EC cards will soon be unusable abroad?

Created: 04/10/2022 08:46

By: Andreas Hoess

Withdrawing money in the Czech Republic with a German bank card and paying for pizza in Italy: Thanks to Maestro, this was part of everyday life.

But now the system is on the verge of collapse.

What this means for consumers.

Munich – The fact that German bank customers have been able to pay and withdraw money almost everywhere in Europe with their EC card is due to two US credit card companies: Mastercard and Visa.

With Maestro and V-Pay, you make it possible for German giro cards to work abroad.

Mastercard will now discontinue Maestro, which is used by 90 percent of giro cards, from 2023.

And according to banking experts, V-Pay from Visa, which is more of a niche offer anyway, could soon be history.

Will Germans soon no longer be able to use their bank cards abroad?

And is the giro card completely on the verge of extinction?

The most important questions and answers.

How long will the Girocard still work abroad?

Giro cards are a purely German payment system that has grown historically.

Only the cooperation with Maestro or V-Pay makes payments and cash withdrawals with giro cards possible abroad.

The lion's share of the approximately 100 million German giro cards are affected by the Maestro shutdown, 42 million of which belong to customers of the savings banks and many other customers of the Volks- und Raiffeisenbanken.

From July 2023, German banks will no longer be allowed to issue new giro cards with a Maestro function.

"As long as they are still valid, the existing cards will continue to work abroad," says Christian Löfflmann from the Bavarian Savings Banks Association.

At the latest in 2028, the end of the last giro cards with Maestro function.

What comes instead of the Maestro function?

This differs from bank to bank.

The direct banks DKB and ING no longer provide a giro card for the account, only a Visa debit card.

If you still want a giro card, you have to order it from the DKB for 99 cents a month, for example.

Debit cards are accepted worldwide and also on the Internet, but unlike credit cards, payments are still debited immediately.

The savings banks and the Volksbanks and Raiffeisenbanks take a different approach with the EC card.

They will continue to offer their customers giro cards after 2023, but they also have the function of a debit card via so-called "co-badging".

This gives you two cards in one, i.e. a giro card for payments in Germany and a debit card from Mastercard or Visa for transactions abroad and on the Internet.

They will automatically replace the expiring Maestro cards step by step, with around 1.5 million cards being exchanged at Bavaria's savings banks alone in the coming year.

It is similar with the Raiffeisen banks.

"So nothing changes for customers in day-to-day use," says Steffen Steudel, spokesman for the Federal Association of Volks- und Raiffeisenbanken.

Customers would even get additional functions such as the option of making payments on the Internet, adds Christian Löfflmann from the Sparkasse.

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How does Mastercard justify the Maestro end?

Mastercard argues precisely with these transactions at Internet retailers: The fact that you can hardly pay with the old Maestro system in online shopping is simply no longer up to date.

Nevertheless, there are probably two other reasons for the Maestro exit: If the 400 million Maestro customers switch to the normal Mastercard system, the provider will save costs and thus probably increase its market share.

After all, some customers will immediately swap their Girocard for a debit or credit card.

Will it be more expensive for customers in the future?

Mastercard also charges higher fees for the new system with more functions, bank circles confirmed to our newspaper.

The additional costs are likely to be passed on to customers - for example in the form of higher account fees or additional costs for the card.

In addition, merchants could have to pay higher costs for card payments in the future, bank professor Jürgen Moormann from the Frankfurt School of Finance told the

.

The Maestro-Aus weakens the giro system and increases the market power of Mastercard and Visa.

And the two US providers could use that to boost transaction prices.

Does this mean that the giro system is on the verge of an end?

"Certainly not for payments in Germany," says Christian Löfflmann from the Savings Banks Association.

"Giro cards are far too established in Germany." In the first half of 2022 alone, more than three billion payments were processed with giro cards in Germany, the cards are accepted at over a million locations - and around 250,000 locations only accept giro cards and no debit or credit cards, including mainly small retailers such as bakers or butchers.

According to the service provider “payment experts”, transactions in the giro system only incur a 0.25 percent fee for merchants, while credit cards are much more expensive with a fee of between one and two percent.