Mastercard is discontinuing its debit system and could also herald the end of the classic money card in Germany. Many banks have already reacted.
In the past, all customers who opened an account at a bank received a suitable Girocard. This was often also referred to as an EC card or simply as a money card and was specially developed for the German market. Many of these cards sported the Maestro or V-Pay logo. But Mastercard is discontinuing the Maestro service and is thereby also influencing the cash card system in Germany.
What is Maestro?
Maestro is the name of the debit system that Mastercard introduced in 1991. It enables users to withdraw money from ATMs abroad with their Girocard. The financial institutions and shops read the corresponding data via the magnetic stripe of the card. At that time, Maestro was considered a kind of revolution, because the service made the classic checks and traveler’s checks superfluous. Today, more than 30 years after its introduction, the solution is no longer up-to-date. More and more people are shopping online and need a suitable means of payment to do so. However, the debit card cannot be used for this because it does not support online payment.
This is not the only reason why the financial market is in a state of upheaval. Instead of money cards, more and more banks are issuing so-called debit cards, which combine the EC card and the credit card. A service like Maestro is no longer needed, which is also reflected in the sharp decline in user numbers. Mastercard has therefore announced that it will discontinue Maestro on July 1, 2023.
What does the Maestro end mean for customers?
From July, banks and savings banks will no longer issue new Maestro cards. Existing cards with a Maestro function can still be used until their expiry date, a spokeswoman for Mastercard told TECHBOOK. However, this is sometimes only possible to a limited extent, especially abroad. For example, the debit cards can no longer be used abroad for withdrawals or purchases. This severely limits the functionality of the cards. The banks therefore began to gradually replace the debit cards a while ago. They usually exchange expired cards for a Debit Mastercard, which can be used in a similar way to a credit card. According to Mastercard, the new debit card continues to debit the current account directly, can also be used for online shopping and allows payments to be made at over 100 million acceptance points worldwide.
The company explains the differences between the Maestro card and Debit Mastercard in the following graphic:
The end of Maestro does not herald the end of the classic money card, but it does contribute to it. Visa’s competitor solution, V-Pay, is also not an alternative in the long term. Because unlike Maestro, V-Pay only works via the EMV chip on the card, which cannot be read everywhere abroad. How long V-Pay will also be available is unclear. It has long been clear that the system in Germany is to be gradually replaced in favor of Visa Debit.
Also read: DKB converts online banking – users must act
The end of the money card is imminent
Sooner or later the Girocard will disappear in Germany. The said debit card takes its place. Compared to the classic Girocard, a debit card has a number of advantages such as contactless payment, online payment and worldwide use abroad.
“Today, consumers expect payment methods to work consistently – when shopping online, with a smartphone in a wallet, at home and abroad. This is exactly what Mastercard, together with many banks and savings banks, will also be able to do with their account card in the future, by upgrading the Maestro system to the Debit Mastercard payment method,” explains Dr. Peter Robejsek, Country Manager for Germany at Mastercard.
But in Germany, the financial system has stuck to the Girocard for so long that a changeover is not easy. Especially in smaller shops, bakeries or small cafés and ice cream shops, paying with a money card, let alone debit card, is not (yet) possible. Here the operators rely on cash payments, since the billing is otherwise too expensive. In Germany, paying with cash and with the Girocard is still the most common payment method.
Also Read: What are the Differences Between Debit Card and Credit Card?
The debit card is considered a combination of Girocard and credit card, but may not really be either of the two. Because on the one hand there are the differences to the Girocard just mentioned, on the other hand the fact that a debit card is not a real credit card. It is not debited collectively at the end of the month, but immediately. Especially in hotels or car rentals, it can happen that the debit card is not accepted because the company cannot block a security fee. Bank customers are therefore advised not to rely entirely on the debit card and, especially abroad, to take a real credit card with them as a backup.
And debit cards have another significant disadvantage: they cannot be used to withdraw money at many supermarket checkouts. You can read about the hurdles we encountered with the new card in the detailed field report “Germany is not yet ready for the debit card”.