My bank sent me a new debit card without asking. What does that mean?

Some banks are slowly leaving the EC card with Maestro function. However, the alternative has its pitfalls. Will it be expensive and who will benefit? What customers need to know.

Must be replaced gradually: giro collection form with Maestro function.image/Sven Simon

By 2021, Germans will have completed about 30 percent of all transactions without cash. According to a survey by the Bundesbank, the EC card, which has been officially called the Girocard since 2007, clearly took the first place among electronic payment methods.

However, this popular payment method in particular is on the verge of extinction. Some banks in Germany, including Targobank, are already sending new debit cards as replacement cards to their customers who have no choice but to do so unsolicited. What’s behind it?

Credit card, Girocard and debit card: that’s the difference

In principle, German Girocards with a Maestro function belong to the so-called debit cards. The alternative designation EC only stands for “electronic cash” because the checking account is directly debited with the amount during a transaction. With a credit card, on the other hand, the owner receives a credit limit from the bank. With classic credit cards, the total of all transactions is debited in installments and interest is incurred. For payment cards, the bank instead settles the entire monthly turnover in the following month, partial payments are not possible. Whichever variant you choose, annual charges are always due for a credit card. Some banks, on the other hand, offer the Girocard for free with the current account. Even though it costs money, the monthly rates are usually lower than a credit card.

You can tell if a card is a debit or credit card by the words “Debit” or “Credit” on the back. The product names, on the other hand, are sometimes misleading. For example, Bank ING-DiBa customers receive a credit card with the Visa logo, which, for example, can also be used to book flights and hotels online. However, upon closer inspection, the “Debit” imprint on the back reveals that it is a debit card.

Mastercard apparently wants more market power

However, the German Girocard system does not work easily abroad. The Maestro feature means German Girocard holders can still easily pay for supermarket purchases in London or withdraw money from ATMs in Barcelona.

The symbol with the overlapping red and blue circles is the international debit card system of the company Mastercard. The Maestro feature was introduced in 1991 and enabled both worldwide cashless payments and cash withdrawals abroad. As an alternative, the V Pay debit card system from Visa Europe was added in 2006, although this is limited to European countries, but also Turkey and Israel.

Debit Mastercard from July 2023

Mastercard is now discontinuing the Maestro system. The American company had already announced in October 2021 that it wanted to say goodbye to Maestro after 30 years, partly because the system was not compatible with the online trading standards. However, the Federal Consumers’ Association suspects that the decision also concerns market power. If people always pay with their own Debit Mastercard instead of with the Girocard, Mastercard will earn more than with Maestro.

However, the switch does not mean that the popular Girocard will disappear immediately. Cards with a Maestro function that are still valid will remain operational for the time being. From July 1, 2023, banks will gradually have to replace expired cards with other products, such as a debit Mastercard.

The latter offers the advantage that it can be used as a means of payment both in physical stores and online. Holders can also use their debit Mastercard with digital payment methods such as Apple Pay or Google Pay.

These are the disadvantages of the new cards

On the other hand, the German trade association warns that the new debit cards cause up to four times higher transaction costs, especially for small and medium-sized retailers. If the costs in the Girocard system amount to a maximum of 0.2 percent of the turnover, this is a maximum of 0.8 percent with Debit Mastercard. Therefore, the trade association assumes that a six-digit number of merchants will not accept the more expensive cards.

In its statement, the association therefore advocates a so-called co-badge solution, as is currently the case with the Girocard and Maestro. The banks must therefore continue to offer Girocards that can also be used in the international Debit Mastercard system. In Germany, cheap Girocard payments would still be possible. It remains to be seen whether the proposal will win, as Mastercard has an interest in selling its own products.

Q Pay or pin? That’s what the banks say about it

In any case, many banks do not yet know what it will look like from mid-2023. For example, the Berliner Sparkasse will remain dependent on the Girocard V Pay for the time being. Visa Europe’s Maestro-like system will remain in place initially. At the request of the Berliner Zeitung, Commerzbank and Berliner Volksbank indicated that they had not yet made a decision on a possible replacement product.

On the other hand, Deutsche Bank would like to offer the Deutsche Bank Card Plus, which combines the services of a giro card with those of a worldwide credit card. The card enables both online purchases and payments with Apple Pay and Google Pay. Only the first year is free, from the second year account holders pay 1.50 euros per month. Customers of direct bank N26 already receive a Mastercard debit card as standard, but must order the Maestro debit card separately on request. ING-DiBa already has an alternative with the Visa debit card, which it offers free of charge to every current account holder.

Will the Girocard come to an end?

So far, no bank has publicly stated that it wants to abolish the Girocard completely. However, it is conceivable that most account holders will immediately opt for an international debit card after Maestro has ended to avoid having to lug around two cards. That is not necessarily a disadvantage. The integration with app payments in particular should appeal to digitally savvy young people. On the other hand, both end customers and retailers may face increased costs.

It is therefore advantageous to always compare offers. The consumer center also advises not to automatically agree if the bank sends a new card with changed conditions. The coming years will show whether an equally cheap alternative to the old Maestro Girocard will prevail or whether Visa and Mastercard will eventually largely dominate the market.

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