ING: direct banking accelerates the end of the EC – economy card

As the country suffered from the hardships of the Corona crisis, unsuspected opportunities presented themselves. In the bakery branch, where the saleswoman was wearing gloves and bagging rolls behind plexiglass, you suddenly found yourself in front of a sign: Please pay without contact! Rolls at 2.54 euros, late shopping at the kiosk, the favorite restaurant that only accepted cash: suddenly there were card readers everywhere. A German peculiarity has remained in many places: often only money transfer cards, formerly known as EC cards, were the most popular payment cards in this country.

If you want to use one of these as an ING direct bank customer, you will have to pay it in the future: the bank wants to have 99 cents per month on those of its nearly ten million customers who want still use the classic Euroscheck cards. This is evident from the new price and service list that the bank published on its website on Tuesday and which was first discovered by the industrial department finanz-szene.de.

With this, one of the last remaining steadfast financial institutions in this country is effectively ending the era of the free checking account. As a customer you will be able to cancel the Girocard in order to save a little less than twelve euros per year, but without this card it simply does not work. At least in Germany, where the typical “but only with EC” can still be heard frequently, as payments with Visa or Master cards are associated with higher fees for the merchant.

Why the Girocard is being phased out

However, the postcard directly linked to the account, that German electronic bank card block, is a thing of the past. Indeed, ING is joining a growing number of banks which are gradually abandoning the EC card as a standard account card.

Customers of direct banks at ING, DKB, Comdirect or Consorsbank have long received a free Visa debit card in addition to the Girocard. You can imagine it as a credit card that you neither have to top up nor pay monthly because it is directly linked to the checking account. While Comdirect has long offered only postcards as an option, the DKB has also announced that it will make Visa debit cards the standard, while postcards cost a fee.

As fluid as the traditional German card works, it has considerable drawbacks. It is just as unsuitable for online commerce as it is for person-to-person payments. It only works in Germany through network operators approved by banking associations – and requires a Mastercard or Visa interface to be able to be used abroad as well. Bank customers can recognize it by the “Maestro” or “V-Pay” labels on their cards.

The market power of American suppliers is increasing

It is above all the card suppliers themselves who determine the creeping end of the girocard. Mastercard recently announced that it will completely deactivate the Maestro feature in summer 2023. By then at the latest, banks will no longer be able to issue new Maestro cards, while old cards are expected to remain valid until 2027. Mastercard justified the approach by adapting to the digital way of life. The Maestro feature was “originally created for a physical world” and cannot be used consistently. In other words: it is no longer up to date. Experts expect Visa to follow suit and V-Pay has no future either.

The two main card operators in the United States are thus consolidating their market power: an alternative European system does not yet exist, banks can hardly ignore Visa and Mastercard, electronic payment transactions in Europe – with Google and Apple Pay, with PayPal and card providers – prospect in US business hands. A consortium of more than 30 European banks and payment service providers is currently working with support from the EU and the ECB on its own system, which is expected to cost billions to develop. Because it is also a question of power that will control payment transactions in the future. And that will be decided in the years to come.

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