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> And in Germany you don't know yet what's living without cash and only with a credit card. That's because we had our own system established in 1984 (ELV, elec

> And in Germany you don't know yet what's living without cash and only with a credit card. That's because we had our own system established in 1984 (ELV, electronic direct debit based on the EC cards mentioned elsewhere). From a German point of view, a credit card is a downgrade. - The system covered all German banks (private banks, public banks = Sparkassen, credit unions) because they got their act together and set up a single standard. - It had lower fees than credit card transactions. - Pretty soon the card was included with bank account fees, while credit cards cost extra. - It worked with a magnet stripe and automated electronic clearing in a time when credit cards were merely a slight convenience over manually writing a check which needed to be mailed around the country (you do know why credit cards have name + card number embossed to this day, right? Check out credit part imprinters). All that made it more attractive to merchants, and credit card companies weren't used to competing in a market that already had a big incumbent.

juanmirocks 9y ago
Thank you very much for this background information, I was ignorant of it.
pierrebeaucamp 9y ago
I don't think that matters at all. Many countries have their own debit card system and for what it's worth, I think EC cards are great debit cards. They can, however, not replace credit cards. All the benefits from credit cards really come from the fact that you're paying with credit: - Travel a lot? They sure accept Visa. - Want to pay some street vendor? Square is only possible because they don't need to dial your bank directly. Also the fee per transaction might be cheaper on debit cards, but the cost to acquire a debit card reader from your bank is still high. That's why virtually all larger vendors do accept debit cards in Germany, only smaller businesses are cash only (from my perspective).
- supergarfield 9y ago
  The advantages you give aren't directly related to the cards being real credit cards, though. Visa debit cards work fine all over the world, and with Stripe. (In my experience it's very common in Europe for debit cards to be dual network, domestic and Visa or MasterCard. I don't know about Germany, though.) The real advantages of credit are spending money you don't have, and points/cashback.
  - pjmlp 9y ago
    You can get them with debit cards as well, depending on your bank account contract. On some banks there are bank accounts with automatic credit, up to a certain limit of expenses.
- InternetOfStuff 9y ago
  > the cost to acquire a debit card reader from your bank is still high. My friend owns a retail business, and acquired a debit card reader for it. I was surprised at how cheap it was (ISTR 50€ -- certainly below 100€). He's quite happy with the bank's tech support, too.
pjmlp 9y ago
In Portugal is even a bit better, because all banks got around SIBS, which created a kind of mini-Internet with ATMs machines. So we can use our debit cards for buying tickets for trains, concerts, cinema, money transfer, paying Internet shops, charging pre-pay phones,... All without paying ATM taxes, regardless of the bank of origin. So the majority of people, if they aren't traveling abroad or buying Internet stuff on foreign shops, don't have any need for credit cards.
- slimshady94 9y ago
  So would bitcoin be a step back here?
  - dukeflukem 9y ago
    A step to the side I'd say
  - nlperguiy 9y ago
    Well, assuming that bitcoin can be tracked and deanonymized, it would. Although, all cryptocoins are a step back. There's no way they could support transactions-per-second necessary. As much as I like cards, I also prefer paying for stuff with cash. In Portugal it is illegal to buy an expensive computer, or high-end computer monitor, or a high-end TV with cash. Similar thing in France. Imagine yourself throwing a dinner party in a restaurant with 10 guests and they eat and drink so much that it comes to a point where it's illegal to pay that dinner with cash. Ridiculous.
    - Kurtz79 9y ago
      I would find more ridiculous (or suspicious) someone carrying 2000€ in cash in this day and age for whatever reason, to be honest. It is clearly a measure created to prevent tax evasion, which in Portugal is a real issue (as in most Southern Europe countries, I'm Italian) http://www.theportugalnews.com/news/may-2016-portugal-named-tax-evasion-leaders/40684 http://www.theportugalnews.com/news/may-2016-portugal-named-.... Since, as your parent says, in Portugal cashless systems are convenient are efficient, I don't really see the issue, aside from your personal preference.
kchoudhu 9y ago
You think of credit cards as a way to transfer funds, but miss the "credit" part of the name. I like having the option to to buy now and pay later at the same price point as paying right now.
- pgeorgi 9y ago
  Same price point, except that credit cards usually cost extra here. Since bank transfers are immediate now (unlike in the past when monthly batching was cost effective) and most credit cards in Germany are managed by the banks and coupled to bank accounts, they could just reconcile all transactions immediately (and even reject those that overdraw too much). In such a situation, credit would become a risk adjusted premium feature and you'd have to calculate if it's worth it (vs the bank's regular interest rate on overdraw). Plus, according to the OECD Germans have somewhat higher household savings (relative to household income) than Americans, so the liquidity might be comparable without using credit.
  - kchoudhu 9y ago
    You are missing my point. I don't care if credit reconciles immediately at the bank level or not, I care about what credit cards allow me to do, which is smooth over lumpy cashflow. If I have expenses of 100K a year, without access to credit I have to make 100K a year without fail, or I am insolvent. With credit, I can make 100K one year, 0 the next and 200K (+ whatever interest I need to pay for Year 2) in the final year. The optionality is more than worth whatever interest and surcharges I encountered by using credit in Year 2. Lest you think this is insane, this is how I bootstrapped my last business.
    - Spearchucker 9y ago
      If it were insane nobody would do it. It does, however, come with a magnitude of risk that Americans seem more likely to accept than Europeans are.
harperlee 9y ago
> From a German point of view, a credit card is a downgrade. Not only germans use the german system. When other Europeans go to European institutions that are placed in Germany, we can't use electronic payments. A system established 34 years ago should not be an acceptable excuse for a subpar service. It is a shame (and quite fraud-risky!) to go on a taxi and have to wait 5-10 minutes for the taxi driver to carbon copy your credit card details in the invoice (now he only needs to memorize 3-4 digits for the security number), whilst in the same country Uber, and other similar services that provide immediate payment facilities with no open handling of sensitive data, have been banned.
- pgeorgi 9y ago
  > A system established 34 years ago should not be an acceptable excuse for a subpar service. The system was developed in those 34 years, both on user visible features (EMV card with chip&pin in 2004) and invisible (SEPA Cards Clearing, implemented in 2015). The latter allows any SEPA based participant (and those outside, apparently there's some interest in Brazil) to handle clearing of transactions compatibly. That should allow card based SEPA Credit/Debit Transfers (which draws from 34 years old ELV a lot). Merging incompatible banking systems takes time, but IMHO that's better than just layering another rent seeker or two (the credit card company, plus potentially Stripe) on top. Offtopic, but: > whilst in the same country Uber has been banned Maybe they should have read up on the local regulations instead of spouting their usual nonsense about fighting the taxi cartel? (nevermind that the biggest player in that space is Uber itself) A cursory reading of the relevant laws got me three different ways to try to establish a legal setup in which they could have proved their contribution to the public transport system for a couple of years (after which that could be extended or be made part of the official playbook). But it sometimes looks like reading laws is a fireable offense at Uber.
  - harperlee 9y ago
    I don't disagree with you. There are other entities that solve the issue for taxi service, such as mytaxi, that pay by the rules - still "an extra layer of rent seekers" though. But in general, even if technically possible, not a lot of businesses accept visa or mastercard - be it that the bank does not provide the service, or that they charge extra, it is not available. Luckily PSD2 will soon open the space to more players.
odiroot 9y ago
I'm now in China. We, in Western Europe, are really decades behind them in mobile payments. This is just so much more convenient. And yes, it's probably a privacy nightmare, I agree. But at least you can make this choice in here.
- seanmcdirmid 9y ago
  How is getting your phone out and fumbling with a QR scanner more convenient than tapping your card against a RF surface?
  - sfifs 9y ago
    It's convenient because everyone accepts it and the transaction charges appear to be half of credit card fees (or zero if the merchant uses Tencent's escrow system). When I travel to China, as a foreigner, I'm virtually the only one carrying any cash. None of the locals carry meaningful amounts of cash any more.
    - Feniks 9y ago
      Well some European countries don't have any transaction fees at all when using a debit card. Those mobile pay systems DO.

juanmirocks 9y ago

Thank you very much for this background information, I was ignorant of it.

pierrebeaucamp 9y ago

I don't think that matters at all. Many countries have their own debit card system and for what it's worth, I think EC cards are great debit cards. They can, however, not replace credit cards. All the benefits from credit cards really come from the fact that you're paying with credit: - Travel a lot? They sure accept Visa. - Want to pay some street vendor? Square is only possible because they don't need to dial your bank directly. Also the fee per transaction might be cheaper on debit cards, but the cost to acquire a debit card reader from your bank is still high. That's why virtually all larger vendors do accept debit cards in Germany, only smaller businesses are cash only (from my perspective).

supergarfield 9y ago
The advantages you give aren't directly related to the cards being real credit cards, though. Visa debit cards work fine all over the world, and with Stripe. (In my experience it's very common in Europe for debit cards to be dual network, domestic and Visa or MasterCard. I don't know about Germany, though.) The real advantages of credit are spending money you don't have, and points/cashback.
- pjmlp 9y ago
  You can get them with debit cards as well, depending on your bank account contract. On some banks there are bank accounts with automatic credit, up to a certain limit of expenses.
InternetOfStuff 9y ago
> the cost to acquire a debit card reader from your bank is still high. My friend owns a retail business, and acquired a debit card reader for it. I was surprised at how cheap it was (ISTR 50€ -- certainly below 100€). He's quite happy with the bank's tech support, too.

pjmlp 9y ago

In Portugal is even a bit better, because all banks got around SIBS, which created a kind of mini-Internet with ATMs machines. So we can use our debit cards for buying tickets for trains, concerts, cinema, money transfer, paying Internet shops, charging pre-pay phones,... All without paying ATM taxes, regardless of the bank of origin. So the majority of people, if they aren't traveling abroad or buying Internet stuff on foreign shops, don't have any need for credit cards.

slimshady94 9y ago
So would bitcoin be a step back here?
- dukeflukem 9y ago
  A step to the side I'd say
- nlperguiy 9y ago
  Well, assuming that bitcoin can be tracked and deanonymized, it would. Although, all cryptocoins are a step back. There's no way they could support transactions-per-second necessary. As much as I like cards, I also prefer paying for stuff with cash. In Portugal it is illegal to buy an expensive computer, or high-end computer monitor, or a high-end TV with cash. Similar thing in France. Imagine yourself throwing a dinner party in a restaurant with 10 guests and they eat and drink so much that it comes to a point where it's illegal to pay that dinner with cash. Ridiculous.
  - Kurtz79 9y ago
    I would find more ridiculous (or suspicious) someone carrying 2000€ in cash in this day and age for whatever reason, to be honest. It is clearly a measure created to prevent tax evasion, which in Portugal is a real issue (as in most Southern Europe countries, I'm Italian) http://www.theportugalnews.com/news/may-2016-portugal-named-tax-evasion-leaders/40684 http://www.theportugalnews.com/news/may-2016-portugal-named-.... Since, as your parent says, in Portugal cashless systems are convenient are efficient, I don't really see the issue, aside from your personal preference.

kchoudhu 9y ago

You think of credit cards as a way to transfer funds, but miss the "credit" part of the name. I like having the option to to buy now and pay later at the same price point as paying right now.

pgeorgi 9y ago
Same price point, except that credit cards usually cost extra here. Since bank transfers are immediate now (unlike in the past when monthly batching was cost effective) and most credit cards in Germany are managed by the banks and coupled to bank accounts, they could just reconcile all transactions immediately (and even reject those that overdraw too much). In such a situation, credit would become a risk adjusted premium feature and you'd have to calculate if it's worth it (vs the bank's regular interest rate on overdraw). Plus, according to the OECD Germans have somewhat higher household savings (relative to household income) than Americans, so the liquidity might be comparable without using credit.
- kchoudhu 9y ago
  You are missing my point. I don't care if credit reconciles immediately at the bank level or not, I care about what credit cards allow me to do, which is smooth over lumpy cashflow. If I have expenses of 100K a year, without access to credit I have to make 100K a year without fail, or I am insolvent. With credit, I can make 100K one year, 0 the next and 200K (+ whatever interest I need to pay for Year 2) in the final year. The optionality is more than worth whatever interest and surcharges I encountered by using credit in Year 2. Lest you think this is insane, this is how I bootstrapped my last business.
  - Spearchucker 9y ago
    If it were insane nobody would do it. It does, however, come with a magnitude of risk that Americans seem more likely to accept than Europeans are.

harperlee 9y ago

> From a German point of view, a credit card is a downgrade. Not only germans use the german system. When other Europeans go to European institutions that are placed in Germany, we can't use electronic payments. A system established 34 years ago should not be an acceptable excuse for a subpar service. It is a shame (and quite fraud-risky!) to go on a taxi and have to wait 5-10 minutes for the taxi driver to carbon copy your credit card details in the invoice (now he only needs to memorize 3-4 digits for the security number), whilst in the same country Uber, and other similar services that provide immediate payment facilities with no open handling of sensitive data, have been banned.

pgeorgi 9y ago
> A system established 34 years ago should not be an acceptable excuse for a subpar service. The system was developed in those 34 years, both on user visible features (EMV card with chip&pin in 2004) and invisible (SEPA Cards Clearing, implemented in 2015). The latter allows any SEPA based participant (and those outside, apparently there's some interest in Brazil) to handle clearing of transactions compatibly. That should allow card based SEPA Credit/Debit Transfers (which draws from 34 years old ELV a lot). Merging incompatible banking systems takes time, but IMHO that's better than just layering another rent seeker or two (the credit card company, plus potentially Stripe) on top. Offtopic, but: > whilst in the same country Uber has been banned Maybe they should have read up on the local regulations instead of spouting their usual nonsense about fighting the taxi cartel? (nevermind that the biggest player in that space is Uber itself) A cursory reading of the relevant laws got me three different ways to try to establish a legal setup in which they could have proved their contribution to the public transport system for a couple of years (after which that could be extended or be made part of the official playbook). But it sometimes looks like reading laws is a fireable offense at Uber.
- harperlee 9y ago
  I don't disagree with you. There are other entities that solve the issue for taxi service, such as mytaxi, that pay by the rules - still "an extra layer of rent seekers" though. But in general, even if technically possible, not a lot of businesses accept visa or mastercard - be it that the bank does not provide the service, or that they charge extra, it is not available. Luckily PSD2 will soon open the space to more players.

odiroot 9y ago

I'm now in China. We, in Western Europe, are really decades behind them in mobile payments. This is just so much more convenient. And yes, it's probably a privacy nightmare, I agree. But at least you can make this choice in here.

seanmcdirmid 9y ago
How is getting your phone out and fumbling with a QR scanner more convenient than tapping your card against a RF surface?
- sfifs 9y ago
  It's convenient because everyone accepts it and the transaction charges appear to be half of credit card fees (or zero if the merchant uses Tencent's escrow system). When I travel to China, as a foreigner, I'm virtually the only one carrying any cash. None of the locals carry meaningful amounts of cash any more.
  - Feniks 9y ago
    Well some European countries don't have any transaction fees at all when using a debit card. Those mobile pay systems DO.