I used to live in Poland (so just across the border from Germany) and now I'm a UK resident, and your question is really baffling, since in both of these countries people use (contactless) card payments for pretty much everything. Germany is definitely an outlier and your comment doesn't really explain why. Is this a cultural thing, regulatory issue, or maybe banks colluding to protect their interests?

It's true Germany uses cash a lot more than other countries, but I wasn't trying to say we don't do card payments. I just said we don't use credit cards, we use debit cards instead which come by default with any standard bank account. However, these cards are neither MasterCard nor Visa and therefore do not work in online payment scenarios.

I have a credit card, but it is paid in full at the end of the month automatically, so for all intents and purposes it's essentially another debit card. Everyone I know in Germany who has a credit card uses it this way. In fact, my bank didn't even ask me if I wanted it set up any differently, so I have to imagine it's not just my social circle handling it this way.

For anyone confused about the debit card comment: A German debit card isn’t the same as any other. It doesn’t have Visa or MasterCard co-branding like other countries’ debit card, nor a 16 digit number, so it can’t be used online. I would rather have translated Girokarte to bank card, because there are actual debit cards with Visa/MC co-branding which are available in Germany, but less common than other kinds

Are debit card only German retailers supporting Visa / MasterCard debit cards now?

Many UK banks used to issue Switch/Maestro cards which interoperated with the German bank card system so were accepted in German supermarkets, but these got phased out for Visa / MasterCard debit around 10 years ago meaning I had to start using cash everywhere.

I've never heard of Switch, but to my knowledge there is nothing about Maestro that integrates specifically with the German banking system. It just so happens that German debit cards are typically co-branded as Maestro (and nowadays sometimes V-Pay), which is why it was commonly accepted. The fact that fees were lower than credit cards probably played a significant role in that.

When the EU capped the interchange fees in 2015, many retailers started accepting MasterCard and Visa here. AMEX is exempt from the regulation since it's a three-party system and less commonly accepted. I'm not aware of any retailers that accept MC/Visa debit, but not credit cards or vice versa.

I live in Poland. I do (contactless) card payments every day, I rarely even have cash in my wallet. But I don't have a credit card and most of my peers / family doesn't have one either. Our debit cards will usually not work for on-line payments (the type that requires card number + cvv). We do, however, have a widely adopted system called Blik[1], which is instant mobile payments (incl. POS payments, the terminals are adopted to process it, and many ATMs support cash withdrawals via Blik). I think it would be hard for any payments processor to get significant market share here without support for this, for many it's the default, then I think wire tranfer is the 2nd option, shopping elsewhere the third one, card payment maaaybe the 4th choice.

[1] https://polskistandardplatnosci.pl/en/

Most debit cards in Poland are standard Visa or Mastercard and definitely work online, sometimes you just need to activate them before the first payment for security reasons, but you're right that Blik seems to be getting more and more traction recently.

Yes, PayPass seems to be the go-to method in the physical world, even more so now (they have doubled the limit for non-PIN payments due to COVID-19 recently, so people don't use cash and don't touch the terminals as often), and Blik is winning on-line payments. The cards reportedly do work on-line, but I have never bothered to activate them. I have a Revolut card now for the odd CC payments with US-based companies, but I hardly ever use it for this purpose. I don't get the security model of CC, to me it's like: "here are all the details you will ever need to charge me an arbitrary amount until the card expires in X years". Any other method I have ever used was 2FA: I had to authorize the transfer of funds from my account to the recipient by some means.

Swede here. Really baffling for me too. My kids have pretty much never even seen cash. I use the nationwide app Swish to send money to people using their phone number (almost every Swede is connected since it's pushed by all big banks) and only use contactless credit card.

How come Germany is so cash positive? Personally I think Sweden has gone a bit far, where some old people have been put in a weird spot where they can't pay because they're technologically illiterate.

Other people have replied to your message already and pointed out that we do use cards, just not credit cards. I figured that was clear in my comment, but apparently it wasn't, so I'll go ahead and edit that.

As for why we're so cash positive: one of the factors is privacy. If you pay for everything electronically both your bank and merchants are in the position to build a profile on you. If you use a non-local scheme (e.g. MC or Visa), they can too.

> we do use cards, just not credit cards. I figured that was clear in my comment,

I think the confusing part of your comment was where you consider non-credit cards (debit, prepaid etc.) to be distinct from VISA/Mastercard. That is not the case in most countries. It used to be the case in Germany, but is slowly changing as more and more debit cards are VISA/Mastercard cobranded.

Germans tend to take on very low levels of debt (speaking broadly). There are lots of hypotheses about the psychology behind it: https://www.bbc.com/news/business-31369185

I like the quit romantic explanation best, that debt in Germany has a moral component. "Debt" and "guilt" are nearly the same word, so taking on debt is a topic of moral philosophy: It's a sin ;-)

Another German. We use "cards" all the time. But these are just cashless and tied to our SEPA accounts (so not a credit card).

>But these are just cashless and tied to our SEPA accounts (so not a credit card).

which wouldn't be a problem for shopping online if they had a Visa or MasterCard cobrand, as these can be debit and tied to your bank account as well.

It's only slowly changing with some Sparkassen issuing MasterCard debit cobranded cards in late fall (https://www.f-i.de/News/ITmagazin/Archiv/2020/Einfach-mobil-...)

Interestingly online payments with Maestro (what cards are commonly co-branded with right now) are possible as well with quite a few sites, but the Maestro card number is not exposed and even if you manage to get it, I believe the cards are typically not enabled for that.

That's a peculiar choice, but I assume the decision was made to appeal to the typically skeptical German market. I do wonder why it wasn't made opt-in, though.

As a Canadian (where most people use debit/credit) my first time in Germany as a tourist I once had to leave my passport as collateral at a restaurant to go find an ATM to pay for our meal as I didn't have €80ish in cash. It flummoxed me almost as much as seeing Germans eat a hamburger with a knife and fork! ;-)

When asking around I got several answers. Everything from a cultural aversion to debt (and spending via cash makes it easier to track your spending), not wanting to be tracked where you shop due to not wanting the government to know (comes from Nazi/East German past), and just being culturally conservative and not really liking change all that much.

I didn't like it as being a tourist meant I was eating out a lot, etc. I had to carry a lot of cash around that I'd only have to pay a fee to convert back if I had any left.

Having many currency crashes going back to post ww1 probably is one of the causes - and maybe a more healthy if cynical view of government.

Currency crashes favor debtors, don't they?

I mean complete replacement of a currency and its German savers that have the fear that their savings will become worthless

Probably a cultural thing.

Debit card means you're responsible and take money out of low/zero interest checking account at the principal bank where we Germans hoard our money.

Credit card means you're on shaky financial ground, deal with credit card companies with their fine print, risk punitive overdraft charges, and have probably no idea if you have any money left.

Sadly, things are changing and many people seem to take on irresponsible loans (i.e. for anything except real estate).

>Probably a cultural thing.

Associating Mastercard and Visa to credit and not debit as well.

>or maybe banks colluding to protect their interests?

Mostly banks and retailers colluding together to use a cheap domestic-only POS-only scheme (think Przelewy24, but offline or LINK but at POS).

Hardly "collusion" that most nations have some form of debit payment system that is independent of the Visa/MC networks.

Yes, but in most countries, such debit cards are co-branded with Visa or Mastercard to make them usable abroad or online.

In Germany, most banks still see these use cases as an opportunity to upsell their loyal customers on their expensive credit card products (not in terms of interest really, but rather because of high monthly and foreign use fees).

Living in Germany and my company is based here. We tried SEPA but it’s a PITA to charge customers with it. Especially B2C which we are. Customers can arbitrarily chargeback even after several days. Not only that, they can ask for a refund, get the refund and then charge back. So we end up paying them! And there’s no way to prevent it. At least that’s the way it was a few years ago when stripe sepa was still beta.

The interesting thing however, we A/B tested with and without SEPA and basically saw no difference. Only German people used it, but when it wasn’t available they managed to find a credit card or use PayPal.

I’d love it if banks were making instant payments simple and verifiable, but SEPA feels like something from the 70s to me.

Minor terminology nitpicking: SEPA is just "Single Euro Payments Area", you're speaking about SEPA direct debit specifically.

These concerns still apply to direct debits, unfortunately. The reason being that there's barely any authorization for direct debits, you just need the bank account number and name. Isn't the situation somewhat similar to CC transactions without 3D Secure/whatever it's called? I seems to recall reading in my bank's terms that I can chargeback transactions for something crazy like a year. You always need a "mandate" to debit an account and if you get that properly signed by the customer, you should be able to get the bank to reverse the reversal, but I can appreciate the bureaucratic overhead.

I was only offering it as a potential solution if getting people to sign up is genuinely difficult.

The thing with PayPal is: they offer direct debit to customers and I'm assuming that's how most people who would've otherwise used direct debit directly with you ended up paying. It is my understanding that PayPal is also aware of the risks associated with this and offers merchants the option not to accept payments through it. I can't seem to find an article just now, but I remember instances where PayPal told me something along the lines of "this merchant does not accept payments via direct debit, please use a credit card instead". I can only assume this is because they at least partially pass on the risk.

> You always need a "mandate" to debit an account and if you get that properly signed by the customer, you should be able to get the bank to reverse the reversal

That's unfortunately not true. There is no recourse to direct debit returns; there is no dispute resolution process or anything like that. The presence or absence of a mandate only impacts the timeframe for returns to be files, as far as I understand.

> Customers can arbitrarily chargeback even after several days.

You are aware that this is possible with credit cards as well, right?

Credit card chargebacks have an appeals / dispute resolution process. SEPA does not.

The process for SEPA is called "sue them"/"press fraud charges".

Against who? An email and an IBAN number? For our B2C with relatively small charges it definitely wasn’t worth it. Even CC chargebacks we don’t bother to dispute because the process is painful and virtually impossible to win (banks side with their own customers typically)

The latter, mostly. And I was more referring to the existence of the dispute resolution process, not the viability for random low-value transactions.

>However, Stripe offers SEPA direct debit, which is usable with any European bank account and may work better for you.

1) SEPA has an 8-week no-questions no-appeal refund model, which is fundamentally incompatible with a SaaS business

2) Stripe doesn't support SEPA on Checkout

3) Stripe doesn't support SEPA on non-EU/US accounts

From experience, (1) isn't really a problem. If payments bounce they do so within a few days due to insufficient funds or fraudulent use. After that, refunds are extremely rare. Esp. since most European countries have easy systems for small claims which allow you to claim the money back.

Regarding points 2) and 3), I wasn't aware of those limitations. I admit to never having tried to use SEPA direct debit with Stripe, I just saw it in their docs.

Regarding 1): is it? Credit card payments can also be charged back, often for a period longer than 8 weeks. And both "aaS" products as well as certain retailers selling and shipping physical goods, do offer direct debit. I can't quote any fraud rates, but it certainly seems possible to do it.

Credit card payments have an appeals/dispute resolution process.

SEPA doesn't. You have to sue your customer if you want the money back.

https://www.williamfry.com/newsandinsights/news-article/2013...

Why does that affect SaaS businesses specifically? I would think that's at least as much a problem (if not worse!) for businesses that do non-recurring sales and also for businesses that sell physical goods or non-scalable services. It sounds like if I pay for a steak or a haircut with SEPA, I can get a full refund eight weeks later and make it the restaurant or barber's problem to chase after me for the money, right?

That's why you can't pay for a steak or a haircut with SEPA I guess.

Actually you can. A few years ago, when paying with a German bank card, very often the transaction was turned into a direct debit transaction, because they used to be cheaper.

This used to be very common in supermarkets. Every time you had to sign the receipt this was happening. It's not as common nowadays as the fees are now more or less the same.

That was a decade ago. Esp with more traveling (car rentals and many hotels abroad require credit cards), penetration of CC in Germany is very high now. Usage isn't, many like to use their debit card or cash. But even older folks I know all have a credit card they get out a few times a year if no other payment method is available.