had no way to know about the charge. Since the credit card companies didn't have to take a large risk they typically didn't agree to take it on. As such a credit card is much riskier, and so it is prudent to not use your cards if you have a different option. When chip and pin came out consumers were interested because it gave them some ability to limit their loss: their chip/pin card could be lost without the potential of great loss.
Note that the above is historical, and like all generalizations is false in some way. Laws change all the time which means the current reality is probably different - but the historical reality is still shaping our world. Europe is not a country, each country in Europe always had their own laws which differed in some way from the next.
In america prices are always cent-specific (2.85, 3.78). Berlin, much like Argentina (cash strong markets) have rounded prices for everything, its actually much faster. What ist errible is the waste of time going to an atm frequently, or handling lots of petty coins or bills.
One thing I like about Square from an independent merchant standpoint is that I can mark that an item's price should be considered to include all relevant taxes & fees. This allows for listing prices in round increments. This is more helpful for cash transactions because most people only cary bills so I mostly only have bills to hand back as change. It is easier for me to deal in whole dollar or at least quarter increments so I never have to worry about pennies, nickels or dimes. For cards, I can charge arbitrary amounts and it doesn't affect me or the customer at all. Granted, you have to do a little math up front for each item to ensure you're getting the right profit per sale, but it's negligible to the amount saved by not having to count change.
"Hide" as in "the calculation is done in multiple lines on each receipt with the amount of VAT clearly spelled out"? Germany has some hidden taxes in the supermarket (on alcohol, tobacco, and coffee) but VAT is absolutely visible.
VAT is part of the itemized receipt. More importantly, as the parent says, advertised prices must include VAT. This is different from the US, where sales tax is added as a last step, and advertised prices are always excluding tax.
That's rarely the case. I can only think of dm (a drugstore) which rounds all prices in 5 cent increments. Otherwise you see a lot of prices ending in 8 or 9.
Yes, dm's prices are great. That's one of the reasons why I prefer it over Rossmann and Müller.
Also, there are several chains (Netto, Rewe, Kaufland, etc.) where you can round up your total to the next-higher multiple of 10 cents, and the difference goes to charity. I always use that if possible to avoid Buntmetall (i.e., 1/2 cent coins).
Cards used to be more convenient in the US. But once they started putting in the chips the verification process takes ages. I can complete the whole transaction in cash in the time it takes the chip reader to get itself sorted.
In a German supermarket there are two notable differences:
People pay with rounded bills most of the time, cashiers are fast at returning change (amounts are usually a single cent below the full euro for each item, so change isn't a big problem).
The credit card workflow requires you to sign as well (or alternatively sometimes your pin if it's a debit card). Also, no swiping, only chip readers.
So in essence, taking out the bills is comparable to taking out your card, and the question is whether signing/entering pin is faster than the cashier giving you your change.
Of course occasionally you will pay in exact change, but that's balanced out by all the times you have to insert your card a second time, followed by trying another card.
NFC payment has been rolling out more and more over the past couple years. Edeka is probably the biggest exception, I'm waiting very impatiently for them to catch up.
Edeka is (despite its appearance) not a chain but just a common brand used by lots of independent merchants without many rules[0]. Some Edeka stores therefore introduced contactless payments years ago, some never will. Best is to talk to the owner (they usually just have one or a few stores) – I have been successful with "mine".
[0]: In contrast to e.g. Rewe which is also mostly operated by independent merchants but has strict rules for those.
Further to this, I've actually found in Canada I use Android Pay more and more often now that it's available. The whole country is shifting to contactless and it's incredibly useful to just be able to pull out my phone and make a purchase.
It's faster, and the app gives a list of the purchases you've made with a card, so I can track what I'm spending relatively easily. Unfortunately, there are still lots of stores that haven't upgraded to contactless yet, which means I can't rely on Android pay for the time being. I can see this being much worse in Europe where contactless payments aren't implemented in many more places than here in Canada.
A) there is a risk as everyone can create a stripe account and buy a charger. Personally I would never notice.
B) every transaction creates costs. Some visible (depit charging fee) some hidden (credit transaction fee)
C) At least in most of Europe it is far from widely supported, even thought it's growing for a while now. Except you stick to the most touristy places that is. In south east Asia I haven't seen it at all except in tourist focused places.
> A) there is a risk as everyone can create a stripe account and buy a charger. Personally I would never notice.
Personally, the convenience of: not having to wear a wallet at all (I just carry the card in my pocket) and not having to deal with coins, negotiate if I'm paying a big bill etc. is just amazing. Even if someone steals $10 from me once in a blue moon, it's well worth it.
For me it's a different world anyway. Currently I carry about $300 in 4 currencies, a debit card and a credit card. I travel a lot and without a stack like this I would have been stuck many times.
The credit card never really saved me. It really just is there to make life a little easier.
I just got back from a four-country trip (3 currencies) and having a credit card was very useful for hotels and car rental places that want to "pre-authorize" charges (often 250 EUR or more).
When I tried using my debit card and they ended up taking the money and then refunding it over a week later.
Good point. I don't drive car but in western countries I basically had to pay the bikes worth as deposit because I didn't carry a credit card. Plus this was seen as super unusual (even having a this high euro amount on hand was seen as suspect)
I can't even count the number of times I've been stuck behind someone in Rewe, waiting while they scrounge around in their purse or wallet for those final few cents. It is far from uncommon, at least where I live.
You're right about the cashiers though, they're super quick.
The good thing about the card is that you hand it over, and while the reader is talking to the bank you have a few seconds to continue packing your bags. I've simply found it flows better with card every time, as long as you remember which checkout has the dicky card reader that needs 3 tries.
I've never lived in Germany, only visited as a tourist a few times to several different cities.
I've never had to sign in the last couple of years when using my credit card. Fewer smaller shops would take it than in the UK, but otherwise I never noticed any difference.
It comes down to the card, not store. Many German cards require you to sign (actually stores bypass the card entirely and just use it to read your account number and make you sign a SEPA direct debit mandate).
Plus, when paying by card even if you dont want a receipt you need to wait for the merchant receipt to be printed out before the transaction is complete. With cash if you dont need the receipt and pay the correct sum you can be on your toes.
You actually have support for contactless and thusly Apple Pay in a load of places in Berlin, people just don't know about it. The look of shock on the clerk's face when I insisted that yes, I can pay by waving my phone.
I find the workflow with the new chip cards much less convenient to the point that I'm starting to prefer cash or Android Pay if it's available. Even though I lose the 2% cashback bribe.
Which card is that, that takes away the incentive? I use Apple Pay pretty frequently and still get my cashback rate, or double points incentives on the cards that I use.
Among others the Citi Double Cash, earned in 2 steps:
1% earned when spending
1% earned when paying the bill
Cashback is not immediately applied to the balance so it's actually 2% and not something like 1.9999999. No annual fee but it's not really worth it to apply for this card per se, better to get another card that comes with a signup bonus (this one never does) and "product change" it to this card by calling in.
Not only that, but you also have to either carry your small coins around so you can use them up or you have to collect them and then redeem them all for bills or deposit them. This is a royal pain. I have so much change lying around the house that I haven't bothered to count and redeem.
On the other hand, if you use credit cards, you would ideally be keeping receipts and then reconciling them to the statements you get from your credit card company to make sure there's no fraud and no errors in billing. Some people have the discipline to do that, but many don't.
With credit cards it's easier to overspend. Not only can you perhaps too easily borrow more than you have in the bank with a credit card, but temporarily giving someone a card that you get back right away or giving them a credit card number doesn't have the same psychological impact as permanently and irrevocably giving someone your hard-earned cash. So people are tempted to spend more when using credit cards.
Finally, there's the issue of being tracked. When you use credit, at the very least the credit card company knows where and when you shop and possibly what you buy. With cash you could have more privacy in this respect.
Every evening I put all spare change from my trouser pockets into a large glass jar next to the door. Once a year I reedem the money and have a really nice dinner.
Do you count the change before you redeem it? That is a huge time-suck for me, and I hate doing it.
Also, I feel really bad for the cashiers that are unlucky enough to have all that change dumped on them and are forced to count it all. Some banks have change counting machines, but surprisingly, many don't and the change is still counted by hand while you wait.
Are you serious? If you take it to the bank, they have change counting machines. Depending on how much you bring in, it takes about 1-5 minutes for the machine to count. In the US we have a company called CoinStar that has kiosks in every major grocery store chain which does the same thing. They take a small percentage, but we're talking about coins here, so it's probably less than a dollar per transaction.
Exactly. I'll continue to use my card whenever possible to save at least 2% on every transaction. But this comes at the cost of getting my CC data stolen from shitty POSs 1-2 times a year. Small inconvenience, but worth it.
The merchant fees do fund a substantial portion of the rewards programs for cards.
However, there's a pretty large market for credit/debit card transaction data. Even Google purchases it[1]. Both your credit card company and the payment processors/networks themselves are able to monetize this data quite effectively. And the more complete people's transaction histories get the more effective this data becomes for different uses and the more the companies can charge for it.
Depending on the demographic a particular card is able to capture, the transaction history may be valuable enough to run the rewards program at a loss or break even when looked at purely from the merchant fees recouped.
Chip cards in most places in the world require a PIN. It's only the US where (I've ever seen) chip-and-signature (which is a horrible and flawed implementation).
In Germany credit cards are very uncommon. We use debit cards, many places don't accept credit cards (but debit cards), some places accept only cash. Paying with a credit card also has a fee while paying by cash or debit cards is free.
in the glorious lands across the ocean, chip cards of all kinds use a PIN instead of a signature, which makes way more sense anyway. Chip & sign is an American abomination.
Is this something that only triggers above a certain threshold? On the east coast, whenever I go to the grocery store, its just insert chip and press ok. I've never had to sign or enter a pin.
No, everywhere else in the world (basically) it's chip-and-PIN. In the US, it seems to be chip-and-signature (which defeats one of the biggest benefits of chip cards).
When I was in Seattle at a restaurant trying to pay, the owner told me that they also couldn't accept tips if they used chip cards. I thought she was BSing me into paying cash but she tried to swipe the card instead so that I could.
It's amazing how, in the US, even the implementation of new technologies is broken and awful.
This is called "expedited checkout". This is a merchant option to help speed up the checkout process. However the merchant is then taking all responsibility for fraudulent transactions.
In the US, the credit card security comes from the vantage of "it's quite literally.... not your money". If there are any failures in security, the bank pays, thus ease of use is of greatest concern to the consumer.
In the USA, its rare that you'd have to sign for anything under $20.
I think maybe this is a cultural thing. In Europe it seems people associate "credit" with "being in debt" which of course isn't (necessarily) true. It just means someone else is on the line until you reconcile, and this is the beauty of credit cards – they make it tremendously easy to safeguard your own money. Just make sure to pay off the bill at the end of the month and everything is solid.
Because of this, credit cards in Europe tend to not have the same great benefits you can find on cards in the US. AMEX is pretty good still, but there isn't exactly tons of competition in the credit card space here.
I love signature, because I play the credit card sign up game. Hard to remember PINs when you open a card a month.
Also because if my card gets stolen, I'm assured that my pin wasn't lifted by camera or keypad shim. The signature will be not present or not mine on fraudulent transactions, so I can tell my card issuer to fix it and not worry about them telling me I had "poor PIN security" or that it was somehow my fault.
Because credit card companies offer incentives to sign up for their cards. A lot of people here regularly carry a lot of debt on their cards, and the credit card companies know if they give those users more cards to juggle around their debt on, they can leach more money from them.
For financially responsible people, that means you can sometimes get a few freebees if you're willing to deal with the hassle.
I don't know what it's like in most other places, but debt is a weird part of culture here.
I'm British, and while some people have credit cards, most people I know don't. I have a bank debit card and I use the single card to pay for pretty much everything I don't pay for directly with cash. I have zero debt, because I always pay up front for everything.
I do get lots of junk mail for credit cards, have done for decades, so I could get one tomorrow if I desired. But I don't see any real value in doing so; why get into debt if you can avoid it.
I use a (n.b. singular, not multiple) credit card from AMEX for the benefits. (Particularly excellent travel insurance and car rental benefits.) I make sure to never spend more than I can pay off at the end of the month, so that I don't actually ever get into debt. My own money is resting nicely in a bank account until the credit card bill arrives.
I never spend my own money directly unless I have to (e.g. the merchant doesn't accept AMEX or only takes cash etc.) because should I end up with fraudulent transactions or lose my card or whatever it may be, I have actual cash to back it up.
If you're fiscally responsible and make sure to always pay off the bill at the end of the month (with all that money you didn't spend) then credit cards are pretty much nothing but benefit. There may be a yearly fee associated (my card has one) with it but I've found it to be worth it for the benefits alone, but I also rack up so many points that I can use those to pay for the fee.
I have a credit card from Luxembourg that is somehow set up to ask for signature, even though it can do PIN just fine, and I really don't recommend this setting in Europe, it's a massive pain in the ass since most merchants aren't equipped to deal with that. You end up having to sign the merchant's receipt with a pen like you're back in 1970, it takes a lot more time than entering your PIN (or better yet, contactless without PIN these days).
(And I did complain to their customer service, but they won't change the setting).
Depends on the country, in many EU countries I find chip+sign payments to be way faster than chip+PIN. Every now and then you run into a cashier that gets confused by chip+sign, but not often enough to justify switching back to chip+PIN in my experience.
- Cashier gives you the total
- I pull out the bills I have and find the best denomination
- I get a bunch of change back I have to stuff into my pocket along with my bills while getting my stuff out of the way for the next person
Credit card workflow:
- Cashier tells you the total
- You say "debit" or "credit" and the cashier pushes a button on the register
- You pull out your credit card, touch it to the machine, and then put it away and start packing up your stuff to leave
- The machine beeps and you leave
Far less fuss, far less opportunity for dropping change. Simple and efficient. I have my card out, tapped, and back within 5 seconds and my transaction is complete, and I never have to worry about if I have enough or too much.
But you left out the step of having to get the cash money into your pocket to begin with. I haven't touched cash in many years, but back when I did use cash it was always a pain having to go to the bank, or an ATM, or remembering to ask for money back once debit cards became a thing.
funnily I often get my cash when buying groceries.
I pay with my banks card (not a credit but a debit card) and then ask them for cash on top of the groceries. I am often the only one paying with a card if any kind though.
that way i have cash for all the things were paying with a card is frowned upon in germany:
- eating out
- going on a fair
- getting ice cream with the kids
- going to the public pool with the kids
- giving kids their allowance :)
and other things of that nature
PS: Since cash payments make it difficult for marketers to 'understand' their customers there are a number of cashback card systems like 'payback' in germany which try to get people to identify themselves.
I agreed. Paying with card is fraught with slow terminals, bad card readers, many prompts in a row (Credit or debt, is this the right amount, do you want to donate $1 to something, do you want it all on one card, would you like to sign up for a store credit card, do you want cash back, how much, do you want a receipt?). For some reason, these all have a 2-5 second delay between them. I could make a system on a $2 arduino that was faster.
Some places like Starbucks seem to get it right. Swipe card and go.
Target however likes to hit you with all the options. Self checkout is even worse.
- Since I was watching the register display, I already have a rough idea how much this will be, and I have prepared the bills to hand over.
- Cashier gives change and receipt
- I walk away, and after I'm out of the way, I put the change into my wallet.
- Done
Similarly, credit card workflow (American):
- Cashier tells you the total amount
- You insert in chip reader a card you already had out
- You sign, sometimes
- You wait 5 sec for transaction to finish
- You put card back in wallet while receipt is printing
- You put wallet back in trouser pocket while receiving receipt
- Done
The time spent on these is very, very similar. Being prepared with your form of payment and dealing with putting away the results (change, card, receipt) after you leave the line results in a very similar time. Signing (or pin) and waiting on the transaction takes a comparable amount of time to the cashier counting your payment and making change. In each case, less than 15 seconds, and at that point, who cares?
Around my area in the Northeast of the US, Apple Pay is becoming ubiquitous. I just put my iPhone near the reader and use touch id. It takes seconds at most and I don't have to expose my wallet to would-be muggers.
Credit card workflow in Australia for anything under $100:
- Cashier types in the total to the EFTPOS terminal
- You get your wallet
- You remove your card
- You tap your carda gainst the contactless reader, which registers the payment in about 1 second not 5 as you describe
- Cashier asks 'would you like a receipt for that?'
- You say 'no receipt, cheers mate'
- You put your card away
- You put your wallet away
If you pay over $100, you enter a pin and it takes maybe a little longer because no one crowds around each other at the payment area so there's none of what you describe and it always works despite the humidity you apparently describe.
As we don't have a tip culture, we don't see donation/tips/etc. prompts as others describe. It's only ever whether you want a receipt, and that's a single button press and you can pre-emptively say no to that so it doesn't even slow you down. Cash definitely takes longer here.
but you have to have a credit card that does that :) I for example don't have one, even though I do have a credit card for travels.
Most Germans I know also don't want one because they usually cost extra money. And that is apart from the fact that the entire name 'Kreditkarte' -> credit card, implies one requires credit i.e don't have that money, not an easy sell here. Paying a yearly fee for having to look as if one needs credit :)
also its always a guessing game whether you have to enter a pin or sign. it seems a random distribution. same shop, same amount, sometimes pin sometimes signature.
PS: I am not saying its good or bad, just trying to give people a feel about some of us Germans
Where the hell do you live that people think you are broke if you pay by card? And even then, who cares. Also, in supermarkets or so, there is a line and most of the time I see people respect privacy... payment by card is certainly faster unless you know in advance the amount and you already have the money ready in your hands...
And I wish we could solves the coin changes from Cash.
I like Paper Cash / Notes. I dont like Coins.
Another Reason I like Debit Card or NFC Recharge Cards like those in Japan is that they actually require me Charge the card first. This action will live in my subconscious how much I have spend. I know this is an unpopular motive in US where they just want you to spend and spend.
And Getting rid of Cash ( The so call Cashless Society ) is like having less freedom in a what is already less free world then before.
At least in the five years that I've been in America, the credit card workflow is almost never like that. It's more like
- Total amt
- (After deciding which card is best) Get card out
- Swipe, but piece of shit card reader complains, so retry. Or insert chip, then the piece of shit card reader makes the same sound for "wait" and "remove", sometimes cauing confusion.
- Wait for piece of shit card reader to show up signature bar (or less commonly the cashier has to print out a receipt and have you sign it)
- Done.
I love credit card rewards though, but I'm not sure if it's a zero-sum game.
At the restaurants I frequent you can now either pay with an app on my phone or pay at a tablet/device that sits on the table. It is super convenient and so fast.
Numerous large restaurant chains in the US (eg Olive Garden) have installed small interactive screens at every table that act as a terminal, that do other things including take orders. When your meal is finished you pay by card at the machine and leave (it prints your receipt as well). I would expect this premise to essentially spread everywhere among non-fast-food chains.
In Europe, pretty much every restaurant, and many bars and cafés, have portable card readers. (If they don't, then they don't take payment at the table.)
There is no practical alternative, since the customer needs to input their PIN.
Dishonest waiters used to be considered a common way for card details to be stolen.
In efficient stores (e.g. Aldi in Germany and branches in Switzerland and Austria) the cashiers start taking the change into the hand the moment you say you pay cash. They do that up to the next bill and if you pay with a higher bill, picking up extra bills from the registry is really fast. Whereas with a credit card you put the card in, wait until the remote system decides if you should use your PIN or signature, then either put the pin in or wait until the cashier gives you the thing to sign and sign it. And if you're really unlucky the store has a system that looks you up in their customer database if you pay by card which adds another couple seconds.
The new contactless payment system is faster, unless the store does something stupid ... like wanting to do a customer database lookup before doing the actual transaction which one chain here in Austria unfortunately does.
I found the whole swipe/insert thing really painfully slow and paid cash all the time.
Now though we have NFC tap-to-pay in Canada and it's wicked fast in comparison to everything. No signature, no PIN entry, connections seem much faster.
I'm surprised it's not mentioned on other comments, but in Japan, the whole thing is automated. The cashier feeds the cash notes / coins into a machine, and the machine spits out the exact change. It's super-fast, even when the cashier counts your change in front of your eyes, and lays it out neatly onto a tray[0].
I wonder how come these types of machines aren't more popular in other countries.
[0] sounds like some super fancy concierge service, but it's pretty much standard, from 7-eleven to fancy stores
Pretty normal in Norway as well. Cashier feeds notes into machine, customer drops coins in coin machine. Usually pretty fast if the machine reads the coins/notes immediately.
That has turned out to be the comedy of the cash systems in the US. As I noticed the cash readers / auto change makers being installed in a lot of locations, it was just in time to rarely be used due to the shift to everyone using cards.
One factor that contributes to making cash slower in USA is the fact that the price displayed isn't the price you have to pay (because of taxes added at checkout time). You end up having to handle random amount of small change for something that ended up being $10.21 (but advertised as $9.99).
In most EU countries, the item would be priced at €10, you would pay with a €10 bill and move on.
You obviously have never been to a Home Depot or Lowes on a weekend and watched in abject horror how long it takes most people to navigate the pin pad to complete their CC purchase! The speed with which the transaction is completed is 100% dependent on the ability of the card holder to navigate all the prompts. At most stores I now have to wade through 4-5 prompts for input before my transaction is complete, this takes up to 30 seconds. This is nowhere near as fast as cash is if one is prepared and has their money out.
You're oversimplifying it. At some places (eg Subway), it was about 1 second timing for credit cards. At most stores, you would have to do things like say whether it was credit or debit, tell it yes/no to cash back, and tell it yes/no to whether amount is OK. All of them seemingly do it a different way. So, if you're used to it, the process might take several seconds. If you're not, significantly longer. Under Chip and PIN, you have that plus a several second wait in most places I go.
Cashiers with decent performance will take a solid bill like a twenty and give you back your change in a few seconds. If you want to give specific amounts of change, that adds time but so does when you split credit cards to put specific amounts on them. If anything, the cards can take longer since the transactions are separate. Wise users of cash also already have most of their money ready for payment by the time the order is totaled since it saves them time.
So, for most orders I see, the cash and credit take about the same time if customer is moving decent speed. The only difference is if the customer is moving slow for whatever reason (eg indecision or fumbling for stuff). That can happen with either but happens more for cash since credit users look for one item (the card).
I've talked to an Aldi employee as of late and he said Aldi is proud to now have the fastest Card processing of all the German stores (within the regulatory limits: you have to put in your PIN or sign the receipts except for those fancy/scary NFC chips) and the Cash workflow is still faster, according to their own statistics. Consider that I already look into my purse while standing in line to get an overview of my available coins and that the cashier starts to collect the likely change the moment they tell you the total amount. This speeds up the process considerable compared to the – likely more cash-inexperienced if I follow your description – American cashiers.
I can also second the opinion of many other commenters that the privacy implications of credit cards, especially the RFC ones which allow for invisible tracking, is a huge turn down of card payments in Germany.
And last but not least, as a developer, I gotta vent some air and complain that credit cards payments are huge pain in the butt, because of all those pesky special cases that arise from fraud prevention and risk reduction. Which isn't necessary for any sane payment method which can collect money directly from your bank account without the possibility of any charge-backs. This is one of the core reasons which persuaded me a European Fintech Startup Scene is necessary, so that Stripe with its CreditCard-centric API doesn't stand uncompeted.
I assume you talk about Aldi Süd? Their card handling is pretty fast and they can even start scanning the next customer's items while the machine is still processing. Aldi Nord on the other is hand is (while still faster than average) not particularly noteworthy.
> This speeds up the process considerable compared to the – likely more cash-inexperienced if I follow your description – American cashiers.
That doesn't make sense as a premise. The US wasn't lacking in experienced cashiers 15-20 years ago when cash was still king, nor today. There was a decade or more of time where the US rapidly transitioned from cash-heavy in stores over to card-heavy, the cards were universally faster unless the store ran a behind-the-counter swipe machine that the cashier had to use. The premise would have to be that in an economy with a super high GDP that has an extremely large service sector, America has especially slow cashiers everywhere (for no apparent reason given the extraordinary economic output overall). It's more than a reach.
Cash can be faster because you do know the total before hand since the price on the menu/price tag is what you pay. This is because there is no sales tax or tipping. Buying 3 items at HK$12 each? Your total is HK$36. If there's a queue I usually have my exact change ready before I'm to the front.
In the US, you can rarely tell how much you'll pay since sales tax varies by county or sometimes by city.
A side effect of this is weird totals like $23.76 that result in lots of hard to spend small change which also disincentivizes cash use.
- Tap phone (that's already in your hand because you were aimlessly swiping while standing in line) to terminal with finger on fingerprint reader while cashier is ringing up items
Here in Singapore they have started using automated cash machines the teller tells you the amount you feed it into the machine. The machine gives change. I use it for getting rid of all the coins once in a while and I don't have to count the coine just drop all the coins I have. If I drop in to much it I returns notes back if pposible. If the coins at a bank coin depositor they charge $0.01 per coin so if you are depositing at the bank you loose 10-20% for 5-10c coins.
On a short trip last month, I surprised a couple of merchants by paying contactlessly with my foreign (EU) card.
That's almost always faster than paying by cash, since there's no need to count the money or make change. The exception is when the cost is €20, and I can hand over a single note.
We have them in all major brand stores, all gas stations as well as all big supermarkets.
Depending on where you are people might not have seen wireless terminal usage (especially if you are far away from a bigger city). A cashier once tried to force me to sign the bill when I payed contactless without a pin or signature (which is possible in germany if the total is below 25-30€).
> Are contactless terminals widespread in Germany?
They are absolutely everywhere since last year more or less, but everybody (esp. cashiers) is always dumbfounded when I use it and it works. Also some of them try to handle your card for you "to insert it in the right way" and since my German is still rather basic I then have to weigh the potential time waste of explaining it's a contactless card with the extra 4-5 seconds for the chip transaction. But I guess that part doesn't really apply to locals.
("kontaktlose karte, nicht einstecken" but they don't listen the first couple times)
Some stores have fucked up the speed of it though by first checking for your store membership account on the card which ruins the flow of the transaction. Often forcing the whole thing to be repeated. It's infuriating.
I was actually pretty annoyed by my bank having issued me a contactless VISA card, but for a particular reason: I already have a contactless card for paying at the university canteen, but with the VISA card also in my wallet, neither the canteen's own terminal nor a merchant's VISA terminal can pick up its respective card's signal properly without having to take the card out of the wallet.
As a German
a.) I mostly pay by credit card because it is way faster. By using paywave you can pay instantly at all larger shops and supermarkets.
b.) The shops need to pay up to 1.7%. If you compare this against the time saved by not returning change and having to carry a money cassette every evening to their bank the saving potential is big.
I try to not use cash anymore, but fail to do so in smaller shops or at the hair stylist.
Don't you guys have paywave for under 25e purchases? Its literally 5 seconds to pay for anything. Literally no one uses cash in Helsinki. I can even use my phone's NFC as a payment option.
We have and pretty much all supermarkets accept that. Doesn't mean that cashiers have even heard of it (even pointing to the huge signs advertising that at the register surprises some) or customers are aware of it. It doesn't help that the national debit card scheme Girocard hadn't had working contactless payment until recently (which is the type of card most customers use).
a) That's a good joke. From faster to slower: NFC > PIN > signature > cash.
b) You should look into the real cost of dealing with cash. EC is stupidly cheap since it's basically the cost of a SEPA direct payment (we're talking 1-2 cents per transaction). Debit card payments can also be pretty cheap in Europe. All those annoying restaurants and small shops that take only cash do it to dodge taxes, not for any other reason.
Transaction costs for cash is probably higher than for credit cards.
For cash you have to count and recount that cash at the end of the shift, and then the bank counts are recounts it again. This is a significant amount of labor. By contrast with a card once the initial transaction is done everything is put into the computer electronically and no human has to look at it again.
Also cash is subject to theft. In some locations this risk is a significant part of the transaction costs - not just the cash, risk of death in the robbery. Electronic payments are subject to loss, but generally there is a trail to chase when it happens, and the possibility of death is much less.
Nobody to my knowledge has every measures the costs of cash, it is just something they accept. With credit cards it is easy to measure because you get a number, but with cash it is not, you have to calculate too many different parameters and figure out what applies where.
I'm pretty sure every single German supermarket chain measures that, it's just a requirement to operate at those margins. The Edeka cooperative published in 2012 that their all-in cash handling cost is 0.14%. The 2013 Steinbeis Cost of Cash study[0] estimated a much higher number of 2.7% for merchants. The truth is probably somewhere in between.
Such studies have also been used to arrive at the EU interchange cap.
The cash is counted by machines at banks, which I'm pretty sure almost never make an error doing so, and I'm sure it's less often than human counting error.
Margins in many businesses are razor thin in Germany. Which is the reason Walmart and others stopped doing business in Germany. For many businesses 1-2% transaction cost is the difference between success and failure.
But yes tax avoidance is a huge problem in restaurants in Germany.
How do they pay their employees if margins are razor thin? They'd have to operate on a huge scale to have enough profit to cover expenses and especially payroll. I would love to see a comparison of the balance sheets between some German and U.S. small businesses. Small businesses don't have the huge scale to live on a razor thin margin, so that's why I'm curious.
Germany doesn’t use the MasterCard or the VISA network, instead having an entire separate payment network, EC, which uses under the hood wire transfers via SEPA. This is the E in EMV (EC, MasterCard, VISA) which created most of modern payment infrastructure.
SEPA is the Single European Payments Area, standardizing how to process fast and cheap payments, all transfers are in Euro, from 2018 on also having a standardized API between banks, wire transfers are free or below 1 cent each, etc.
Thank you for explaining those, but I'm still not sure what they have to do with the "real cost of dealing with cash". EC and SEPA seem to be digital payment technologies, and therefore aren't dealing with cash.
Basically there is Rewe Dortmund (with stores across NRW) and Rewe anywhere else (including NRW). The latter requires credit card acceptance for all Rewe-branded stores. If a store does not have that, an email to Cologne usually changes it.
There's also Rewe and Coop (Sky, Plaza, etc) in Schleswig-Holstein, which have merged now, but offer different amounts of credit card acceptance.
And members of both have reservations against MasterCard and VISA, due to what happened with Rossmann a few years ago (Rossmann sold cuban cigars, as punishment MasterCard, VISA and PayPal seized Rossmanns funds and suspended all payments), but as EC was also bought by MasterCard and merged with the Maestro brand, currently there's no option but to continue on.
Personally, as member of both the REWE eG and coop eG, I'd support a move away from CC to any national or EU based payment system as soon as possible.
I know that there are some reservations but the rule the cooperative (including SH) decided as binding still stands. You are of course free to lobby internally for change.
Rewe has a fairly complicated legal structure, I'm not sure which you are a member of. There is no single "Rewe eG" which you can just buy into, especially not if you don't happen to own supermarkets.
EC was not bought by MasterCard, the brand was always owned by them (though there have been various mergers). The system behind those cards was not merged with Maestro (which is a different system) but merely rebranded as Girocard, an independent scheme by the German banks. It works without any reliance on MasterCard.
> Rewe has a fairly complicated legal structure, I'm not sure which you are a member of. There is no single "Rewe eG" which you can just buy into, especially not if you don't happen to own supermarkets.
I'm personally not sure either. Originally my entire family was just a member of the coop eG, but when they started to merge with REWE eG in the past months the coop eG offered an option to invest additional money into the REWE eG (at better than usual terms). So we did.
So now we have some stores that have just been rebranded REWE, some still branded Sky, operating with the same mix of REWE and Sky products, and some accepting CCs, some not.
> The system behind those cards was not merged with Maestro (which is a different system) but merely rebranded as Girocard
In marketing, EC stopped being the main brand, though, and MasterCard provides their EC cards under the "Maestro" brand within of Germany, although they are not operating over the Maestro network, or in any way compatible with it. Take any recent EC card, it'll work only via the EC system, say Girocard Electronic Cash on the back, and Maestro on the front, but doesn't actually have any relation to the Maestro system. That's what I was referring to with the rebranding.
EC is Eurocheque, a German specific card system. In my experience in Germany, lots of places take EC but neither visa, mastercard or amex, so in effect, only Germans can pay with credit in a lot of places. This is true even in Frankfurt (arguably the financial capital of Europe). In the cafeteria of a place I frequently work, they also don't take cash, so foreigners can't eat.
SEPA is the single euro payment area. Here it refers to the cost of a wire transfer.
Now that we are talking about card payments (NFC, chip and pin, etc.): jump into a random Frankfurt taxi in 2017, and IF they are willing to take your card (pretty big if), this will be their method of choice:
They put your card in there, put a paper on top, and proceed to press and copy the embossing of all you card numbers into a carbon copy paper. Talk about swipe card insecurity... That is by far the slowest way, you spend 5 minutes easily.
I agree with the laundering / tax evasion cause only partly: I once wanted to pay upwards of 900€ in IKEA with mastercard. The cashier asked me to go to an ATM that was inside the IKEA building, take out cash from the card, and pay with that. With its scale, I don't think IKEA prefers cash to launder money or evade taxes...
> EC is Eurocheque, a German specific card system.
Eurocheque hasn't existed since 2003. The current system is Girocard (https://en.wikipedia.org/wiki/Girocard), it's just that the colloquial name is still "EC".
In most countries, we just tap to pay with NFC (except America, where this only works with Apple Pay or Google Wallet). This is most definitely faster than cash. You can actually go to any store and time it on real customers.
I recently moved from the Netherlands, where card is overwhelmingly favoured (at least in Amsterdam and Den Haag, I've never been somewhere that doesn't take card and some places refuse cash) to Berlin, which I think is even more pro-cash than most of Germany. Cash is way slower, and I've now got a couple euros' worth of coppers that are utterly worthless because no-one's going to bother counting them out. In the Netherlands the smallest denomination of cents is 5, but you could live for years there and not know, because almost everywhere takes card (and most machines support contactless).
It is weird how Germany is still so cash based. Even younger kids will count out coins at grocery stories, and they're convinced it's faster than using a card (their cards do take a while). Most of their cities still use paper train tickets! Many cities are skipping the tap/card systems all together and going straight to phone apps (which I don't really like. My card will always validate if a ticket inspector comes on the train. My phone can run out of battery).
For the most part, I would say paying by contactless is faster than paying in cash because you need to wait for the cashier to find the change for the cash you gave them. Then especially in Germany, people spend ages looking for really small change so if it's 19.64 they can give them 20.14 and get a 50 cent back. Where as contactless you tap the holder and that's it. Even paying by pin is generally faster. The only reason it's sometimes slower is if they use a German bank that wants a signature over the pin or the cashier doesn't know how to use the card machine. (I've had that once or twice in Rewe and Edeka)
I was on holiday in Germany. In The Netherlands I pay everything with my contactless debit card, where you hold it near the reader, wait 1 second and then you've paid.
Every cashier in Germany (provided they accepted cards in the first place) insisted on "taking" my card, sticking it in the machine for a non-contactless payment, then hand me the machine so I can enter the PIN, then take back the machine, wait for the transaction to finish and then remove the card from the machine and hand me back my card. If that's the standard card-experience, I can imagine why you think cash is quicker...
(At one shop I saw the machine accepted contactless; before the cashier could take my card I quickly paid contactless. The cashier was 50% flabbergasted and 50% upset and seriously doubted I actually paid, until the receipt rolled out to prove it).
This is also why I prefer using credit over debit cards: with credit, a fraudulent transaction (before being cleared) is merely decreasing my available funds (and because I generally pay off my balance monthly, this has zero impact on my life). With debit, the money comes out of my account, and only once a fraud investigation is complete do I get my money back.
Contactless cards also typically have a per-transaction limit in the area of $100~$200, so the amount of damage someone can do without the PIN and before you cancel the card is quite limited. I actually wouldn't be surprised if you do too many transactions in a certain period of time it would ask you to do a PIN transaction.
Then again finding a working Sparkasse ATM in Berlin is always something you have to plan to do a couple of times every week, or then you must carry lots of money with you.
Again I owe to my colleague for my lunch because I forgot to pick money in the morning.
We had hyperinflation in Brazil (end of 80s and begin of 90s) and you can use credit/debit card almost everywhere (I even saw a video of a Brazilian that lived in Japan for 10 years commenting how weird this is for him)
Brazilian here. We had a three-to-four-digit annual inflation rates that last 14 years, from 1980 to 1994 (and it topped 5000% on the last year).
Almost everyone uses debit or credit card nowadays. Even transport cards machines, taxis, small vendors, food trucks accepts credit cards.
Usually I only carry cash for some emergency to the point I don't even remember how much I left on my wallet.
True, Uber's decision of allowing cash payments in Brazil(because a lot of people can't get a credit card approved) was met with a very negative drivers' response due to increased robbery risks.
Fellow Brazilian here and I don't carry a lot of cash with me because that was how I was raised, mostly my parents taught me to be scared of being robbed with a lot of money. Even though I am not living in Brazil ATM I still act like this.
Plus fraud is becoming rarer with chip credit cards(and apps which allow you to lock your card much faster in the case of theft), while counterfeit bills are also harder to reproduce these days you can still find some.
I can add that in Mexico the culture is to also not carry that much cash - due to risk of robbery and losing the wallet or it getting washed in laundromats.
Also remember that whole Eastern Europe (including East Germany) had no electronic payments before fall of Soviet Union.
So credit cards took off in US in 80s but half of Europe just got out from under communism in early 90s and they were not very trustworthy of western banks so would prefer cash.
Also the banking and payment infrastructure was non existent so needed to be built from scratch. This probably slowed down uptake of credit/debit cards considerably.
My theory with Germany specifically is that the Germans I have known have all been extremely protective of their privacy. I'd be interested in seeing stats on social media adoption in Germany, because my hypothesis is that they lag the rest of the world.
If privacy is such a concern (and particularly privacy from one's own government), then the use of cash makes sense. My guess is that this distrust of government did grow from the abuses of domestic surveillance by the Nazi regime and East Germany. I'd be curious to see how this breaks down between the old east/west lines as well.
And I'm sure individuals don't use cash for these reasons; but because the system in Germany functions that way out of historical legacy. As a consumer, it's simply easier to buy things with cash.
>I'd be interested in seeing stats on social media adoption in Germany, because my hypothesis is that they lag the rest of the world.
Not only do they lag in general, but I also remember a study which showed that in Germany higher education levels are associated with significantly less social media use, while it's quite the opposite in the rest of the world.
That's true. The fastest growing social network within German universities was an anonymous one. This is opposed to the USA, where Facebook was the fastest growing network based on the ideal of knowing exactly what classes Y person on your campus went to.
I had it installed for a few days once. I decided to uninstall it because it took too much attention (there are MANY users in Berlin) and I kind of felt too old. The typical user is a student in the first few semesters.
This seems counter-intuitive to me. The author argues it's due to hyperinflation from the pre-WW2 era, concluding that "People in countries that suffered banking crises quite sensibly often prefer to save in cash."
If there really is some national memory of that crisis, wouldn't they actually prefer to actually avoid saving in cash? During the hyperinflation period your cash could lose half of its value overnight. This just doesn't make sense.
Perhaps it means that when your money is in a bank account, the bank can refuse to give it back to you until it loses all its value. In cash, you can spend it straight away.
I fully agree, if anything this would be about bank runs. Also it is a cherry picked example, I can cherry pick one too. Poland had a hyperinflation episode in 1920s and another high inflation event in the 1990s; yet card adoption (and adoption of innovations in consumer banking) is among the highest in Europe.
The differentiating factor is whether a solution is supported by the merchant. If it is, you will see adoption. Merchants in Germany do not support CCs and limit debit cards, so people do not use them. They do not do that partly because they can get away with it and partly because the fees they are being charged are high (both per transaction and per POS). Naturally there is room for the government to step in here. E.g., said Poland lowered the maximum allowable fee Visa/Mastercard can charge a few years back; along with that went away minimum spending limits on transactions in shops.
This will change though as Germany starts moving to a cashless economy as, e.g., Sweden is doing.
It might be worth mentioning, but the payment preference goes both ways. Germans' preference for cash payments sometimes means or meant that payment options common elsewhere might not be available.
This caught me out at a McDonald's in Berlin that accepted neither Visa nor MasterCard earlier this decade. Even bigger brands adapt to local culture, it seems.
Is that really true? Whilst I probably haven't been to McDonald's in the same amount of years I'm not sure how that could have worked even 15 years ago in Sweden, which is one of the countries with the least cash usage in the world.
This is somewhat frustrating as a tourist to Germany (withdrawing cash usually involves a 3% exchange fee, and bank fees if you use the wrong ATM), but wouldn't be so bad if there was a way to get a reloadable EC card (or bank account with EC card). But as far as I can tell, reloadable EC cards don't exist, and I don't think there's a way to get a German bank account without a permanent residence in Germany.
I've been able to witness the change over the last 5 years in Germany. While gradual, it has been quite noticeable to see more plastic options become available, and my ATM visits have become less frequent.
It's still a far cry from home (Australia) where I hadn't needed cash on hand in quite a long time, but it in terms of convenience it's not a big deal. it certainly beats France where cheques are still in extremely frequent use vs. wire transfers.
A few years ago I was living in the UAE and I was surprised that cheques were so common. When you rent an apartment you typically give post-dated cheques for each quarter at the start of the year.
It sounds a bit crazy, but by law if a cheque bounces it was a criminal offence (I believe they recently changed it or were thinking about it).
There are a lot of interesting advantages to this, as you can effectively escrow cash without a third party. If you receive a cheque you know you can always (or should always) being able to cash it in.
I live in Sweden and I use cash more often in Germany than I do when I am at home, despite being there only for a week each year. But yes, I've noticed this effect as well - accepting cards is becoming mainstream and eventually I hope to be ably to visit without having to leave with lots of scrap metal in my pockets.
To the contrary. Of the three closest grocery stores, only one of them has a single cash line. One of the stores is cards only, and one of them doesn't even have any live employees.
debit cards are more commonly used than credit cards in Germany. I'd expect almost all adults to have a debit card, but there are plenty that don't have a credit card. This might not so much reflect cash usage, but simply that the type of cards used in Germany is also different.
I went all cash a few months ago for everything except hotels and rental cars. It's very liberating. Credit cards give you 3-5% incentives to spend because you spend more. Since going all cash, we spend in average 15% less.
I have the opposite problem - using cash means it takes more time for me to enter transactions into my finance software (Quicken). With electronic cards (whether credit, debit or presumably EC), I can download a list of my transactions at the end of the day in one go & be up to date. With cash, I'd often fall days behind.
Not surprisingly Germany has one of the highest household savings rates in Europe. In fact almost all the top countries are German speaking or have German as an official language.[1]
I (German) have never used NFC payments and was curious how that would work with my bank. Turns out they want me to install an app on my phone for this, which is definitely not going to happen.
In America, I would prefer to use a debit card or cash, but many credit card issuers offer 1%-3% cash back, meaning, they give back 1%-3% of the purchases you make.
As far as I know there are no transaction fees on credit cards. That's one of the reasons to stop using debit and use credit. The only fees are on the merchant (1.5%).
Similarly in Australia, the merchant usually pays the fee (although Australian stores now have the right to charge the fee if they wish. In practice, a handful of stores impose a partial surcharge only on AmEx & Diners cards).
I try to use cards when I can because I earn Frequent Flyer points, something I wouldn't get using cash. I've already used those points once to fund a Round The World trip (strangely enough, including a trip to Germany).
Here it's illegal for merchants to add fees at checkout.
That being said, yes, they might mark up their products for it. That being said, I doubt it. The retailers I've worked with while developing e-commerce solutions already made enough profits on their products to absorb that fee.
But you pay those transaction fees whether or not you use a credit card. I believe there are even laws against charging more for paying with a credit card (beyond just having credit card minimum like you see at delis and mom and pop shops).
Yet another example of wealth transfer in the US from the poor (who often don't have credit cards, or don't have the high rewards ones because they cost $150+ dollars a year) to the upper middle class.
>I believe there are even laws against charging more for paying with a credit card
not really "laws", more like merchant agreements. also, there's nothing preventing shops from offering a cash discount, which is effectively the same thing.
whats the fine print for your 1-3% cash back? wondered about that. Will you be sharing (allowing the card issuer) to sell meta data of your transactions?
With most credit cards, your entire purchase history (sometimes including item-level data) is for sale to data brokers and advertising companies. It's a high price for that 1-3% cash back.
In addition to selling purchase history, CC companies may also be (at least partially) funding the rewards with transaction fees.
Some cards (e.g. Amazon Store Card) get you relatively high rewards at a specific vendor (Amazon). I predict there are special deals in place with the banks/transaction processors involved that make these rewards more possible.
You have a good point. I just got the costco citi credit card, and there was a small pamphlet included with the privacy information and what data is shared. Basically something like 8 line items for different kinds of data, 5/8 were required, the other 3 I had the option to opt-out, but they were automatically opt-in.
At the end of the day, the benefits far outweigh the meta-data that is shared. Ok, sure you can see what I ordered at costco and how much I spend on gas.
Yes, it's a data grab by companies, but what are you gonna do... not take 4% back on gas and 3% on restaurants?
>not take 4% back on gas and 3% on restaurants
yes? This is the same argument for using stuff like gmail. What, are you really gonna pay 20 bucks a year for email? I'm sure everyone's price to sell away their privacy is different but I'm a little off-put by how cheaply people are selling themselves these days. I hope it never becomes a problem (e.g. Stasi) but if it does I won't be crying for those people whose lives will be ruined.
Most brick & mortar stores in Germany will not offer debit card payments under 10 Euros, since the fees they have to pay are extremely high. Most clerks will frown upon small card payments for that reason, and sometimes outright decline the payment, even if that means no purchase happening.
Credit cards are rarely accepted in any store but larger ones in malls. Most Germans, and that was pretty spot-on in the article, don't even have a credit card. You can imagine how detrimental that is to building a German SaaS business. Stripe and the like have started going into the ELV market, which is pretty much a direct debit payment - and you need to pass quite a few restrictions to even be allowed to offer ELV as a vendor.
All in all, it is both a consumer, banking and a merchant issue, and it severely limits the German E-Commerce landscape in terms of payment solutions. Paypal has taken over German online payments, since it can be linked with a bank account. Credit cards? Not so much.
I can see why this is problematic for the e-commerce industry, but you seem to be saying this is problematic for the economy as a whole. If that's what you're saying, could you provide some justification for this claim?
If you want to see e-commerce as a relevant branch of the economy, it's stifling growth.
Funny enough, banks are now charging withdrawing fees for cash. So if you only ever buy things with cash, you will loose money on just acquiring it. Net loss for the non-banking economy.
> If you want to see e-commerce as a relevant branch of the economy
I don't, and I don't see much evidence that anyone outside the e-commerce industry should want to see that.
> Funny enough, banks are now charging withdrawing fees for cash. So if you only ever buy things with cash, you will loose money on just acquiring it. Net loss for the non-banking economy.
It's fairly simple to avoid ATM fees. Every bank and credit union I've ever banked at had a network of ATMs, and there's usually no fee for cash back at grocery stores. In contrast, credit cards always charge a fee to the receiving business. Additionally, many workers receive some or all of their pay in cash, cutting banks out of the equation entirely.
I don't think you can reasonably claim that credit cards take less from the non- banking economy than cash.
Not in Germany though. Cash salaries don't exists (outside of temp jobs), cash-back from grocery stores is still new and rare. The ATM withdrawal fees are the actual problem, they have been recently introduced, and they happen no matter which network is being used.
Take a hike to Poland if you want to marvel at this tech in action. Paying contactlessly that is. Called "zbliżeniowo" in Polish, that's also the word to say in response to being told the total if you want to use the card without pin and not the cash.
It's not universal but extremely common at small shops, super markets, 'better' restaurants. Out of the way places, milk-bars ("bary mleczne", it has nothing to do with milk, it's a cheap place to eat simple foods at), pawn and thrift shops, street vendors, etc. are the majority of ones that don't have it.
In Poland such a limit of 10 zlotys is common-ish (I've seen it ONCE in Warsaw when visiting) but will run afoul of agreements terminal owners have with banks and the fees are (I have no idea if that's true, it's hearsay from consumer legal advice websites) percentages not fixed so there is no difference in the end.
Of course even if that's true the incentive is there - pure cash has no fees and most people buy little things very often so it adds up.
The difference between debit cards and credit cards is not so big and not really relevant. You can do almost everything (domestically) with a debit card that you can do with a credit card in other countries. There are tens or hundreds of thousands of business receiving money already. Wire transfers are ubiquitous, can also be initiated by the vendor after some checking, and have no fees. There are also payment processors who help you as a business. Using cards for small payments, just like large bills, is a bit socially frowned upon, but usually no problem anymore. Compared to the US system, i have almoat nothing to complain about the German system.
I sometimes do wonder though why you can't just send money to a telefone number like in China. Like in most countries, banks move slowly here.
> Paypal has taken over German online payments, since it can be linked with a bank account.
Very true. Whenever payment processors are discussed around here someone will inevitably mention how glad they are that they could finally replace Paypal with Stripe, and why would anyone still use Paypal anyway these days?
I like Stripe as much as the next guy, but in Germany it‘s absolutely necessary to offer Paypal and Stripe can only act as an additional gateway.
However credit cards are gaining momentum here - the online store of my employer almost sees an equal share between both methods. And then there‘s still about 15-20% of customers who opt for manual SEPA transfer.
The vast majority of German supermarkets accepts credit cards. Aldi even has signs at the cashier telling you it's possible "from the first cent". And that's a store famous for trying to save money wherever it can.
If the fees for offering card payment for a store are still extremely high, they are getting ripped off by their acquirer for some time now. But old habits die hard and many sale clerks (and even some store owners) are not aware of the changing reality.
$123 * 365 ~= 45k/year. So, you would need to mug / pickpocket 1 or more people per day per person involved. At a guess that's not very stable and your very likely to get caught. aka, you might get 100 peoples wallets at moderate risk, but going for 10's of thousands is a lot more risky.
$45k a year, untaxed, for what, a few minutes of work per day? Sign me up. There are professional pickpockets all over the world, that make a healthy living off of it.
Also, average monthly salary in Germany is $2666. Sounds WAY more profitable to be a pickpocket.
Until you get caught. The problem is not so much being an experienced pickpocket, the problem is getting to that point and then living off of it for 40 years without spending a lot of time in prison.
Of course it's "until you get caught", and then subsequently released to just start over. Thieves exist, getting caught isn't a deterrent. You're taking it from the perspective of someone logical, with a vision of the future, savings, etc.
Actual data suggests pickpockets are in massive decline.
I suspect criminals are more rational than you might think.
http://www.npr.org/2011/03/06/134298101/pickpocketing-an-art... Sure, you can make a living picking pockets, but drugs / cyber crime etc. have more 'advancement' potential.
I don't know why, but we don't have many pickpockets here in Germany.
Probable reasons:
We don't have that much poor people here.
The few that are, get social aid from the public/country.
The few that aren't happy with the amount of money they get, can collect bottles, which give you 0,25€ per bottle. Few hours of bottle collecting in a big city is easy money on the side.
So most poor people here can make 10-20€ a day on the side legally.
Food is really cheap in Germany, so people don't have to carry around much money. Most of the time I only have below 50€ on me and only on bigger travels in the country-side I take more.
So I think there is simply no reason to risk getting caught stealing an amount of money you can easily make legally.
According to http://www.nationmaster.com/country-info/stats/Crime/Robberi... Germany has 65.2 robberies per 100k whereas the US is sitting at 146. Poverty rates are higher in the US but I think that Germany's relative safety is what makes people feel comfortable carrying cash. I'd go back to cash if I could, but it's not safe and the local government where I live has basically no interest in making it any safer...
I can't comment about the rate of muggings, but ATMs are everywhere which would promote holding less cash for shorter periods of time. It's not uncommon to visit a bank in the centre city where most of the 5-6 ATMs are full of people withdrawing cash (which is a stark difference between more cash-digitised nations).
However German banks like to charge you if you use the wrong machine. There are various different networks and you have to use the right one to make sure you aren't charged. This is quite different from the UK where most machines are free.
Muggings rarely cross anyone's mind, except maybe when carrying an exceptionally large sum for e.g. buying a used car (which i the biggest transaction customarily done in cash, by a wide margin). Concerns about muggings are usually consolidated with the more general though of "what if I somehow lost my wallet" and that is dominated by concerns about the credit, debit, ATM and ID cards that also reside there (yes, credit cards are not terribly rate, but many are rarely used in face to face transactions). Losing a few days worth of cash transactions isn't high on the list of annoyances that would come with a lost wallet.
By the way, the big costs of daily life, like rent, insurance and the like are not settled using credit cards, cheques or cash, this stuff is all done by bank transfer and has been done by bank transfer since long before credit cards became somewhat established (for occasional use).
I have experimented with it too, and you may as well, leave your credit cards at home, and only use 'Cash' ... you will think twice before paying for $100 consumer item ... whereas using Credit Card, you barely had noticed the price tag .... so bottom line is, Yes, paying through Cash can 'significantly' cut your expenses on 'extravagant spendings'.
Must be personal variance, as I'm not any more likely to spend with a card. I would guess it's the other way around for me -- cash is "spend money" to be used more freely, while using the card draws from the savings so the transaction carries some hesitation.
That's even more true with small spendings: with cash, you easily see the amount stocked in your wallet decrease item after item, shop after shop, drink after drink; you also need to "refill" at the cash dispenser when it gets empty so that reminds you that you have already spent the XX or XXX € you had taken 2 days ago; you also may not be bothered to refill and opt for a lower priced item, or a lesser quantity of items, or do without the item.
If you start paying small amounts with a card, it is too easy and also you don't keep track of your spending rate, you don't "feel" it, so you end up spending more.
(After all, that's the point of it, shopkeepers wouldn't bother losing time and money to offer card payment if they got no benefit from it.)
Yes that was the actual point, with CC you don't get the feel or pain of losing money ... When paying through cash you physically feel losing an amount of money. Humans.
> One explanation is that, as researchers have found, memories of hyperinflation have quite a bit of staying power. People in countries that suffered banking crises quite sensibly often prefer to save in cash [...] For the same historical reasons—they loathe debt.
This explanation seems absurd (or at least counter-intuitive). If your fear is hyperinflation the two things to do would be to avoid hoarding cash that can be worthless tomorrow and to buy as much tangible stuff as possible with a debt you will have to pay back with this devaluated currency.
I spent a few weeks working in Munich and was surprised when I first went into a supermarket to buy lunch. The payment process was like stepping back in time 20 years in the UK. No self-checkout kiosks, just a single cashier, and a line of people all paying in cash.
It worked, but it was a much slower process than was I was used to. I guess the stereotype of German super-efficiency made me assume they would be quick to adopt such technologies. But I think perhaps that is countered by a degree of conservatism about switching away from systems that are understood, and proven to work.
I am a German living in the Netherlands right now and find that quite annoying every time I come back to Germany, too. Before NFC I would have agreed that card payments are just much, much slower than cash. Most shops in Germany won't let you pay by card if the total amount is less than 5€, so you would always carry cash around anyway. NFC and self-checkout are quite widely spread in NL; in fact a small supermarket at a university here only has self-checkout systems with NFC.
Often heard (from Germans with some international experience and its point of view) that innovations need around two years to arrive in the heads of Germany. Skepticism towards new ideas tends to impress people more than open-minded consideration of new developments. This may change at the moment as much of the younger generation gains lots of international experience and is exposed to frequent technological developments and innovative start-up culture.
As a Swiss German I think the currency stability argument is moot. Swiss Frank is one of the most stable currencies available and we still have a similar attitude to cash as Germans. IMO it's mainly due to the following reasons:
1) CC is slow, at least in Switzerland. Like in Germany, efficiency is baked into the culture - people hate to wait on someone paying his chocolate bar with credit card. It's also not rare for people to show you that discontempt. This trains people into behaving.
2) Switzerland, as most of Germany, is a mostly urbanized place with good public transport and facilities close to where people live. Meaning, there's way less weekly mall-shopping going on than in less dense countries like the US or France. So, the average total price is lower since shopping trips are more frequent, often about every second or third day after work.
3) Security concerns. For a long time CC were as insecure as the US ones, with a simple swipe of the magnetic stripe being sufficient, and CC fraud was relatively frequent. So, many people have an instinct of only using CC when necessary, and if at all possible not in public places. Debit card on the other hand have always been relatively secure (6-digit pin code, 3 tries), so they are used more often, maybe more so than in the German example since Swiss banks have pushed them since around 20 years ago.
on 1) Recent touch-based CC terminals are really fast, and often don't require a PIN if the amount is less than 10€. I've stopped using cash since with these terminals CC are faster than paying in cash.
Android/Apple Pay (using NFC) is even faster from my experience. On top of that, the merchant never gets your CC data, so it's much more secure. It's still not widespread, but I make sure to use it whenever I get the chance.
Your card info stays safe
When you use your phone to pay in stores, Android Pay doesn’t send your actual credit or debit card number with your payment. Instead we use a virtual account number to represent your account info – so your card details stay safe and secure.
I believe Apple Pay works the same in this respect so the virtual account number is not cycled per transaction. I can't remember if it's cycled per vendor or just unique per device.
Once a certain cultural trait is established, inertia can keep it alive for a long time after the original reason is gone.
As a cash-paying German I think that the main appeal to me is that cash payments are a process you can easily understand in its entirety, whereas everything else comes with an infinite supply of unknowns big and small. Sure, it's easy to grasp the basic and get adequate working knowledge, but there will always be lines in the fine print, lines in the code and lines in the physical specs of the hardware that you never read and even if you did you may not have understood correctly. You don't have to worry about these things, but you could, and that seems to be enough for many to stick to what they know.
Also, not paying cash feels lazy, some stereotypes might apply. (Now I wonder about the possibility of a correlation between cash and the protestant/catholic divide still present as a cultural shadow of the past even amongst decidedly atheist Germans - payment customs in the nordics suggest otherwise though)
While the CC may or may not be slow. In the 5+ months I've now been living in Germany, I've noticed that people are very keen to pay with exact change if they can dig it up. This is an even slower process, but also seems to be the norm.
Also, almost every store accept touch-pay method where you just touch your CC with the terminal and it is payed without entering pin or providing signature.
Only works if the amount is less then 25 EUR but still it is much faster then cash.
Pretty much every national chain, especially supermarkets, accepts credit cards. You won't have as much luck at owner-operated stores or restaurants. Berlin is probably the most card-friendly place in Germany by the way.
I'm indeed thinking independent stores, family-run restaurants and discount markets such as Netto which only accept the German card; local kiosks and fast-food places take cash only. I can confirm credit card works in upscale markets (like Rewe) and major chains.
Both Netto with and without a dog in the logo (competing chains with the same name) now accept credit cards, same with other discount markets such as Aldi, Lidl, and Kaufland. Major exceptions in the food sector are most Penny and many Edeka stores (a lot of the latter I would categorize as "upscale"). You are right about independent stores and restaurants. Unless you know for sure all places you plan to go to take cards you should carry enough cash.
But having exact change on hand is seen as being responsible and prepared, which is another highly valued trait. You came into the shop with the ability to pay the exact amount of the purchase.
That's made easier by the VAT system as opposed to the US sales tax system.
Totals are easy to calculate in your head. I'd say this is a stronger driver of cash use than anything cited in the article.
Years ago I collected all change for 6 months without spending any. Afterwards I counted all to see how much of each type of coin I have collected during this time. The idea was to see if it is worth bothering collecting all coins or is there are a cut-off for me as I dislike having carrying really thick and heavy wallet. It turned out that for my pattern of cash use collecting coins bellow 10 cents really wasn't worth it.
A few years ago I visited Berlin again and tried to leave few cents in local supermarket. It was the only time while being there that I can remember people giving me unfriendly looks. Cashier was also visibly unhappy.
People just collect them at home and bring them to the bank when they make holidays or so. Usually I don't see small coins used by anyone except cashiers for return money.
Personally I just throw them in those collection boxes for good things at airports and train stations when I leave the country.
When I pay with cash and the change would be below 5 cents, I usually say "Stimmt so" (i.e. "keep the change") and just leave. If I forget and the cashier puts change on the counter, I just pick the golden and silver coins and leave the rest lying there.
I don't remember any unfriendly looks. But then again, I'm German, so I probably just didn't notice the looks. :)
The cashier's get into trouble if they have an incorrect amount of money in the counter and you're essentially telling them you're too good to bother putting the coins into the donations box sitting centimeters next to you.
If that isnt rude, I don't know what is.
This only applies to big discounters thought. The smallish shops and bakers don't mind at all.
If there is a donations box or a tip jar, I'm using that. But that's available in maybe 10% of shops (most drugstores, some bakeries, no supermarkets).
I lived in Austria and Switzerland. I never really experienced this. For me this is as rare as faulty credit cards which have the same annoyance levels.
In Austria people often just hand over more and say 'bast scho' (tip). Or otherwise pay a little bigger and take the change. In switzerland it's only the latter and less tipping but again nobody even looks at their own small coins.
Nearly everyone I know just has a glass at home where they throw the small coins in but never would really use them.
Interesting. At least in my experience in the us, people paying cash is much, much slower than using credit or debit. All it takes is one customer paying cash to turn a fast register into a storefront-filling queue.
In my US experience, the variation from customer to customer is much larger than the difference between cash and card. You can be pretty fast or very slow with either method.
Hardly surprising that a rare form of payment isn't terribly fast. When you have cashiers who work with actual cash all day, and customers who know the process of taking a quick inventory of their change reservoir while their goods are being scanned so that they can very quickly decide between giving precise change (in addition to the uprounded sum in paper) or not once the final sum is known. Mirror picture in Germany, many people are still wasting time engaging in some kind of mini-negotiation with the cashier before paying in plastic (usually a debit card, which is quickly taking over most cash transactions that happen at a register).
Also, American banknotes with their identical size and color over all denominations are just incredibly impractical for anything but building those nice tidy stacks of drug money depicted in the movies. Cash payments in the United States are a terrible benchmark.
In my experience (in the US) it is the one person paying with a check that does that. And checks are extremely common in grocery and other big box stores here. Cash is usually not a significant slow down compared to debit or credit, possibly in part because of time spent fussing with PINs or signing receipts.
Have been living on and off in Switzerland for the last 7 years(Zurich mainly). Your post describes my experience in Switzerland when I first moved here, however for the past year or two (since contactless payments and NFC took off) I would say that your first point has completely reversed - it is now much faster to pay with card unless you have the exact change ready.
Also regarding your third point, anecdotally I have heard that many smaller shops/restaurants are now pushing for non-cash payments as it is more difficult for employees to steal that way.
In Sweden and Denmark there are many places where cash isn't accepted. Come to think of it, I was on a business trip to Frankfurt last week and the restaurant we ate at only accepted cards.
I pay for most purchases here in the UK with a debit card - mostly using contactless payments. There is no doubt to me that this is much faster than mucking about with bits of paper and chunks of metal.
e.g. when buying train or tram tickets the printing of the ticket takes much longer than the payment step.
But (3) is exactly why many people do use credit cards: exposing information of your actual cash accounts over and over in transactions increases the risk of fraud. It's much safer to fight for the integrity of your credit account because it's someone else's (the bank's) money. They are far better equipped to handle the case, which would sap not only more of your own money, but a lot of time. Waiting for a replacement card is far less painful.
> CC is slow, at least in Switzerland. Like in Germany, efficiency is baked into the culture - people hate to wait on someone paying his chocolate bar with credit card.
I pay with my card faster than the vast majority of people with cash. I also worked as a cashier during school, my favorite people were the older ones who'd just hand me their wallet so I could take the best mix of coins for the payment. Most people are horribly slow when trying to pay optimally.
Anyway, at least here in Germany the whole NFC thing seems to be taking off and card payments are even faster now.
Here in the Netherlands, paying by contactless card is bar far the fastest. Even with PIN, I'm pretty sure cash will be as fast (if not slower) given the change and handling of coins.
Another big aspect is, German people like having control over their spending. Checking my Credit Card is unnecessary frustrating. While you have a pretty good overview of how much you are spending if you always get about the same amount from the ATM.
This is the comment I was waiting for the whole thread. I don't want to have to check a huge list of random stupid payments, half of which I can't remember anyway, the other half with obscure names. Just to have a little control and be sure to not be frauded
Huh? You don't have to check your CC if you feel you have a good grasp of how much you are spending.
If anything, the CC statement gives you an objective summary of your spending, in case you want to recall something 10 months later, or budget for the future. When you pay only in cash, it will be a burden to keep the receipts, organized and readable, for that long.
Plus, isn't it less hassle to use a credit card rather than visit the ATM every so often?
I wonder how this is true "people hate to wait on someone paying his chocolate bar with credit card".
In the US, I always wish they had non-cash lanes at grocery stores (especially at Costco, Walmart) because paying cash is almost always a super slow process.
Do prices and taxes in Germany for stuff usually end up in whole numbers? I think in that case it's easy to calculate total owed and be ready with the exact amount of cash.
Regarding credit card security. In Europe, liability is on the person, in the U.S., it’s on the bank. So the “insecurity” of a U.S. credit card is misty irrelevant to the consumer.
CC is slow? I can nearly pay everywhere with Visa NFC. Don't see how that is slow. Maybe it is just me after having lived in the US where CC is really slow.
In fact, it is way faster than me trying to find the right coins for the chocolate bar.
2.) I think this applies to the Netherlands as well, but there debit-card payments are the de facto standard. Some supermarkets even have tills which only accept debit cards.
In the US you are protected by the Equal Credit Opportunity Act so the bank can't turn you away based on your age. That said though - you do need to show sufficient income to qualify.
It's funny that Lidl, the store in the picture at the top of the article, is one of the stores I always pay with debit card in Germany. They have great NFC support and don't give a damn if I pay my 79¢ bread with card.
I live in northern Europe and once at a shop I had a shop-money credit applied automatically and was left to pay 1 cent. I didn't have absolutely any cash and paid it with debit card. I didn't hear any complaint :)
Chains like Lidl are competing in the ultra-competitive German discount supermarket sector (Germans loooove discount chains, there are so many in Germany, and the price of groceries is therefore cheap on average), so it makes sense they'd be quick to deploy it.
As a German, I think ot's always intersting to get an outsiders perspective. The article strikes me as absurd, though.
There is a deep caution against technology here, especially if it's foreign technology. There were numerous attempts by German banks to reinvent the wheel with incompatible payment systems (Geldkarte, ...) none of which could be used for online payment. All of them failed. I would also counter the efficiency argument: having recently visited Norway for vacation, I'm still impressed with the efficiency of grocery shopping where everyone pays with their credit cards. Imho it's a mixture of privacy concerns and generally negative attitudes towards technology.
But I have the feeling credit cards are getting more mainstream lately.
When I moved to Stuttgart 10 years ago I only could pay with EC card at supermarkets, now I can pay with credit card.
With the RFIDs they even got much faster, I often don't have to enter a PIN or give a signature, just wave my credit card over the terminal and be done with it.
Also I can withdraw money from all ATMs of all banks without any fees.
I moved from Stuttgart to the US 5 years ago. I am always delighted to come back and see that I need less and less cash.
It blew my mind when even Aldi and Lidl jumped on the credit card train.
Looking forward to the day when I can visit Germany without having to go to the ATM.
Norwegians mostly use debit card thanks to the BankAxept system which all banks are part of. Most BankAxept cards are both bankAxept for everyday use and VISA if necessary (online shopping etc). When you pay with BankAxept it's counted against your account immediately. Another reason debit is mostly used is that not all shops accept credit card (which might also be because everyone has a BankAxept card so having MaterCard capabilities or whatever costs more than it's worth.
I think BankAxept is pretty similar to the Danish Dankort.
I'm glad you brought up the privacy thing. I don't know much about Germany specifically, but people not wanting to create an electronic trail of financial transactions seems like a reasonable explanation for at least some people to be avoiding credit cards.
I thought it was the other way around - that the reason German people pay cash is simply because shops and bars refuse to support credit cards. Whenever I visit Berlin I'm so frustrated because I have to plan my spending ahead and make sure I have enough cash in my pocket before I go buy anything.
Absolutely, I too think it's a matter of supply. So often shops refuse to take cards to avoid the fees. I suspect a systematic or law issue making card transactions more expensive.
Agree, such a pain. Especially in restaurants if you take a large group out and want to pick the bill up. It has got better but I have been totally caught out with this on one of my first visits to Berlin with a fairly pricey group dinner and I physically cannot take more than €250 out of the ATM a day without taking cash out on CC which involves horrendous cash advance fees.
I also don't buy this cc fee argument. It's regulated (and low) in the EU, perhaps 1-2%. This must be lower than the cost of storing cash, counting cash, paying it in to the bank, transporting it, getting fraudulent notes, people giving wrong change, etc etc.
The other annoying thing is DB machines not taking visa/mastercard and no notes over €10 (though this may have changed recently), which is all you get out of an ATM when you land at the airport. Such a hassle.
I hope Berlin can fix this and the BER airport situation one day.
If your gross profit (not including rent and other fixed costs) at a restaurant is, say, 80%, do you still think 1% CC fees are silly? To me this seems like ridiculous premature optimisation. If I go to Germany and I'm having a meal with clients I'll phone ahead and see if they accept CC and won't visit if they don't.
> If your gross profit (not including rent and other fixed costs) at a restaurant is, say, 80%, do you still think 1% CC fees are silly?
That's a question, but that's not what things look like.
Many German businesses are operating at razor-thin margins, or even at losses. From farmers (which lose around 13ct for every liter milk sold) to small restaurants (often making losses on all of the food, and only minor profit on the drinks) to any other kind of business.
If you are a 4 people company and you're trying to compete (and do so successfully) with american multinational chains, then you don't have enough profits to pay 7% CC fees. You'll be lucky if you can afford the 30€/month + 0.125% EC fees, and many businesses can't even do that.
> If I go to Germany and I'm having a meal with clients I'll phone ahead and see if they accept CC and won't visit if they don't.
Trust me, these businesses prefer not having your business. You'd only make losses for them.
> Can't see any reason not to accept MC/Visa now though.
Still 10 times higher fees than with the German card systems. If your profit margin is 1.4%, you can't afford 2.2% credit card fees. And if you increase the price, all customers go to the cheaper competitor.
German stores are in a reaaaaal close competition with these things.
Where can I get those magical 30€/0.125% fees? Girocard is cheap (though less than an order of magnitude compared to CC) but I'm not aware of an offer that cheap, especially for low volume.
Those were the prices offered by EC (the original EC back in the day, before MasterCard bought it: https://de.wikipedia.org/wiki/Electronic_Cash) back when a local business wanted to start supporting EC, and made an inquiry to several payment processors.
I'm not sure about values today, but they don't seem to be much higher if you exclude costs for the actual readers and the connection.
Currently I seem to find for low volume situations only contracts from iZettle and co for 0.95% fees.
> das Interbankenentgelt, das Zahlungsdienstleister bei Debitkartentransaktionen pro Zahlungsvorgang bieten oder verlangen dürfen, beträgt höchstens 0,2 % des Transaktionswerts.
On the other side, invoices are paid with wire transfers or even direct deposit entries. I haven't seen many checks since the Eurocheck lost its guaranteed value of DEM 400.
Personally I think cash is convenient. I also use debit card and credit card but somehow cash is the most convenient was of payment in a store.
As a german, this techno-phobic attitude was really getting to me for the longest time. It's just so incredible convenient not having to scramble for coins when taking the tram and many other examples. Living in London, I rarely take my wallet with me anymore. Apple Pay and my Mondo card is all I need.
Come to think of it, some time in the not so distant future, Germany will probably have the last laugh once the entire electronic payment system collapsed under the Next Big Cyberattack (tm)... insert coin here.
I suspect the main reason is that in a safe country like Germany people feel more comfortable carrying around large amounts of cash. Japan is extraordinarily cash-oriented, but it works because people don't get mugged; even if you leave your wallet on a train you can expect to get it back with all the cash still inside.
The "memory of hyperinflation" theory is an obvious crock, because the prediction is 100% backwards-ass wrong. If you thought hyperinflation in the near future was at all likely, you'd want to buy everything on credit.
The why is easily explained and has nothing to do with the 'tumultuous history': it's all about the privacy. I shudder what data is available in the US (and other countries) on customers buying habbits.
Sure, with eShoping on an ever rise, this privacy increasingly vanishes.
496 comments
[ 3.0 ms ] story [ 303 ms ] thread> "of course, [the Germans] attitudes toward currency must owe something to Germany’s tumultuous monetary history. During the Weimar-era hyperinflation that peaked in 1923 [...]"
> "the German tendency to settle up in cash undeniably reflects the fact that for much of the last century, Germany has been either on the brink of, in the midst of, or struggling to recover from, disaster."
As a German I call that theory into question. Our currency has been stable for 60+ years. It would've been nice if other countries with recent disasters (war, hyperinflation, sanctions) and their attitude toward currency was compared against.
In fact it is rare that I ever carry cash. The same is true for a fair number of my friends and family as well.
But otherwise I'm in the same boat. Amex for everything I can possibly use it for, Visa for places that don't take Amex, Visa debit when I'm under a CC limit.
In London you can't pay for a bus with cash any more.
Now try catching a bus late at night after the shops close - what a silly system.
You don't need to buy an Oyster card as contactless bank cards work on Oyster systems as well.
> Now try catching a bus late at night after the shops close - what a silly system.
London is a 24 hour city. :P
I use a credit card to pay for a $1.25 coffee. I never have cash, partly because I forget to take some out.
I still use cash, probably more than the average. There are just a handful of situations - paying for a newspaper, or at my local bakery - where it feels more 'natural' to me to use cash, but I'm sure that feeling will go eventually!
[0] https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country...
From what I can tell from other sources, what it really means is that one must pay VAT when purchasing stuff with it.
---
HN throttles comment time. Annoying. I don't want to give away my ideas/time enough to tolerate shit like that!
http://www.bbc.co.uk/schools/gcsebitesize/history/mwh/german...
(Please write "at".)
11 years ago, when I was living in Istanbul, I had bought bread from a supermarket and I paid with my credit-card, vendor of which had a deal with that supermarket-chain and automatically divided the payment of the bread to 10 months. If I remember correctly, they later banned the postponing of the payment of basic goods because it was getting ridiculous.
Now I realize that if your account is used without authorization most banks refund the money. This can take a certain amount of time and could lock up your remaining funds in the meantime.
I noticed it on Thursday, I had the new card and all unwanted transactions rolled back on Monday.
This for a debit/Visa hybrid card, which acts as Visa out of country and on the Internet.
Also, the bank requires me to temporarily unlock the card for 'unsafe' Internet purchases before usage, which basically is all purchases that don't involve 2FA.
I know I can charge back. But then I need to waste time to check all the charges and go through the charge back process.
Also depit cards. At least in Europe. AFAIK don't offer a easy charge back at all
At the same time, though, the govt did push Lloyds TSB to take over HBOS in 2008 rather than let the latter fail.
There is zero practical difference if you withdraw from an ATM every other day or more often, so you can pay cash.
https://www.fdic.gov/consumers/banking/facts/
Those claims are made to increase trust and lower market interest rates for companies to borrow money but regularly failed once really needed.
From some aspects, yes. From others (no interest in purchases, directly reducing one's account balance, etc) they are the same.
>There is a huge difference between having currency in your hand or use a medium to access money held by the private organization that can go bankrupt (and this happens much more often than, for example, governments with their currencies).
Still not often enough to matter, especially since the cash one has at hand will be a limited amount anyway.
It's not like having $100 or $300 in your pocket to buy things (as opposed to using a debit card) really protects you from the "private organization that can go bankrupt", when the large majority of your money will be in some bank anyway.
Except if you propose we keep all our money in cash at all times. This has other issues, not just a government going bankrupt, but inflation, theft -- and those things are much more common than a bank going bankrupt.
1) People forget to pay it off before the final date. They're not always clear about when that date is; you know exactly how long it's been since the charge, but you don't know for sure when your payment will be applied. It's best to pay the total off at least a month before the final date, to be sure it's paid during the billing cycle before it is due.
2) If you use the card for anything else, there's fine-print that says that any payments will go towards non-promotional charges first. It can get very difficult to determine if you've paid the promotional charge off or not, and they typically do not assist you in figuring that out.
They also benefit from extending you more credit than you need for the one charge you want to make, especially since you're unlikely to use it in order to avoid trap #2. And they benefit from having an additional customer on the books. I'm sure these benefits make them money somehow too.
One big difference in Turkey is many shops had 5 or more card terminals, each in the colour of the issuing bank. Banks competed for both merchants and consumers by offering value-added features unique to their terminal, such as instalment credit instantly accessible to only their customers.
Instalment credit was popular in Turkey following the economic crisis in 2001 (3000% interest rates) because many people simply didn't have the cash to pay up front for major purchases such as whitegoods or even shoes.
In most other countries, shops have only one payment terminal, supplied by the acquiring bank (acquiring = acquires payment transactions, as distinct from issuing = issuing payment cards to consumers). That terminal has to support all cards equally, using the base Visa/MasterCard standards. Hence there are no value-added payment options.
Also as a German, OUR currency has been stable for 26 years.
I'd still question the theory.
The Euro transition was stable.
a.) I mostly pay cash because it's faster
b.) some shops that can afford it only have cash payments to save on CC costs
Not because of inflation or because something happend 100y ago.
a) I don't want to feed the Visa/Mastercard/Amex/Whatever leach earning a few cents of every transaction.
But if banks wanted, they could actually track the serial codes on the bills around. And since often cash is used in only 1 hop (so ATM -> you -> shop -> bank) they could know pretty well where you spent your money.
A quick reference: https://news.ycombinator.com/item?id=9948081
E.g. about China: "According to schedule, by late 2015, the serial number of every Rmb100 note withdrawn from banks by members of the public can be traced."
That doesn't include how much you spend exactly. And it only works most of the time (what if my money gets used as change for another customer?).
Also, been a couple of times in the situation where either the shop's card terminal was malfunctioning, or the bank had some issues, and the card payment was impossible. Without cash you'd be helpless in such a situation, whereas cash = power & independence.
There's the labor costs of handling cash - counting it, moving it, organizing it, accounting for it, making sure there's enough change to run a shift; the cost of storing and transporting it - safes, cash draws, key management, money transport/money transport companies; and the cost of loss due to theft, mistakes, and mismanagement.
I'm not saying that the cost of cash is more than the cost of card, I'm simply saying its not anywhere near free.
https://qz.com/123642/physical-money-costs-americans-more-th...
>But new research from Tufts University aims to highlight the pain points of cash, where digital currency can break in. The use of physical bills costs US consumers, businesses and the government at least $200 billion each year—about $1,739 per household. Here are the main reasons why:
>Small businesses don’t lose much money by operating cash-only. But larger businesses spend a significant amount of money dealing with cash—collecting it, sorting it and getting it to the bank without it being stolen. US businesses lose $40 billion a year to cash theft and loss, about 1% of total revenues.
http://baltimore.cbslocal.com/2017/02/02/cashless-coffee-sho...
(There's also a potential to increase sales by accepting card.)
https://qz.com/123642/physical-money-costs-americans-more-th...
>larger businesses spend a significant amount of money dealing with cash—collecting it, sorting it and getting it to the bank without it being stolen. US businesses lose $40 billion a year to cash theft and loss, about 1% of total revenues.
Cash workflow:
- Cashier tells you the total amount
- You look in your wallet/purse
- You spend time counting exact change if you do have it
- If not, you take out a rounded bill/note (say $20)
- Cashier takes the bill/note, punches in the register and then spends a few seconds giving you the change back.
Credit card workflow:
- Cashier tells you the total amount
- You look in your wallet/purse
- You swipe card/insert in chip reader
- Done
- You look in your wallet/purse
- You swipe card/insert in chip reader
- You avoid making eye contact while the transaction is processed
- (optional) The card reader fails and requests reinsertion. Repeat previous two steps
- Done
Disclaimer: I've seen exactly this a few times
> - Cashier tells you the total amount
> - You look in your wallet/purse
> - You swipe card/insert in chip reader
> - Done
You forgot the part where you have to enter you PIN and wait for the transaction to go through, or sign the receipt.
That seems an easy way to get your merchant account cancelled very, very quickly.
Even if it did, the bank is likely to block the transaction, or call/text for verification.
I heard that those are very easy to crack. It might have been this article from 2011 where I read about this (German, sorry): http://www.zeit.de/2011/21/Kreditkarten-Sicherheit
So 70% of the time it saves time and 30% of the time it wastes time. Then I broke my phone and bought a replacement without NFC so I don't have the option anymore anyways.
It's a great system, however, I think the kinks need to be worked out a little.
(I had a Nexus 5x FYI)
That's true only if you or the credit card company notice the fraudulent transactions and act on them within the limited grace period, which I believe is something like 3 months.
Many people don't actually keep their receipts or reconcile them with their credit card statement. So unless they get an unexpectedly huge credit card bill, they might not even notice that they were victims of fraud and in that case the "0 liability" credit card policies are worthless, because they get defrauded anyway.
I have to verify any transaction over 20$ with my Swiss credit card for example. Even on contactless
Historically if in the US if someone gets a hold of your card, if I report it as soon as I know there is a problem you are legally out $50, and the credit card company and merchant has to eat the rest of the loss. In most cases the credit card companies figure since they have to take the rest of the loss they may as well get the customer service points by taking that $50 as well. As such it is only a minor inconvenience if someone gets a hold of your card, most of which is related to waiting for them to mail you a new one. Because of this people don't care about chip and pin being more secure: security was not their problem. This is also a factor in why the US is much more likely to use a credit card: there are no anecdotes about someone losing a lot of money because of their card.
By contrast in Europe you were liable for all amounts charged on your card before you report it, even if you had no way to know about the charge. Since the credit card companies didn't have to take a large risk they typically didn't agree to take it on. As such a credit card is much riskier, and so it is prudent to not use your cards if you have a different option. When chip and pin came out consumers were interested because it gave them some ability to limit their loss: their chip/pin card could be lost without the potential of great loss.
Note that the above is historical, and like all generalizations is false in some way. Laws change all the time which means the current reality is probably different - but the historical reality is still shaping our world. Europe is not a country, each country in Europe always had their own laws which differed in some way from the next.
Cards are definitely more convenient.
That's rarely the case. I can only think of dm (a drugstore) which rounds all prices in 5 cent increments. Otherwise you see a lot of prices ending in 8 or 9.
Also, there are several chains (Netto, Rewe, Kaufland, etc.) where you can round up your total to the next-higher multiple of 10 cents, and the difference goes to charity. I always use that if possible to avoid Buntmetall (i.e., 1/2 cent coins).
People pay with rounded bills most of the time, cashiers are fast at returning change (amounts are usually a single cent below the full euro for each item, so change isn't a big problem).
The credit card workflow requires you to sign as well (or alternatively sometimes your pin if it's a debit card). Also, no swiping, only chip readers.
So in essence, taking out the bills is comparable to taking out your card, and the question is whether signing/entering pin is faster than the cashier giving you your change.
Of course occasionally you will pay in exact change, but that's balanced out by all the times you have to insert your card a second time, followed by trying another card.
Standard on most bank cards in the UK. No pin or anything. Tap it on the machine and you go. Takes 2 seconds at most.
Still, I do hold cash sometimes, you do need it in some cases.
[0]: In contrast to e.g. Rewe which is also mostly operated by independent merchants but has strict rules for those.
It's faster, and the app gives a list of the purchases you've made with a card, so I can track what I'm spending relatively easily. Unfortunately, there are still lots of stores that haven't upgraded to contactless yet, which means I can't rely on Android pay for the time being. I can see this being much worse in Europe where contactless payments aren't implemented in many more places than here in Canada.
A) there is a risk as everyone can create a stripe account and buy a charger. Personally I would never notice.
B) every transaction creates costs. Some visible (depit charging fee) some hidden (credit transaction fee)
C) At least in most of Europe it is far from widely supported, even thought it's growing for a while now. Except you stick to the most touristy places that is. In south east Asia I haven't seen it at all except in tourist focused places.
Personally, the convenience of: not having to wear a wallet at all (I just carry the card in my pocket) and not having to deal with coins, negotiate if I'm paying a big bill etc. is just amazing. Even if someone steals $10 from me once in a blue moon, it's well worth it.
The credit card never really saved me. It really just is there to make life a little easier.
When I tried using my debit card and they ended up taking the money and then refunding it over a week later.
You're right about the cashiers though, they're super quick.
The good thing about the card is that you hand it over, and while the reader is talking to the bank you have a few seconds to continue packing your bags. I've simply found it flows better with card every time, as long as you remember which checkout has the dicky card reader that needs 3 tries.
I've never had to sign in the last couple of years when using my credit card. Fewer smaller shops would take it than in the UK, but otherwise I never noticed any difference.
1% earned when spending
1% earned when paying the bill
Cashback is not immediately applied to the balance so it's actually 2% and not something like 1.9999999. No annual fee but it's not really worth it to apply for this card per se, better to get another card that comes with a signup bonus (this one never does) and "product change" it to this card by calling in.
On the other hand, if you use credit cards, you would ideally be keeping receipts and then reconciling them to the statements you get from your credit card company to make sure there's no fraud and no errors in billing. Some people have the discipline to do that, but many don't.
With credit cards it's easier to overspend. Not only can you perhaps too easily borrow more than you have in the bank with a credit card, but temporarily giving someone a card that you get back right away or giving them a credit card number doesn't have the same psychological impact as permanently and irrevocably giving someone your hard-earned cash. So people are tempted to spend more when using credit cards.
Finally, there's the issue of being tracked. When you use credit, at the very least the credit card company knows where and when you shop and possibly what you buy. With cash you could have more privacy in this respect.
Also, I feel really bad for the cashiers that are unlucky enough to have all that change dumped on them and are forced to count it all. Some banks have change counting machines, but surprisingly, many don't and the change is still counted by hand while you wait.
[1] http://www.coinstar.com/HelpCenter
Of course, just take it to the bank and they'll do it for you for free.
also i use it to get some change for the occasional buns
- Cashier tells you the total amount
- I get a 10 EUR note from my trouser pocket
- Cashier gives back money
- I put money in trouser pocket
- Done
- Home: I put all spare money in a large glass jar
Credit card workflow:
- Cashier tells you the total amount
- You look in your wallet/purse
- You swipe card/insert in chip reader
- You insert PIN number
- You shield your PIN entrie from the people next to you
- You tell people too close to back off
- Chip reader did not work because of humidity
- You insert PIN again
- You tolerate the angry stares from people behind you who think you're either stupid or broke
- You wait 5 sec for transaction to fish
- You put card back in wallet
- You put wallet back in trouser pocket
- Done
However, there's a pretty large market for credit/debit card transaction data. Even Google purchases it[1]. Both your credit card company and the payment processors/networks themselves are able to monetize this data quite effectively. And the more complete people's transaction histories get the more effective this data becomes for different uses and the more the companies can charge for it.
Depending on the demographic a particular card is able to capture, the transaction history may be valuable enough to run the rewards program at a loss or break even when looked at purely from the merchant fees recouped.
[1] https://www.washingtonpost.com/news/the-switch/wp/2017/05/23...
in the glorious lands across the ocean, chip cards of all kinds use a PIN instead of a signature, which makes way more sense anyway. Chip & sign is an American abomination.
When I was in Seattle at a restaurant trying to pay, the owner told me that they also couldn't accept tips if they used chip cards. I thought she was BSing me into paying cash but she tried to swipe the card instead so that I could.
It's amazing how, in the US, even the implementation of new technologies is broken and awful.
In the USA, its rare that you'd have to sign for anything under $20.
Because of this, credit cards in Europe tend to not have the same great benefits you can find on cards in the US. AMEX is pretty good still, but there isn't exactly tons of competition in the credit card space here.
Also because if my card gets stolen, I'm assured that my pin wasn't lifted by camera or keypad shim. The signature will be not present or not mine on fraudulent transactions, so I can tell my card issuer to fix it and not worry about them telling me I had "poor PIN security" or that it was somehow my fault.
For financially responsible people, that means you can sometimes get a few freebees if you're willing to deal with the hassle.
I don't know what it's like in most other places, but debt is a weird part of culture here.
I do get lots of junk mail for credit cards, have done for decades, so I could get one tomorrow if I desired. But I don't see any real value in doing so; why get into debt if you can avoid it.
I never spend my own money directly unless I have to (e.g. the merchant doesn't accept AMEX or only takes cash etc.) because should I end up with fraudulent transactions or lose my card or whatever it may be, I have actual cash to back it up.
If you're fiscally responsible and make sure to always pay off the bill at the end of the month (with all that money you didn't spend) then credit cards are pretty much nothing but benefit. There may be a yearly fee associated (my card has one) with it but I've found it to be worth it for the benefits alone, but I also rack up so many points that I can use those to pay for the fee.
You can call your bank, get your card switched over to Freedom™ mode and enjoy faster payments.
Might not want to do this with a debit however.
(And I did complain to their customer service, but they won't change the setting).
- Cashier asks if I'm paying with a credit or debit card.
- Cashier enters the total amount into POS terminal. Meanwhile I pull my card from wallet.
- I tap the terminal with my CC.
- I put my card back into wallet. Meanwhile the cashier asks if I need the receipt.
- Optionally: take the receipt.
- Done.
- Cashier gives you the total - I pull out the bills I have and find the best denomination - I get a bunch of change back I have to stuff into my pocket along with my bills while getting my stuff out of the way for the next person
Credit card workflow: - Cashier tells you the total - You say "debit" or "credit" and the cashier pushes a button on the register - You pull out your credit card, touch it to the machine, and then put it away and start packing up your stuff to leave - The machine beeps and you leave
Far less fuss, far less opportunity for dropping change. Simple and efficient. I have my card out, tapped, and back within 5 seconds and my transaction is complete, and I never have to worry about if I have enough or too much.
I pay with my banks card (not a credit but a debit card) and then ask them for cash on top of the groceries. I am often the only one paying with a card if any kind though.
that way i have cash for all the things were paying with a card is frowned upon in germany:
- eating out - going on a fair - getting ice cream with the kids - going to the public pool with the kids - giving kids their allowance :)
and other things of that nature
PS: Since cash payments make it difficult for marketers to 'understand' their customers there are a number of cashback card systems like 'payback' in germany which try to get people to identify themselves.
Some places like Starbucks seem to get it right. Swipe card and go.
Target however likes to hit you with all the options. Self checkout is even worse.
- Cashier tells you the total amount
- Since I was watching the register display, I already have a rough idea how much this will be, and I have prepared the bills to hand over.
- Cashier gives change and receipt
- I walk away, and after I'm out of the way, I put the change into my wallet.
- Done
Similarly, credit card workflow (American):
- Cashier tells you the total amount
- You insert in chip reader a card you already had out
- You sign, sometimes
- You wait 5 sec for transaction to finish
- You put card back in wallet while receipt is printing
- You put wallet back in trouser pocket while receiving receipt
- Done
The time spent on these is very, very similar. Being prepared with your form of payment and dealing with putting away the results (change, card, receipt) after you leave the line results in a very similar time. Signing (or pin) and waiting on the transaction takes a comparable amount of time to the cashier counting your payment and making change. In each case, less than 15 seconds, and at that point, who cares?
- You get asked if you want to donate to (charity/cause)
...
- Cashier types in the total to the EFTPOS terminal
- You get your wallet
- You remove your card
- You tap your carda gainst the contactless reader, which registers the payment in about 1 second not 5 as you describe
- Cashier asks 'would you like a receipt for that?'
- You say 'no receipt, cheers mate'
- You put your card away
- You put your wallet away
If you pay over $100, you enter a pin and it takes maybe a little longer because no one crowds around each other at the payment area so there's none of what you describe and it always works despite the humidity you apparently describe.
As we don't have a tip culture, we don't see donation/tips/etc. prompts as others describe. It's only ever whether you want a receipt, and that's a single button press and you can pre-emptively say no to that so it doesn't even slow you down. Cash definitely takes longer here.
- Cashier tells me total amount.
- I get my card from my wallet.
- I hold the card near the terminal.
- 2-3 seconds pass, terminal goes "Approved".
- Done.
It's easier than cash. Almost every store I went to had wireless card terminals, even coffee shops and supermarkets.
also its always a guessing game whether you have to enter a pin or sign. it seems a random distribution. same shop, same amount, sometimes pin sometimes signature.
PS: I am not saying its good or bad, just trying to give people a feel about some of us Germans
I like Paper Cash / Notes. I dont like Coins.
Another Reason I like Debit Card or NFC Recharge Cards like those in Japan is that they actually require me Charge the card first. This action will live in my subconscious how much I have spend. I know this is an unpopular motive in US where they just want you to spend and spend.
And Getting rid of Cash ( The so call Cashless Society ) is like having less freedom in a what is already less free world then before.
- Done.
- Total amt
- (After deciding which card is best) Get card out
- Swipe, but piece of shit card reader complains, so retry. Or insert chip, then the piece of shit card reader makes the same sound for "wait" and "remove", sometimes cauing confusion.
- Wait for piece of shit card reader to show up signature bar (or less commonly the cashier has to print out a receipt and have you sign it)
- Done.
I love credit card rewards though, but I'm not sure if it's a zero-sum game.
- Waiter brings check
- Leave cost + tip
- Leave
If you pay with card that's an extra trip from the waiter which can take a pretty long time.
You can make it explicit, by having a card visible when you ask for the bill.
They take your card away and bring back a card receipt for you to sign & leave a tip on.
There is no practical alternative, since the customer needs to input their PIN.
Dishonest waiters used to be considered a common way for card details to be stolen.
Example: https://www.paymentsense.co.uk/card-machines/portable/
The new contactless payment system is faster, unless the store does something stupid ... like wanting to do a customer database lookup before doing the actual transaction which one chain here in Austria unfortunately does.
Now though we have NFC tap-to-pay in Canada and it's wicked fast in comparison to everything. No signature, no PIN entry, connections seem much faster.
Which is annoying and time-consuming.
I wonder how come these types of machines aren't more popular in other countries.
[0] sounds like some super fancy concierge service, but it's pretty much standard, from 7-eleven to fancy stores
In most EU countries, the item would be priced at €10, you would pay with a €10 bill and move on.
Cashiers with decent performance will take a solid bill like a twenty and give you back your change in a few seconds. If you want to give specific amounts of change, that adds time but so does when you split credit cards to put specific amounts on them. If anything, the cards can take longer since the transactions are separate. Wise users of cash also already have most of their money ready for payment by the time the order is totaled since it saves them time.
So, for most orders I see, the cash and credit take about the same time if customer is moving decent speed. The only difference is if the customer is moving slow for whatever reason (eg indecision or fumbling for stuff). That can happen with either but happens more for cash since credit users look for one item (the card).
In Germany you always have to insert your PIN or sign the bill if you want to pay by card (we use debit cards mostly, credit cards are very uncommon).
I can also second the opinion of many other commenters that the privacy implications of credit cards, especially the RFC ones which allow for invisible tracking, is a huge turn down of card payments in Germany.
And last but not least, as a developer, I gotta vent some air and complain that credit cards payments are huge pain in the butt, because of all those pesky special cases that arise from fraud prevention and risk reduction. Which isn't necessary for any sane payment method which can collect money directly from your bank account without the possibility of any charge-backs. This is one of the core reasons which persuaded me a European Fintech Startup Scene is necessary, so that Stripe with its CreditCard-centric API doesn't stand uncompeted.
That doesn't make sense as a premise. The US wasn't lacking in experienced cashiers 15-20 years ago when cash was still king, nor today. There was a decade or more of time where the US rapidly transitioned from cash-heavy in stores over to card-heavy, the cards were universally faster unless the store ran a behind-the-counter swipe machine that the cashier had to use. The premise would have to be that in an economy with a super high GDP that has an extremely large service sector, America has especially slow cashiers everywhere (for no apparent reason given the extraordinary economic output overall). It's more than a reach.
Cash can be faster because you do know the total before hand since the price on the menu/price tag is what you pay. This is because there is no sales tax or tipping. Buying 3 items at HK$12 each? Your total is HK$36. If there's a queue I usually have my exact change ready before I'm to the front.
In the US, you can rarely tell how much you'll pay since sales tax varies by county or sometimes by city.
A side effect of this is weird totals like $23.76 that result in lots of hard to spend small change which also disincentivizes cash use.
- Tap phone (that's already in your hand because you were aimlessly swiping while standing in line) to terminal with finger on fingerprint reader while cashier is ringing up items
- Tap confirm and sign once all items rung up
- You hold your card/device near the screen for about a second
- It authorises in a few secs
- Done
On a short trip last month, I surprised a couple of merchants by paying contactlessly with my foreign (EU) card.
That's almost always faster than paying by cash, since there's no need to count the money or make change. The exception is when the cost is €20, and I can hand over a single note.
They are absolutely everywhere since last year more or less, but everybody (esp. cashiers) is always dumbfounded when I use it and it works. Also some of them try to handle your card for you "to insert it in the right way" and since my German is still rather basic I then have to weigh the potential time waste of explaining it's a contactless card with the extra 4-5 seconds for the chip transaction. But I guess that part doesn't really apply to locals.
("kontaktlose karte, nicht einstecken" but they don't listen the first couple times)
Some stores have fucked up the speed of it though by first checking for your store membership account on the card which ruins the flow of the transaction. Often forcing the whole thing to be repeated. It's infuriating.
- fast enough
- no problems with failing electronic payments of all kinds
- more places where it works (electronic payment systems can indeed be an extra cost which matters for small businesses)
- cash doesn't break (cards do)
- still easier to transfer directly between people
- pretty private
a) That's a good joke. From faster to slower: NFC > PIN > signature > cash.
b) You should look into the real cost of dealing with cash. EC is stupidly cheap since it's basically the cost of a SEPA direct payment (we're talking 1-2 cents per transaction). Debit card payments can also be pretty cheap in Europe. All those annoying restaurants and small shops that take only cash do it to dodge taxes, not for any other reason.
For cash you have to count and recount that cash at the end of the shift, and then the bank counts are recounts it again. This is a significant amount of labor. By contrast with a card once the initial transaction is done everything is put into the computer electronically and no human has to look at it again.
Also cash is subject to theft. In some locations this risk is a significant part of the transaction costs - not just the cash, risk of death in the robbery. Electronic payments are subject to loss, but generally there is a trail to chase when it happens, and the possibility of death is much less.
Until 2016, the costs were 30€/mo+0.125% for EC, 160€/mo+4% for VISA and MasterCard, 160€/mo+7.5% for AMEX in Germany.
Most German merchants run on margins below 1-2%. Good luck paying 7.5% transaction fee on a margin of 1%.
This is why EC was far more widely accepted, although even that was too expensive for small places, such as farmers selling stuff on the market.
Such studies have also been used to arrive at the EU interchange cap.
[0]: http://www.steinbeis-research.de/images/pdf-documents/CFP_Co...
But yes tax avoidance is a huge problem in restaurants in Germany.
SEPA is the Single European Payments Area, standardizing how to process fast and cheap payments, all transfers are in Euro, from 2018 on also having a standardized API between banks, wire transfers are free or below 1 cent each, etc.
Well, it is used (almost all major stores and large grocery chains support both Visa and MasterCard), but Girocard is far more widespread.
And members of both have reservations against MasterCard and VISA, due to what happened with Rossmann a few years ago (Rossmann sold cuban cigars, as punishment MasterCard, VISA and PayPal seized Rossmanns funds and suspended all payments), but as EC was also bought by MasterCard and merged with the Maestro brand, currently there's no option but to continue on.
Personally, as member of both the REWE eG and coop eG, I'd support a move away from CC to any national or EU based payment system as soon as possible.
Rewe has a fairly complicated legal structure, I'm not sure which you are a member of. There is no single "Rewe eG" which you can just buy into, especially not if you don't happen to own supermarkets.
EC was not bought by MasterCard, the brand was always owned by them (though there have been various mergers). The system behind those cards was not merged with Maestro (which is a different system) but merely rebranded as Girocard, an independent scheme by the German banks. It works without any reliance on MasterCard.
I'm personally not sure either. Originally my entire family was just a member of the coop eG, but when they started to merge with REWE eG in the past months the coop eG offered an option to invest additional money into the REWE eG (at better than usual terms). So we did.
https://www.shz.de/regionales/schleswig-holstein/tschuess-sk...
So now we have some stores that have just been rebranded REWE, some still branded Sky, operating with the same mix of REWE and Sky products, and some accepting CCs, some not.
> The system behind those cards was not merged with Maestro (which is a different system) but merely rebranded as Girocard
In marketing, EC stopped being the main brand, though, and MasterCard provides their EC cards under the "Maestro" brand within of Germany, although they are not operating over the Maestro network, or in any way compatible with it. Take any recent EC card, it'll work only via the EC system, say Girocard Electronic Cash on the back, and Maestro on the front, but doesn't actually have any relation to the Maestro system. That's what I was referring to with the rebranding.
SEPA is the single euro payment area. Here it refers to the cost of a wire transfer.
Now that we are talking about card payments (NFC, chip and pin, etc.): jump into a random Frankfurt taxi in 2017, and IF they are willing to take your card (pretty big if), this will be their method of choice:
http ://fernandodecordoba.es/wp-content/uploads/2012/04/bac1.jpg
They put your card in there, put a paper on top, and proceed to press and copy the embossing of all you card numbers into a carbon copy paper. Talk about swipe card insecurity... That is by far the slowest way, you spend 5 minutes easily.
I agree with the laundering / tax evasion cause only partly: I once wanted to pay upwards of 900€ in IKEA with mastercard. The cashier asked me to go to an ATM that was inside the IKEA building, take out cash from the card, and pay with that. With its scale, I don't think IKEA prefers cash to launder money or evade taxes...
Eurocheque hasn't existed since 2003. The current system is Girocard (https://en.wikipedia.org/wiki/Girocard), it's just that the colloquial name is still "EC".
In most countries, we just tap to pay with NFC (except America, where this only works with Apple Pay or Google Wallet). This is most definitely faster than cash. You can actually go to any store and time it on real customers.
In addition to a.), I like having full control of my money and not be dependent on some third party when making purchases.
Every cashier in Germany (provided they accepted cards in the first place) insisted on "taking" my card, sticking it in the machine for a non-contactless payment, then hand me the machine so I can enter the PIN, then take back the machine, wait for the transaction to finish and then remove the card from the machine and hand me back my card. If that's the standard card-experience, I can imagine why you think cash is quicker...
(At one shop I saw the machine accepted contactless; before the cashier could take my card I quickly paid contactless. The cashier was 50% flabbergasted and 50% upset and seriously doubted I actually paid, until the receipt rolled out to prove it).
I guess Germans are generally very precautious and wouldn't trust contactless debit cards.
Contactless cards also typically have a per-transaction limit in the area of $100~$200, so the amount of damage someone can do without the PIN and before you cancel the card is quite limited. I actually wouldn't be surprised if you do too many transactions in a certain period of time it would ask you to do a PIN transaction.
Again I owe to my colleague for my lunch because I forgot to pick money in the morning.
> stable
Plus fraud is becoming rarer with chip credit cards(and apps which allow you to lock your card much faster in the case of theft), while counterfeit bills are also harder to reproduce these days you can still find some.
So credit cards took off in US in 80s but half of Europe just got out from under communism in early 90s and they were not very trustworthy of western banks so would prefer cash.
Also the banking and payment infrastructure was non existent so needed to be built from scratch. This probably slowed down uptake of credit/debit cards considerably.
Cash is still king in Eastern Europe today.
If privacy is such a concern (and particularly privacy from one's own government), then the use of cash makes sense. My guess is that this distrust of government did grow from the abuses of domestic surveillance by the Nazi regime and East Germany. I'd be curious to see how this breaks down between the old east/west lines as well.
And I'm sure individuals don't use cash for these reasons; but because the system in Germany functions that way out of historical legacy. As a consumer, it's simply easier to buy things with cash.
Not only do they lag in general, but I also remember a study which showed that in Germany higher education levels are associated with significantly less social media use, while it's quite the opposite in the rest of the world.
I had it installed for a few days once. I decided to uninstall it because it took too much attention (there are MANY users in Berlin) and I kind of felt too old. The typical user is a student in the first few semesters.
Older osti don't see it that way. When I say "older" I mean "everyone over the age of 40" so not really that old. They've seen their currency change.
In a hyperinflation environment your priority is converting cash into assets as quickly as possible.
The differentiating factor is whether a solution is supported by the merchant. If it is, you will see adoption. Merchants in Germany do not support CCs and limit debit cards, so people do not use them. They do not do that partly because they can get away with it and partly because the fees they are being charged are high (both per transaction and per POS). Naturally there is room for the government to step in here. E.g., said Poland lowered the maximum allowable fee Visa/Mastercard can charge a few years back; along with that went away minimum spending limits on transactions in shops.
This will change though as Germany starts moving to a cashless economy as, e.g., Sweden is doing.
This caught me out at a McDonald's in Berlin that accepted neither Visa nor MasterCard earlier this decade. Even bigger brands adapt to local culture, it seems.
It's still a far cry from home (Australia) where I hadn't needed cash on hand in quite a long time, but it in terms of convenience it's not a big deal. it certainly beats France where cheques are still in extremely frequent use vs. wire transfers.
It sounds a bit crazy, but by law if a cheque bounces it was a criminal offence (I believe they recently changed it or were thinking about it).
There are a lot of interesting advantages to this, as you can effectively escrow cash without a third party. If you receive a cheque you know you can always (or should always) being able to cash it in.
I went all cash a few months ago for everything except hotels and rental cars. It's very liberating. Credit cards give you 3-5% incentives to spend because you spend more. Since going all cash, we spend in average 15% less.
Money is mostly for buying stuff on the street (bottled water, papers).
[1] http://stats.oecd.org/Index.aspx?QueryId=51648
Why not?
That amount adds up over time.
I'm alright with 1% in direct cash without any fees. That's not a lot but hey, it's beer money!
As far as I know there are no transaction fees on credit cards. That's one of the reasons to stop using debit and use credit. The only fees are on the merchant (1.5%).
Example : https://www.desjardins.com/ca/personal/loans-credit/credit-c... with no transaction fees (or monthly fees) along with 1% cashback.
I try to use cards when I can because I earn Frequent Flyer points, something I wouldn't get using cash. I've already used those points once to fund a Round The World trip (strangely enough, including a trip to Germany).
That being said, yes, they might mark up their products for it. That being said, I doubt it. The retailers I've worked with while developing e-commerce solutions already made enough profits on their products to absorb that fee.
Yet another example of wealth transfer in the US from the poor (who often don't have credit cards, or don't have the high rewards ones because they cost $150+ dollars a year) to the upper middle class.
Yes, in nine states and DC. It was also part of the contract, but the courts struck that down after a big lawsuit.
not really "laws", more like merchant agreements. also, there's nothing preventing shops from offering a cash discount, which is effectively the same thing.
Not sure why people down vote it? then again who cares.
Some cards (e.g. Amazon Store Card) get you relatively high rewards at a specific vendor (Amazon). I predict there are special deals in place with the banks/transaction processors involved that make these rewards more possible.
At the end of the day, the benefits far outweigh the meta-data that is shared. Ok, sure you can see what I ordered at costco and how much I spend on gas.
Yes, it's a data grab by companies, but what are you gonna do... not take 4% back on gas and 3% on restaurants?
Credit cards are rarely accepted in any store but larger ones in malls. Most Germans, and that was pretty spot-on in the article, don't even have a credit card. You can imagine how detrimental that is to building a German SaaS business. Stripe and the like have started going into the ELV market, which is pretty much a direct debit payment - and you need to pass quite a few restrictions to even be allowed to offer ELV as a vendor.
All in all, it is both a consumer, banking and a merchant issue, and it severely limits the German E-Commerce landscape in terms of payment solutions. Paypal has taken over German online payments, since it can be linked with a bank account. Credit cards? Not so much.
Funny enough, banks are now charging withdrawing fees for cash. So if you only ever buy things with cash, you will loose money on just acquiring it. Net loss for the non-banking economy.
I don't, and I don't see much evidence that anyone outside the e-commerce industry should want to see that.
> Funny enough, banks are now charging withdrawing fees for cash. So if you only ever buy things with cash, you will loose money on just acquiring it. Net loss for the non-banking economy.
It's fairly simple to avoid ATM fees. Every bank and credit union I've ever banked at had a network of ATMs, and there's usually no fee for cash back at grocery stores. In contrast, credit cards always charge a fee to the receiving business. Additionally, many workers receive some or all of their pay in cash, cutting banks out of the equation entirely.
I don't think you can reasonably claim that credit cards take less from the non- banking economy than cash.
It's not universal but extremely common at small shops, super markets, 'better' restaurants. Out of the way places, milk-bars ("bary mleczne", it has nothing to do with milk, it's a cheap place to eat simple foods at), pawn and thrift shops, street vendors, etc. are the majority of ones that don't have it.
In Poland such a limit of 10 zlotys is common-ish (I've seen it ONCE in Warsaw when visiting) but will run afoul of agreements terminal owners have with banks and the fees are (I have no idea if that's true, it's hearsay from consumer legal advice websites) percentages not fixed so there is no difference in the end.
Of course even if that's true the incentive is there - pure cash has no fees and most people buy little things very often so it adds up.
I sometimes do wonder though why you can't just send money to a telefone number like in China. Like in most countries, banks move slowly here.
Very true. Whenever payment processors are discussed around here someone will inevitably mention how glad they are that they could finally replace Paypal with Stripe, and why would anyone still use Paypal anyway these days? I like Stripe as much as the next guy, but in Germany it‘s absolutely necessary to offer Paypal and Stripe can only act as an additional gateway.
However credit cards are gaining momentum here - the online store of my employer almost sees an equal share between both methods. And then there‘s still about 15-20% of customers who opt for manual SEPA transfer.
If the fees for offering card payment for a store are still extremely high, they are getting ripped off by their acquirer for some time now. But old habits die hard and many sale clerks (and even some store owners) are not aware of the changing reality.
> On average, wallets in Germany hold nearly twice as much cash—about $123 worth
Not worth a mugging in a Western country that doesn't leave its citizens starving.
Also, stolen CC can be turned into cash.
Also, average monthly salary in Germany is $2666. Sounds WAY more profitable to be a pickpocket.
Probable reasons:
We don't have that much poor people here.
The few that are, get social aid from the public/country.
The few that aren't happy with the amount of money they get, can collect bottles, which give you 0,25€ per bottle. Few hours of bottle collecting in a big city is easy money on the side.
So most poor people here can make 10-20€ a day on the side legally.
Food is really cheap in Germany, so people don't have to carry around much money. Most of the time I only have below 50€ on me and only on bigger travels in the country-side I take more.
So I think there is simply no reason to risk getting caught stealing an amount of money you can easily make legally.
By the way, the big costs of daily life, like rent, insurance and the like are not settled using credit cards, cheques or cash, this stuff is all done by bank transfer and has been done by bank transfer since long before credit cards became somewhat established (for occasional use).
If you start paying small amounts with a card, it is too easy and also you don't keep track of your spending rate, you don't "feel" it, so you end up spending more.
(After all, that's the point of it, shopkeepers wouldn't bother losing time and money to offer card payment if they got no benefit from it.)
This explanation seems absurd (or at least counter-intuitive). If your fear is hyperinflation the two things to do would be to avoid hoarding cash that can be worthless tomorrow and to buy as much tangible stuff as possible with a debt you will have to pay back with this devaluated currency.
It worked, but it was a much slower process than was I was used to. I guess the stereotype of German super-efficiency made me assume they would be quick to adopt such technologies. But I think perhaps that is countered by a degree of conservatism about switching away from systems that are understood, and proven to work.
Often heard (from Germans with some international experience and its point of view) that innovations need around two years to arrive in the heads of Germany. Skepticism towards new ideas tends to impress people more than open-minded consideration of new developments. This may change at the moment as much of the younger generation gains lots of international experience and is exposed to frequent technological developments and innovative start-up culture.
1) CC is slow, at least in Switzerland. Like in Germany, efficiency is baked into the culture - people hate to wait on someone paying his chocolate bar with credit card. It's also not rare for people to show you that discontempt. This trains people into behaving.
2) Switzerland, as most of Germany, is a mostly urbanized place with good public transport and facilities close to where people live. Meaning, there's way less weekly mall-shopping going on than in less dense countries like the US or France. So, the average total price is lower since shopping trips are more frequent, often about every second or third day after work.
3) Security concerns. For a long time CC were as insecure as the US ones, with a simple swipe of the magnetic stripe being sufficient, and CC fraud was relatively frequent. So, many people have an instinct of only using CC when necessary, and if at all possible not in public places. Debit card on the other hand have always been relatively secure (6-digit pin code, 3 tries), so they are used more often, maybe more so than in the German example since Swiss banks have pushed them since around 20 years ago.
Your card info stays safe When you use your phone to pay in stores, Android Pay doesn’t send your actual credit or debit card number with your payment. Instead we use a virtual account number to represent your account info – so your card details stay safe and secure.
So, just as trackable as a credit card number. Or are virtual account numbers unique per transaction?
As a cash-paying German I think that the main appeal to me is that cash payments are a process you can easily understand in its entirety, whereas everything else comes with an infinite supply of unknowns big and small. Sure, it's easy to grasp the basic and get adequate working knowledge, but there will always be lines in the fine print, lines in the code and lines in the physical specs of the hardware that you never read and even if you did you may not have understood correctly. You don't have to worry about these things, but you could, and that seems to be enough for many to stick to what they know.
Also, not paying cash feels lazy, some stereotypes might apply. (Now I wonder about the possibility of a correlation between cash and the protestant/catholic divide still present as a cultural shadow of the past even amongst decidedly atheist Germans - payment customs in the nordics suggest otherwise though)
While the CC may or may not be slow. In the 5+ months I've now been living in Germany, I've noticed that people are very keen to pay with exact change if they can dig it up. This is an even slower process, but also seems to be the norm.
Only works if the amount is less then 25 EUR but still it is much faster then cash.
Definitely not the case in Berlin where cash is king, German bank cards work often, and credit cards are rarely accepted.
I call them "red Netto" and "black Netto" because of the yellow-red and yellow-black color scheme. (The main color is, frustratingly, also the same.)
For my card (N26) I can still use the feature but I'll have to enter my pin. Still faster than sticking it into the slot.
Whatever you think. This is central Europe and visible Badly supported
That's made easier by the VAT system as opposed to the US sales tax system.
Totals are easy to calculate in your head. I'd say this is a stronger driver of cash use than anything cited in the article.
A few years ago I visited Berlin again and tried to leave few cents in local supermarket. It was the only time while being there that I can remember people giving me unfriendly looks. Cashier was also visibly unhappy.
Personally I just throw them in those collection boxes for good things at airports and train stations when I leave the country.
I don't remember any unfriendly looks. But then again, I'm German, so I probably just didn't notice the looks. :)
The cashier's get into trouble if they have an incorrect amount of money in the counter and you're essentially telling them you're too good to bother putting the coins into the donations box sitting centimeters next to you.
If that isnt rude, I don't know what is.
This only applies to big discounters thought. The smallish shops and bakers don't mind at all.
In Austria people often just hand over more and say 'bast scho' (tip). Or otherwise pay a little bigger and take the change. In switzerland it's only the latter and less tipping but again nobody even looks at their own small coins.
Nearly everyone I know just has a glass at home where they throw the small coins in but never would really use them.
Also, American banknotes with their identical size and color over all denominations are just incredibly impractical for anything but building those nice tidy stacks of drug money depicted in the movies. Cash payments in the United States are a terrible benchmark.
Also regarding your third point, anecdotally I have heard that many smaller shops/restaurants are now pushing for non-cash payments as it is more difficult for employees to steal that way.
In Sweden and Denmark there are many places where cash isn't accepted. Come to think of it, I was on a business trip to Frankfurt last week and the restaurant we ate at only accepted cards.
e.g. when buying train or tram tickets the printing of the ticket takes much longer than the payment step.
I pay with my card faster than the vast majority of people with cash. I also worked as a cashier during school, my favorite people were the older ones who'd just hand me their wallet so I could take the best mix of coins for the payment. Most people are horribly slow when trying to pay optimally.
Anyway, at least here in Germany the whole NFC thing seems to be taking off and card payments are even faster now.
If anything, the CC statement gives you an objective summary of your spending, in case you want to recall something 10 months later, or budget for the future. When you pay only in cash, it will be a burden to keep the receipts, organized and readable, for that long.
Plus, isn't it less hassle to use a credit card rather than visit the ATM every so often?
In the US, I always wish they had non-cash lanes at grocery stores (especially at Costco, Walmart) because paying cash is almost always a super slow process.
Do prices and taxes in Germany for stuff usually end up in whole numbers? I think in that case it's easy to calculate total owed and be ready with the exact amount of cash.
So you add the numbers up, pay that much, and get 0.0x back, where x is the number of articles you bought, usually.
In fact, it is way faster than me trying to find the right coins for the chocolate bar.
That's not just because of an aversion to debt. German Banks require a much larger down payment for their mortgages. Usually 30% or more.
Banks will also look at the physical age of the borrower. They will not hand out 20-30 year loans to someone in their 60s.
There is a deep caution against technology here, especially if it's foreign technology. There were numerous attempts by German banks to reinvent the wheel with incompatible payment systems (Geldkarte, ...) none of which could be used for online payment. All of them failed. I would also counter the efficiency argument: having recently visited Norway for vacation, I'm still impressed with the efficiency of grocery shopping where everyone pays with their credit cards. Imho it's a mixture of privacy concerns and generally negative attitudes towards technology.
When I moved to Stuttgart 10 years ago I only could pay with EC card at supermarkets, now I can pay with credit card.
With the RFIDs they even got much faster, I often don't have to enter a PIN or give a signature, just wave my credit card over the terminal and be done with it.
Also I can withdraw money from all ATMs of all banks without any fees.
Looking forward to the day when I can visit Germany without having to go to the ATM.
I think BankAxept is pretty similar to the Danish Dankort.
I also don't buy this cc fee argument. It's regulated (and low) in the EU, perhaps 1-2%. This must be lower than the cost of storing cash, counting cash, paying it in to the bank, transporting it, getting fraudulent notes, people giving wrong change, etc etc.
The other annoying thing is DB machines not taking visa/mastercard and no notes over €10 (though this may have changed recently), which is all you get out of an ATM when you land at the airport. Such a hassle.
I hope Berlin can fix this and the BER airport situation one day.
Of course no one is going to support CC if they can save that much money.
That's a question, but that's not what things look like.
Many German businesses are operating at razor-thin margins, or even at losses. From farmers (which lose around 13ct for every liter milk sold) to small restaurants (often making losses on all of the food, and only minor profit on the drinks) to any other kind of business.
If you are a 4 people company and you're trying to compete (and do so successfully) with american multinational chains, then you don't have enough profits to pay 7% CC fees. You'll be lucky if you can afford the 30€/month + 0.125% EC fees, and many businesses can't even do that.
> If I go to Germany and I'm having a meal with clients I'll phone ahead and see if they accept CC and won't visit if they don't.
Trust me, these businesses prefer not having your business. You'd only make losses for them.
AMEX still takes 7% fees, even today, and even MasterCard and VISA could take those fees in 2015 still.
It's definitely not 7% though, considering Stripe offers AMEX processing for 1.4% in the EU.
Can't see any reason not to accept MC/Visa now though.
Still 10 times higher fees than with the German card systems. If your profit margin is 1.4%, you can't afford 2.2% credit card fees. And if you increase the price, all customers go to the cheaper competitor.
German stores are in a reaaaaal close competition with these things.
I'm not sure about values today, but they don't seem to be much higher if you exclude costs for the actual readers and the connection.
Currently I seem to find for low volume situations only contracts from iZettle and co for 0.95% fees.
EDIT: Just found this Verordnung setting the maximum fee for EC at 0.2%: http://eur-lex.europa.eu/legal-content/DE/TXT/PDF/?uri=CELEX...
> das Interbankenentgelt, das Zahlungsdienstleister bei Debitkartentransaktionen pro Zahlungsvorgang bieten oder verlangen dürfen, beträgt höchstens 0,2 % des Transaktionswerts.
Personally I think cash is convenient. I also use debit card and credit card but somehow cash is the most convenient was of payment in a store.
Come to think of it, some time in the not so distant future, Germany will probably have the last laugh once the entire electronic payment system collapsed under the Next Big Cyberattack (tm)... insert coin here.
Sure, with eShoping on an ever rise, this privacy increasingly vanishes.