Money and Payment in Germany

"Money makes the world go around, the world go around..." Wasn't it that what Liza Minelli once sung? The same is true in Germany. However, Germans have their special customs when it comes to paying. This page will introduce you to the most important traits.

 

My electricity supplier asked me to pay by "Lastschriftverfahren". I know this means direct debit, but how does it work?

Money and Payment in Germany

No reason to worry! Paying by “Lastschrift” or direct debit is a convenient way to pay one’s bills. Participation in this pro­cedure will allow the electricity supplier to directly collect from your account. Now, take this literally. That company will transfer money from your ac­count to theirs. You are not to do anything anymore to pay the bill. This prac­tical side has some distinct advantages. You will never again pay late because it is up to your supplier to make sure he gets paid. The drawback to this is that the supplier can easily collect too much. But if they do, you have six weeks to countermand the transfer. So check your account statements at least once a month. N.B. direct debit is very common in Germany. No one can force you to get in on it, but big companies for basic supplies like water, natural gas, electricity expect you to either use direct debit or pay in advance. Sometimes they even give you discounts for direct debiting. Common phrasing is “zahlen per/mit Lastschrift”, (paying by direct debit).    
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What is an EC card? Is that another kind of credit card like VISA®, MasterCard®, AmEx® or Diner’s Card®?

No, not at all! An EC card is a synonym for electronic cash. When paying with this card you will allow that company to directly debit your account. The EC-card is a remnant of the old eurocheque system and is nowadays often called MaestroCard. Until 2004, you could pay with an Eurocheck and present the EC-card to prove you owned the check. Two features of this check made it popular. Up to a certain amount, the checks were guaranteed, and they were accepted all over Europe. However, since checks in general have lost prestige as a method of payment, and since the EC-card grew even more popular, the checks were simply abolished. The remaining card itself is still accepted all over Euroland. No one looks twice, if an Austrian pays with his EC card in Greece or Italy. 
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What does it imply to pay “with my signature”? Will I have really paid without spending any money in the end?

Paying with your signature is actually a comfortable way to pay. When entering your card into the reader this machine will print your bank details on the cash register slip and then you sign it. While you wait for the machine to start printing, your bank will contacted to find out if your card has been barred. Your signature acknowledges that the payment as printed is okay and that this sum can be directly debited from your account. One or two days later, your account will be debited. The advantage for you as the customer is that you have the right to countermand this direct debit. This disadvantage for the honest business is that they will have to initiate collecting proceedings. Since this procedure is insecure and very troublesome for many tradespersons, this system has been abolished at the end of 2006. However, there is still an interim period during which shops will still accept this way of paying.
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What is paying with my card's PIN? What are the implications with this method?

The electronic cash method checks already in the shop if your account has enough credit for the transaction. This is sure payment for the shop. However, you as the customer may not contradict this deduction. Banks can return the debit if your account lacks sufficient credit at the time your purchase is to be booked from your account.
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Specimens of the EC Symbols

EC-Scheck (now abolished)

pay with your signature

Pay with your PIN

just sign to
pay
pay with your PIN