Electronic cash was, until 2007, the debit card system of the German Banking Industry Committee, the association that represents the top German financial interest groups. Usually paired with a transaction account or current account, cards with an Electronic Cash logo were only handed out by proper credit institutions. An electronic card payment was generally made by the card owner entering their PIN (Personal Identification Number) at a so-called EFT-POS-terminal (Electronic-Funds-Transfer-Terminal). The name "EC" originally comes from the unified European checking system Eurocheque. Comparable debit card systems are Maestro and Visa Electron. Banks and credit institutions who issued these cards often paired EC debit cards with Maestro functionality. These combined cards, recognizable by an additional Maestro logo, were referred to as "EC/Maestro cards".
All of Germany's providers registered with the Central Credit Committee are connected in the working group Arbeitskreis der electronic cash-Netzbetreiber. According to the Federal Cartel Office of Germany, the following providers have considerable market shares:[1]
In 2006, the following companies had market shares of less than 3% each:DVB Processing, CardProcess, Tyco/ADT, Bank-Verlag, CardTech, CCV Allcash, EKS, Alphyra, Experian, Paycom, Lavego, Telekurs.
In 2010, only CardTech and Lavego remain from the 2006 list (as well as the six top companies), with AGES, BCB Processing, CardProcess, Deutsche Bahn, Deutsche BP, Douglas Informatik & Service, Elavon, ESSO Deutschland, ICP International Cash Processing GmbH, Postbank, and Shell also offering services now.
Currently there are two valid acceptance marks for electronic cash: the electronic cash PIN-Pad and girocard pictograms. The Technical attachment to the eligibility requirements for participation in the electronic cash system of the German credit services sector (retailing requirements) includes the retailer's obligation to accept both of these acceptance marks at newly set up points of sale for the time being. Furthermore, the acceptance marks are printed on the debit cards of German financial institutions.
The trademarks on these two acceptance marks are held for the Central Credit Committee by the EURO Kartensysteme GmbH.
For a transitional period another pictogram, the ec electronic cash pictogram, is still to be found as an acceptance mark on debit cards issued by the German credit services sector and on POS terminals. This mark was used during the transition from Eurocheque (payment via certified cheque) to payment via ec-card (card based payment with PIN). After the abolition of the Eurocheque, the allocation of ec-cards by the German credit services sector was suspended and the trademarks for Eurocheque were sold to MasterCard.
The German banking sector no longer uses the ec electronic cash sign as an official acceptance mark for electronic cash. Instead, newly issued debit cards show the two current acceptance marks described above. However, the old ec electronic cash sign can still be found on some debit cards in circulation. These cards, which were issued before the new pictograms were introduced, remain valid, but will gradually be replaced by the new cards as they expire. Newly installed electronic cash POS terminals also bear the new pictograms.
A card terminal, also called EFT-POS terminal, consists of hardware and software components. The main hardware components are the security module, the PIN pad, the printer, the display, the magnetic card reader, the chip-card reader, the communication module and the power supply.
The software mainly consists of the operating system, the communication software, the software of the security module and various software modules for OPT (Online-Personalization of Terminals), EMV as well as additional applications such as prepayment, customer loyalty systems and remote administration. The most important element is the so-called security module, without which the terminal can only be used for electronic direct debit (EDD) transactions.
All card terminals working with the electronic cash system have to be certified by the ZKA (the German Central Credit Committee) in order to take part in cashless payment transactions. Terminals working exclusively with EDD do not require a ZKA certificate. Operating a card terminal requires a provider contract with the network operator. The data collected by the terminal is processed by the provider. For the time the terminal is in use the user (for example, the retailer) can contact the service provider. He can call a hotline and is guaranteed on-site technical support by a technician. He has a contact person who helps with questions about the account, transaction control, managing the contract, etc.
Most ec-cards are equipped with a magnetic stripe. This magnetic stripe is read-only and thus only contains static information. In addition, since the year 2000, more and more banks have started to add the EMV chip to newly issued cards. By 2008, 70% of the cards issued had that chip. The new chip is capable of processing data like a small computer and can respond to requests without the entire contents being read. In contrast to magnetic stripes, the chips cannot be copied easily. To maintain downward compatibility, especially with the Maestro card, which is most often integrated, most cards are still equipped with magnetic stripes. However, usually the chip as the more secure option is chosen wherever both means of communication are technically possible.
The magnetic stripe on a card has three paths. Until 30 September 2009, path 3 of the magnetic stripe was read for payments in Germany. Since then, the international standard path 2 is being read.[4]
Paying at a POS terminal (point of sale) works as follows: Online authorization validates the card against the list of blocked account numbers and checks the given PIN. Next, it verifies whether the amount due is covered by the account balance (balance plus overdraft facility minus pending debits). Payment is rejected if any of the criteria listed above are not met. The authorization as well as the validation regarding sufficient funds and the daily limit is carried out by the headquarters of the institute from which the card is issued. General procedure for electronic cash payment using the magnetic stripe:
The general procedure for electronic cash payment using a chip is as follows:
Steps 3 to 6 are not applicable if the credit limit has not been reached, thus resulting in no transaction costs. Additionally, the payment process is often accelerated because no online connection needs to be established. The bank thereby grants the customer additional credit.
The charge made for an electronic cash transaction depends on the amount of the payment. It is 0.3% of the amount with a minimum of 8 cents.[5] In the oil industry the basic charge is 0.2% of the amount but with a minimum of 4 cents.[6]
Depending on the provider, further charges, e.g. for technical deployment, may be incurred.
According to retailers' terms and conditions, shops have to accept electronic cash payments on the same conditions and at the same prices as with cash. Thus, they have to pay the charges and are not allowed to set a minimum sales amount.
Many retailers provide the option of paying by card or electronic cash, as both payment systems include a guarantee of payment. The electronic direct debit (EDD) system offers no such guarantee and thus exposes the retailer to a default risk.