What are some incomprehensible payment methods

Payment Methods

The method of payment depends on the payment method

When paying, we differentiate between three different forms, which in turn result from the respective situation. Cash payments are classic in retail or in smaller businesses between two people. Payment was expanded in the 1970s with the Euro check, later with the EC card, and then with credit cards. Today, consumers can also use their mobile phones or payment services to settle their bills. In the end, however, there is a transaction on the current account. The current account plays a direct role in cashless payment transactions when transfers, checks, direct debits, standing orders or bills of exchange are involved.

The payment methods in retail

The cash payment

There is little to say about cash payments. The buyer hands the seller the desired purchase price in bills and / or coins. Bills and coins are officially the only legal tender in Germany. While there is an unlimited obligation to accept bills on the part of the service recipient, it is limited to 50 coins denominated in euros or cents. However, cash payments are becoming more and more out of fashion. Sweden is quite a step further here, on average a Swede has less than once a week contact with cash. But the gap between card and cash payments is also narrowing in Germany.

Pay with the debit card

The term EC card is still common, but officially it is a girocard from Maestro or VPay. These are debit cards that debit the account when the transaction is made. By entering the PIN or using an NFC terminal, the cardholder triggers a direct debit procedure. The prerequisite for the payment process is that he either has sufficient funds in his account or the credit line has not yet been exhausted. If neither is the case, it depends on the respective payment system. Some terminals then immediately refuse to pay, others accept it, but the bank returns the direct debit.

Pay by credit card

When paying with a credit card, there are three different options. In the first case, it is a classic credit card with its own credit card account. The payment amount is first charged to the credit card account. At the end of the month, the cardholder receives a statement with all sales for that month. He can now choose whether to repay the outstanding balance in one sum or in installments.

The second variant of the credit card works like the Maestro or VPay card as a debit card. The amount will be debited directly from the account. The advantage of a credit card as a debit card over Maestro or VPay is the larger number of acceptance points worldwide. The third variant of credit card payment is based on a prepaid credit card.

The owner of a prepaid credit card loads a credit before use. The term "credit card" no longer really fits, but the issuers of these cards are the two large companies VISA and MasterCard.

Pay with the debit card

The cash card is also a prepaid card technologically supported by the German banking industry. The cash card cannot be used abroad. The credit can either be transferred online or paid in. The maximum top-up is limited to 200 euros. The cash card is accepted at over 400,000 locations, recognizable by the cash card logo. The card is intended as a means of payment for smaller amounts and is partially integrated into the Girocard. The cash card can be used both in connection with a current account and in the form of a "stand-alone card". So far, however, the debit card has not really caught on in Germany.

Pay with the virtual credit card

Virtual credit cards are still quite young in the credit card family. These can only be used in local retail if they are integrated into a payment app on the mobile phone. As the name suggests, virtual credit cards are not available in physical form, but only as credit card numbers with a check digit. Virtual credit cards are primarily intended for online shopping. These are prepaid credit cards that have to be topped up before they can be used. The variants in which the cardholder also receives an anonymized physical card, which can then also be used in retail stores, are not quite as puristic.

Pay by check

Checks no longer have any function as a means of payment in everyday life. Paying by check at the cash register is completely out of fashion. Checks are basically only used in business life, if at all. Confirmed bank checks as security, for example at an auction, are a variant. Insurance companies still send checks in the event of a claim settlement or premium refund. The fact that people are still paying by check and credit card in retail is a thing of the past.

The payment methods in cashless payment transactions using an account

Banking cards and credit cards are part of cashless payment transactions. However, this also includes the transactions that run directly from account to account.

Pay by bank transfer

Payment by bank transfer is initiated by the debtor. Transfers always come into play when a one-time amount owed is to be paid. The legislature has set a bank working day for the duration of a transfer in Germany and within the euro zone. However, the transfer must be before the daily acceptance deadline for transfers. Depending on the bank, the acceptance deadline is between 2 p.m. and 6 p.m. However, there are no regulations for transfers with destinations outside the euro zone. For particularly urgent transfers, some banks have recently started offering real-time transfers, known as "instant payment". The creditor is credited to the payee within a few seconds. However, this service is chargeable.

Pay with prepayment

Paying in advance is less often done with cash in brick-and-mortar retail stores than by bank transfer when goods are ordered. The dealer does not deliver the goods until the buyer has made the payment. The disadvantage for the buyer, especially when buying in online shops, is that he may have come across a dubious business partner. The goods are not delivered at all, are faulty or not in the way they were ordered. The problem with prepayment is that the funds can only be returned if the payee agrees. The probability is rather low for people with criminal energy.

Pay by direct debit

In cashless payment transactions, direct debits clearly dominate. The reason is that institutional payees such as insurance companies or utilities fall back on it. Direct debits come into play when payments of unequal amounts are made in a given rhythm. The trigger of a direct debit is the creditor, who, however, has to submit a signed SEPA mandate from the debtor to the creditor's bank, giving permission for redemption. In contrast to transfers, the debtor can object to the redemption of a direct debit. If there is a mandate, the deadline is eight weeks. In the case of unauthorized direct debits, the account holder has 13 months.

Pay with promissory note

Promissory notes no longer play a significant role in payment transactions. If payment is made by promissory note, the debtor declares in writing that he will pay the outstanding amount to the obligee by a date specified in the promissory note. The promissory note can certainly contain the passage of interest. Borrower's notes are considered "fungible paper" in Bank German. Translated, this means that the creditor may pass on the promissory note to his own creditor to settle his own debts through assignment. In this case, the debtor now pays the outstanding amount to the second creditor.

Pay with a bill

Similar to the promissory note, the bill is no longer of any importance today. Bills of exchange were also based on the debtor paying the outstanding amount at a later point in time. Since bills of exchange played an essential role until the eighties, especially in the trade for goods orders, there is still a separate bill of exchange law. The legal regulations for bills of exchange are much stricter than for promissory notes. For example, "broken" bills of exchange do not count as "vacation items", meaning that courts have to deal with bill disputes outside of the court holidays. The so-called exchange riding is interpreted as a criminal offense. In this case, two parties involved draw bills of exchange against each other in order to artificially generate credits in this way.

Purchase on invoice

Buying on account is a very safe option for the buyer in the mail order business. He receives the ordered goods and then has a certain period to pay the invoice by transfer. This enables him to check the goods for completeness and perfect condition. The purchase on account completely eliminates the possibility of fraud, as it is with prepayment. There are also no additional fees compared to cash on delivery.

Pay by cash on delivery

For consumers who order goods online or traditionally by mail order, cash on delivery is undoubtedly one of the safest options. You only pay the invoice after the goods have been delivered. Cash on delivery is a train-by-train transaction. Payment is made directly to the supplier, who then transfers the amount to the clearing account of the mail order company. The disadvantage here is the cash on delivery fee, especially if it is a small delivery.

The modern means of payment

In addition to cash payments, card payments and classic account-based cashless payment transactions, other payment methods have recently become established. PayPal is undoubtedly one of the most popular, but Google Pay and Apple Pay want to break into this domain. There are also means of payment in "foreign currency", bitcoins and foreign exchange.

PayPal

PayPal, a payment service founded by eBay, offers the option of transferring funds directly between two parties without the involvement of a bank. For this purpose, an email address is linked to a credit card or a bank account. The client places a payment order via the PayPal interface, the recipient is informed immediately by email that he has received a payment. PayPal was intended to simplify payment processing on eBay and at the same time to implement buyer protection. If the buyer has reason to complain about the goods, he can use PayPal for the purpose of reversing the transaction.

Paydirect

Paydirekt is the answer from German financial institutions to PayPal. The principle is identical with one exception. At Paydirekt there is no intermediary payment service provider. Payment is made directly from account to account. The prerequisite for using Paydirekt is the activation of your own current account for this additional function. The problem with Paydirekt is the lack of acceptance on the part of shops and consumers. Anyone who uses PayPal as a consumer does not need an additional payment service, as no shop operator offers Paydirekt but not PayPal as a payment option. Sending money to friends or acquaintances is also possible with Paydirekt.

Mobile payment

The latest trend in paying in the supermarket is mobile payment. Mobile payment can be made by girocard or credit card as well as by cell phone. Buyers and sellers use the so-called NFC method (Near Field Communication). The chip on the card sends radio signals to the terminal and thus verifies the invoice amount directly at the terminal. There is no need to enter the PIN.

As an alternative to the NFC process, some payment services also offer QR codes that can be used to pay using a mobile phone app. The catch with mobile payment is that there is still no uniform standard. Paydirekt, PayPal, Google and Apple Pay and Deutsche Bank Mobile, to name just a few, are still fighting for market share.

Pay with Bitcoin

Despite the hype that the crypto currencies experienced, Bitcoins still could not really establish themselves as a means of payment. Some Berlin in-bars accept payment with Bitcoin, as do one or the other non-profit organization, but the spread is few and far between. One of the reasons could be that you first need a Bitcoin wallet in order to be able to use Bitcoins as a means of payment. Mobile payment is much easier and can also be understood and used by older citizens. It is possible that the majority of consumers perceive Bitcoins more as an object of speculation and less as a serious means of payment.

currency

Foreign currencies are less exotic, but also less common as a means of payment in Germany. A distinction must be made here. A foreign guest who pays in foreign currency uses "sorts". This is the name for cash. The term "foreign exchange" stands for a foreign currency in the form of book money. However, there are certainly companies that also accept varieties. This is not uncommon at airports and large train stations. But inner-city retailers in larger cities have also been accepting foreign currencies for years. However, payment with credit cards is much more important in other countries than in Germany. As a result, foreign consumers primarily use credit cards here as well.

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