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What is the digital German bank N26 that’s about to hit a million customers?

Berlin-based bank N26 is growing rapidly. In just three years, almost one million customers across 17 European markets have signed up, according to the startup’s founder. But what makes it different from other banks?

What is the digital German bank N26 that’s about to hit a million customers?
A customer using the N26 app on a mobile phone. Photo: DPA/obs/N26 GmbH

“We are now approaching one million customers,” N26 founder Valentin Stalf told Tagesspiegel newspaper in an article published on Monday.

In March, the company announced it had acquired around 850,000 customers. Relatively new to the financial services sector, N26 entered the market in January 2015.

Headquartered in Berlin and offering its services throughout the eurozone, the German direct bank claims that they are Europe’s first mobile bank.

Set apart from conventional banks, N26 doesn't have any physical branches, meaning its customers only have the option of doing their banking online via an app. 

Founder of N26 Valentin Stalf. Photo: DPA

Among the most popular products N26 offers are the basic current account (also referred to as a chequing account in North America or a Girokonto in Germany) and the premium Black account.

One of the major ways in which the digital bank stands out from traditional ones is that it offers its customers free cash withdrawals from most ATMs across Germany.

Moreover, no fees are charged when customers withdraw foreign currency abroad with their Black or Metal Mastercard. And all N26 products include foreign currency transfers.

“They’re going in a totally different direction than other banks,” Maik Klotz, a senior consultant in the payment and banking sector, tells The Local.

Whereas traditional German banks are bad when it comes to handling and operation, N26 as a product is “simple, easy to use and tech-driven,” Klotz says, adding that “smartphone users, millennials and digital natives” are the company’s target audience.

Despite a few other potential fintech competitors with N26 at the moment, “there’s no other bank in Germany today that’s comparable.”

The only downside with the mobile bank is that it doesn’t have any physical branches for customers looking to speak with someone in person, according to the consultant.

Klotz adds that when it comes to the issue of security, “it’s not more unsafe than other banks.”

N26 has plans to enter the UK and the US this year.

With DPA

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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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