Status: 01/26/2022 08:05 a.m
Known as the EC card, the Girocard is very popular in Germany. But the phasing out of the Maestro system could herald a change. Mastercard and Visa are deliberately pushing other cards on the market.
Almost every German has it in their wallet and uses it: the Girocard, also known colloquially as the EC card. It is the most popular bank card in Germany. According to the Bundesbank, 95 percent of Germans have at least one Girocard, but only slightly more than half have a credit card. That could become a problem. Because the Girocard will have two fewer important functions in the future: withdrawing money and paying abroad.
Girocard without Maestro in future
In autumn 2021, the US payment service provider Mastercard made a far-reaching decision: From July 1, 2023, Maestro-enabled money cards may no longer be issued. Maestro is the payment system that makes transactions abroad possible in the first place. It can be recognized by the red and blue symbol on the giro card. And this will soon no longer be the case. The company justifies the step by saying that the function is not sufficiently designed for online trading and is therefore no longer up to date.
Does Mastercard want to earn more from online trading?
The consumer advice center has a completely different assumption: “Especially since the Girocard is a standard means of payment in Germany, it could also be that Mastercard would like to earn more from online sales,” says the website of the federal association.
If a credit or debit card, for example from Mastercard, is used more frequently for payment instead of direct debit in the future, the online shops will pay fees to the company. The consumer advice center concludes that this would greatly increase the share of credit and debit cards on the German market.
US financial giants are pushing debit cards onto the market
Claudio Zeitz-Brandmeyer from the Federation of German Consumer Organizations observes that the US groups Mastercard and Visa are currently pushing their own payment card systems onto the market, the so-called debit cards. “With its decision (to switch off the Maestro system), Mastercard is increasing the pressure on individual institutions to use its debit card.”
Maestro is still implemented on most Sparkasse cards, but the Volksbanks offer their customers V-Pay from Visa. However, industry experts believe that Visa could follow Mastercard’s decision and abolish the foreign payment system for the Girocard.
Debit or credit card?
So the giro card model, which is so popular in Germany, inevitably has competition. More and more institutes are offering so-called debit cards from the outset. Comparable to the giro card, because the account assigned to the debit card is debited immediately when a payment is made. Unlike credit card payments, where a loan is actually granted, which is usually only debited at the end of the month – plus accrued interest.
However, the credit card is the method of choice when it comes to payment transactions abroad. Hardly any hotel reservation or car rental works without the small plastic card. It can be used, for example, to deposit a non-cash deposit to cover possible damage to the room or rental car. Here the debit card, which looks confusingly similar to a credit card, is often not recognized. Consumer advocates advise checking exactly which bank cards you have in your wallet and retrofitting them if necessary.
How the banks will react to the phasing out of the Maestro function will vary from institution to institution. There is still a bit of time, because consumers can use their Girocard with the Maestro symbol until the end of the term – by December 31, 2027 at the latest, emphasizes the Federal Association of German Volksbanken and Raiffeisenbanken.
European response is a long time coming
However, a uniform European payment system is still a long way off. Just the year before last, 16 major European banks founded the European Payments Initiative. The aim is to oppose the overpowering US financial service providers such as Visa, Mastercard and Paypal. However, well-known participants such as Commerzbank and several Spanish banks have recently withdrawn. For consumers, this could mean that in future they will have to conduct their financial transactions online and abroad, primarily via US providers – who could then also enforce their conditions as monopolists.