The credit card in Germany - a Cinderella tale

I think consumer attitudes towards personal debt are different in Germany compared to places like the United States or the UK.

Many of the "Credit Card" Schemes I have seen in places like Spain, Italy and Germany are in fact modified forms of Deferred Debit rather than the traditional model of Revolving Credit we associate with Credit Card Operating models.

I'd imagine in the future - with a Ubiquitous Transacting Platform (e.g. Mobile/Cellphone) we will see a wider adoption of Credit "Card" Facilities in a wider range of geographical locations where previously such services had limited subscribers.

I'm reminded of my many shopping trips to SATURN in Germany in the early 2000s. I was always perplexed by this electronic retailer's policy of refusing credit cards. Then one day, while standing in the long checkout queue made longer by people patiently forking out cash to hand over to the cashier, I noticed a sign for a SATURN-Visa co-branded credit card. I thought things had changed until I reached the checkout counter, only to be told by the attendant that the co-branded card was only a marketing tool, and that SATURN's no-credit card policy still applied. In other words, SATURN wouldn't accept even a SATURN credit card!

From there to credit card becoming the most popular payments method ten years later - albeit for the online channel - reminds me of a favorite Bill Gates quote about how we overestimate the amount of change possible in two years but underestimate the amount of change possible in ten years!

Hi Felicitas,

Unless I am very much mistaken (if I am please let me know:) one important reason why credit cards are so popular online among German consumers is the fact that the vast majority of debit cards that consumers hold can not be used for payment in that channel.

Fingers crossed that the Deutsche Bahn co-brand has more success second time around...

By the way: Are you going to CARTES?

Mit freundlichen Grüssen / Best regards,

Felix Kronabetter

Senior Research Analyst, D-A-CH

Retail Banking Research Ltd

Tel: +44 20 8940 1398 | felix@rbrlondon.com

Ketharaman - that's one of my favourite Bill Gates quotes too!  I use it all the time to interpret the progress of EMV chip migration (very slow from a 2 year perspective - very fast from a 10 year perspective).  In this case it looks as if the increased security of chip-enabled credit cards has finally persuaded German people that they're safe to use, as Felicitas points out.

I hate to throw a spanner in the works, but the above article contains several questionable points.

First, evidence from other sources (including EMOTA and Deutsche Bundesbank) show that credit transfer is overwhelmingly the preferred method of payment for e-commerce purchases in Germany. These payments are, of course, not processed by Deutsche Card Services. Incidentally, the article is based upon the 2010 DCS report, and a similar claim was made in its 2009 report!

Second, which major investments were made to move the "debit card infrastructure" to one that conforms with SEPA? The re-branding of EC-Karte cards as girocard cannot be attributed to SEPA, and if the author means making German EFTPOS terminals and cards EMV-compliant then these costs should be apportioned also to credit cards.

Third, the claim that the increased usage of credit cards is due consumers having greater confidence in them because all German credit cards contain a chip is not borne out by the latest EPC data, which show that just 30% of German credit cards were EMV-compliant at Q3 2009 compared to 90% of debit cards. Given this, Germans should be more inclined to use their debit cards if they are really concerned about security.