Only about one in four Germans have a credit card

The last 30 minutes have been spent in intense self-debate about the need for it, the winning argument being how much cheaper it is in Germany compared to other nations, such as Britain thanks to the euro-pound exchange rate; while the biggest hurdle, how to explain away the heavy expense to the other half, has been successfully surmounted.

You’ve come through with all guns blazing, well-worn credit card in hand, only to be shot down at the counter: "Leider nur Bargeld, oder Maestro-Karte vielleicht” ("Unfortunately, only cash or maybe cashcard").

Something to this effect has happened to me in several German chains - Peek & Cloppenburg and Saturn among them - where I was eager to snap up something spur-of-the-moment and special, but the credit card carpet was pulled from under my feet.

My initial view was that if a High Street store doesn’t want to take my money in the way I want to pay it, then I’ll take it elsewhere.

But that’s probably a fit of pique having become well used to a UK situation in which all shops seem to accept all plastic, and in which the need to walk around with hundreds of pounds in the pocket for a particular purchase has now become rather obsolete.

*quote1*In less credit card-savvy countries, like Germany, traditional cash, a debit card offered by most banks, or even store cards, are favoured.

International chains like H&M tend to take the range of plastic, though the Germany/Poland branch of the company says most people still tend to pay by cash or Maestro-Karte.

Statistics provided by the Bundesverband Deutscher Banken (Association of German Banks) show that the situation may be slowly changing however, with credit card possession rising from 12.7 million in 1996 to 21.5 million in 2003.

For a population of 82.5m, that’s roughly one in four - MasterCard has the biggest market share, followed by Visa, American Express, and then Diners.

(Compare this to a survey carried by AOL.co.uk for unravelit.com that shows UK credit card possession among almost 7,000 responses sampled at more than 63 percent, with two in three people owning more than one.)

It is estimated that you can pay with major credit cards in about 60 percent of places needed by tourists, but expats, who have more to do with day-to-day Germany, may occasionally hit the wall if they don’t check out in advance which credit cards are accepted in a particular store, restaurant or other outlet.

In Germany cash is still king

In truth the policies are designed to protect and attract rather than provoke the customer by keeping prices lower. Accepting one or more credit cards means commission payments by a store to a credit card company, a cost burden that would inevitably be passed onto consumers through higher on-the-shelf prices.

The actual levels of commission particular stores pay appears to be something of a secret, so presumably it’s a question of tough negotiation based on sales history and forecasts, and this may be where the international chains have the upper hand.

A spokesman for electrical chain Saturn Ludwig Deglman says: “Credit card businesses charge the seller handling fees for each payment, amounting to a relatively high percentage of the purchase price. Such costs will flow into the calculation and thereby be passed on to the customer though the cost of goods.

“We don’t want our customers to bear this burden so we have therefore decided in favour of our low price policy and against this payment method.”

*quote2*Düsseldorf-based Peek & Cloppenburg also points out the additional administrative effort and loss of interest in the time between a particular purchase and the actual money coming through from the credit card provider – this, of course, less the commission payment - as key reasons against general acceptance.

A statement says that greater credit card acceptance would also discriminate against those customers who chose not to use credit cards but end up paying more as a result of the store taking them.

“As compensation we have offered our customers for several years the possibility to pay with Maestro cards (formerly EC-Karte) without a pin number in addition to cash, foreign currency, or Travellers Cheques,” it says.

“And following feedback from above all foreign customers, we also decided to accept American Express in all our stores.”

So it’s up to you to weigh it up, cost versus ease of payment. I have to confess that unless the price difference is radical, or the product rather unique, I rather lazily favour the latter.

March 2005

[Copyright Expatica 2005]

Subject: Life in Germany, credit cards in Germany, shopping in Germany