Germany Pays Digitally – An Initiative with Potential
Digital payment methods have long been a part of everyday life for many consumers in Germany – and yet, the retail sector, particularly among micro-businesses, is still noticeably lagging behind when it comes to digital payments. While there has been significant progress in recent years – I was recently finally able to pay for my favorite doner kebab with a card – there is still considerable ground to make up compared to other European countries. With the initiative “Germany Pays Digitally,” the industry, together with partners from politics and business, aims to close this gap. It’s a good opportunity to take a closer look at the current situation, explain who can benefit from the program, and point out some important fine print.
Status Quo: Digital Payments in German Retail
According to a recent study by S-Payment, over 70% of consumers in Germany currently use digital payment methods such as card payments, mobile payment, or digital wallets. But the picture looks different on the merchant side: micro-businesses in particular are falling behind. The 2024 “Retail Payment Systems” study by the EHI Retail Institute reveals that around 34% of small retailers still do not accept credit cards.
Yet card payments are steadily increasing. In 2023, card payments accounted for over 60% of in-store sales, with the girocard continuing to dominate. In just four years, this share has risen by 11.3 percentage points. At the same time, mobile payments and wallets like Apple Pay and Google Pay are gaining traction – especially among the under-35 demographic.
Why Micro-Retailers Still Avoid Digital Payments
There are many reasons for this reluctance:
• Costs: Many merchants fear long contract terms, high transaction fees, or the need to invest in new hardware or pay high monthly terminal rental fees.
• Complexity: The market is saturated with solutions – which one fits their business best?
• Security concerns: Some merchants view digital payments as a potential security risk.
• Habits: Those who have relied on cash for years often see no urgent need to change.
• Misperceptions: A Bitkom study shows many retailers underestimate demand for card payments – while most customers want digital options, many merchants still believe cash is preferred.
Germany in International Comparison
Looking beyond its borders, Germany ranks low in terms of digital payments within Europe. In countries like Sweden, Denmark, or the Netherlands, it’s long been standard to pay even for a coffee or parking ticket contactlessly – in some places, cash is already the exception.
In Sweden, over 90% of transactions are cashless. According to the European Central Bank, the average in the eurozone in 2022 was 55% – but in Germany, it was just 30%.
This discrepancy shows that Germany has significant catching up to do. This is precisely where the “Germany Pays Digitally” initiative comes in.
Why Digital Payments Are Worth It – and What Studies Say
Many micro-merchants underestimate the concrete benefits of digital payment methods. However, there are several compelling reasons to accept card payments and more:
- Higher Sales Through Larger Basket Sizes
Numerous studies show that customers who pay by card or smartphone spend more on average than cash payers. The Bundesbank reports a 10–15% higher basket value for card payments.
A study by SumUp also confirms this: small cafés and boutiques saw an 18% average revenue increase in the first six months after introducing card payments. - Meeting Customer Expectations
According to a Bitkom survey (2024), 76% of consumers say they are annoyed when they can’t pay digitally – including at the bakery, farmers’ market, or hairdresser. Businesses that fail to meet this expectation risk frustrating their customers – and losing them to better-equipped competitors. - Faster Processing and Fewer Errors
Card payments are faster than cash transactions, especially contactless ones. This reduces queues and increases satisfaction. Plus, there’s no need for handling change, and there are fewer till discrepancies or counterfeit cash incidents. - Less Cash Handling = Less Hassle
Cash costs both time and money – from daily cash counts to bank deposits and coin counting. Banks are also increasingly charging for providing change, and theft or counterfeit money adds to the cost of handling cash.
According to a study by the German Retail Federation (HDE), cash costs around 24 cents per transaction, whereas card payments can be significantly cheaper with modern pricing models. However, to be fair, these savings will only fully apply once a merchant completely stops accepting cash. - Security and Transparency
Digital payments reduce the risk of theft, burglary, or cash discrepancies. They also automatically generate digital receipts – a real advantage in bookkeeping. - Modern Image
Accepting digital payments has become a marketing asset. Offering Apple Pay, Google Pay, or contactless payments projects a modern, customer-friendly, and future-ready image – crucial when competing for younger, digitally savvy customers.
What Do the Terms of the Initiative Mean for Merchants?
The funding conditions of the “Germany Pays Digitally” initiative state:
“The terms apply to all transactions of the brands EC, Maestro, Mastercard, Visa, and V PAY. The funding covers costs for 12 months from the start of the contract, up to €50,000 in revenue from digital payments.”
Importantly, the term “EC” here does not refer to classic girocard transactions, which many merchants in Germany are familiar with. Instead, it refers to transactions via so-called co-badged cards, such as the Maestro function of a girocard when used abroad or for e-commerce.
For merchants, this means: the cost coverage only applies to international card schemes (Mastercard, Visa, Maestro, V PAY) – not to payments processed through the domestic girocard network. This is significant, as the girocard still accounts for the majority of card transactions in German brick-and-mortar retail. Merchants can still accept girocard payments, but starting in the second year, they will incur higher credit card fees if transactions are processed via Maestro.
If the payment service provider chosen by the merchant enables processing through the girocard network, the cost coverage for the first year must be individually agreed upon with the provider – it is not covered by the initiative.
In the long run, processing via the girocard network remains the more cost-effective option for merchants.
For initiative partners – especially payment service providers – this means they must clearly communicate which transactions fall under the subsidized conditions. Merchants should be thoroughly informed during onboarding about how card acceptance is structured in each package – and which payment methods are covered.
In the long term, the initiative can still offer an important stimulus. With Maestro being phased out (end of 2027) and the growing popularity of Mastercard or Visa-based debit cards, international card schemes will become increasingly relevant in German retail anyway.
By the end of the first year, many merchants will likely realize that their customers prefer to pay digitally – and they won’t want to do without it. That would mean the initiative has achieved its goal of encouraging skeptical merchants to accept card payments.
Market Outlook: Where Are We Headed?
The overall landscape clearly favors continued growth in digital payments in Germany:
• Initiatives like “Germany Pays Digitally” raise awareness and provide education.
• Regulatory measures like Instant Payment or Request-to-Pay drive further momentum.
• Technological innovations (e.g., SoftPOS) lower entry barriers even more.
• Changing consumer behavior: The COVID-19 pandemic accelerated digital and contactless payments – and the trend is here to stay.
Analysts predict that by 2027, over 80% of all retail payments in Germany will be digital. Contactless payments, especially for small amounts, will increasingly become the norm.
Conclusion
Digital payments are more than just a new technology – they’re a core part of modern customer expectations. Those who don’t think digitally today risk becoming irrelevant tomorrow.
We therefore see the “Germany Pays Digitally” initiative as an important step to support micro-businesses in their digital transformation. The key to success is not just technology but education: What solution fits my business? Which providers are trustworthy? What processes need adjustment?
Our recommendation to all merchants: actively engage with digital payment options – not as a burden, but as an opportunity. Proximity to customers, operational efficiency, and future readiness are within reach – as long as you’re willing to take the first steps.
Update 8th April 2025: Will digital payment acceptance soon be mandatory?
The importance of digital payment methods is currently being emphasised by political developments in Berlin. As part of the ongoing coalition negotiations, various media outlets such as Der Spiegel are discussing whether retailers and catering businesses should be legally obliged to offer at least one electronic payment method – such as card or mobile payment – in addition to cash.
Such a step would mean a paradigm shift in the German payment culture, which is traditionally characterised by cash. If it is implemented, this could lead to a significant boost for electronic payment methods, particularly among small businesses that have been hesitant to date.
This political development would be an additional tailwind for the ‘Deutschland zahlt digital’ initiative: in addition to voluntary incentives through education and cost reimbursement, it would also send a regulatory signal – digital payments are no longer a ‘nice-to-have’, but are becoming a basic requirement.
Merchants should therefore not wait for legal requirements, but prepare themselves early on. The initiative offers a low-risk entry into the world of digital payments.