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BANKING

Online banking hack nets over €1 million for crooks

Criminals have successfully stolen tens of thousands of euros from dozens of people across Germany after finding a way around systems that text a code to confirm transactions to online banking users.

Online banking hack nets over €1 million for crooks
Photo: DPA.

The Süddeutsche Zeitung reports that the total amount of money lost in the scam is likely to be over €1 million.

Millions of bank customers use the co-called “mTan” scheme to make sure that only they can carry out transfers and other transactions with their bank online.

After the account holder has entered all the information about the transfer, the bank texts a code to their phone which they then have to enter by hand.

It's a system that had been believed to be secure for years thanks to its reliance on two separate systems with a human in between.

But there have already been two previous waves of frauds in autumn 2013 and summer 2014.

The latest wave of fraudulent bank transactions has only hit Deutsche Telekom mobile customers.

“Criminals have further refined their methods for committing fraud using mTan,” a Telekom spokeswoman told SZ.

She said that the number of frauds this time was “in the mid double-digits”.

The fraudsters managed the trick by first hacking bank customers' computers and installing software that would record online banking passwords.

At the same time, they would find out the victim's mobile phone number.

With that, they could contact Telekom, posing as a mobile phone shop worker, and say that they wanted to activate a new SIM card using the phone number – meaning that they could receive any and all texts meant for the customer.

With access to the customer's online banking and their text messages, the fraudsters had total control over the account.

Telekom says it has now “tightened its methods of identifying retailers” to crack down on the problem and that this method should no longer work.

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BANKING

Card over cash? Why Germany is seeing a new payment preference

Cash has long been king in Germany, with many smaller retailers refusing to join the rest of the world in adopting contactless payment systems. But card-based payments are on the rise, as recent stats about Girocard use reveal.

Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year. 

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons. 

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26. 

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.

With reporting by DPA

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