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Google Pay launches in Germany. But will cash-loving Teutons take to it?

Google Pay made its debut in Deutschland on Tuesday, making it the 19th country in the world to introduce the mobile payment service. Some experts say though, that the technology is answering a question Germans aren't asking.

Published: 26 June 2018 16:33 CEST
Google Pay launches in Germany. But will cash-loving Teutons take to it?
A customer using Google Pay in a cafe. Photo: DPA

Tech giant Google is now allowing its Android smartphone users to make contactless payments in shops. In doing so, it hopes people in Germany will take to the payment method in a country where cash remains king.

Contactless payment is also known as “tap-and-go” since it refers to a method by which consumers make purchases via smartphone or (credit, debit and chip) card by tapping it near a point-of-sale terminal.

FOR MEMBERS: Google is coming to Berlin Kreuzberg and locals are far from happy. Here's why

In order to use the service though, cash registers must support the payment method by being able to sync to the store checkout using Near Field Communication (NFC); a significant number of terminals in Germany have already been converted accordingly. Google Pay can also be used for online purchases. 

The businesses where Google Pay is accepted in Germany include, among others, Media Market, Aldi Sued, and Adidas, as the Statista infographic below states.

Users will moreover have to be a customer of either Commerzbank, it’s subsidiary Comdirect, digital bank N26 or Boon. Clients of Landesbank Baden-Württemberg (LBBW) and UK digital bank Revolut are also in luck, as these banks are set to soon follow suit.

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

With its launch in the German market, Google has its sights set on overtaking its biggest competitor, Apple.

Whereas iPhone has a 23 percent share in the German smartphone market, Android’s share is 76 percent, which gives Google a huge advantage.

Apple has its own iPhone payment system which has not yet launched in Germany. Unconfirmed reports state that Apple Pay will launch in the Bundesrepublik later this year in autumn or winter.

In spite of Google Pay's official launch and Apple Pay's pending one, fintech consultant Maik Klotz told Deutsche Welle he doubts whether the majority of Germans will adopt the new technology.

Some three quarters of transactions by consumers in Deutschland are settled with banknotes and coins.

“Mobile payments solve a problem that basically doesn't exist,” he said, adding that “the customer can already pay at the checkout with card or cash.”

SEE ALSO: Will contactless payment ever take off in Germany?

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PROPERTY

Why buying property in Austria remains unaffordable for most

Buying a home in Austria is a dream for many international residents, but it remains out of reach for the average earner.

Published: 7 May 2024 12:30 CEST
Why buying property in Austria remains unaffordable for most

Many people living in Austria dream of one day owning a home, but despite recent drops in property prices and interest rates, this dream is still out of reach for many average earners. 

In Austria, it is recommended to not spend more than 40 percent of a monthly income on debt repayment.

But new analysis by tariff comparison portal durchblicker.at reveals that even a double-income household would need to spend around 60 percent of their income to afford a 90m² new-build apartment in Vienna.

While the government has created initiatives to improve the affordability, with attractive housing packages, fee reductions and eliminations of certain fees, such as the “Grundbucheintragsgebühr” (land register entry fee) and “Pfandrechtseintragungsgebühr” (mortgage registration fee) for properties up to a certain value, their impact has been limited.

Furthermore, the governments initiatives often overlook the specific needs of lower-income households and may benefit those who are already financially stable, leaving the average earner still struggling to afford a home, according to Der Standard.

READ ALSO: ‘Haushaltsversicherung’ – How does Austria’s home insurance work?

High prices, rates and strict lending criteria

One of the biggest barriers to owning a home in Austria is simply the sky-high property prices. Over the years, property prices have increased, making it more difficult for people with an average income to afford a place of their own. Even with recent minor dips in prices, they still remain high.

Another factor making owning a home challenging is the increase in interest rates in recent years. As a result, both existing variable-rate loans and newly obtained fixed-rate loans have become more expensive. Analysts expect the European Central Bank to cut interest rates by around 0.5 percent in the near future, but according to durchblicker’s calculations, this would initially only create a little relief for loan takers, where instead of around 60 percent, 55 percent of monthly household net income would be needed for debt repayment.

Another issue preventing many from realising their dream to buy a home is the difficulty in obtaining a mortgage. Since July 2022, stricter rules have applied in Austria for the granting of property loans. Loan applicants must have a deposit worth at least 20 percent of the value of their property to be granted a loan, according to the financial online platform Finanz.at. This means that even applicants with higher incomes may struggle to get their dream financed. 

Furthermore, many loan takers with variable-rate loans, especially those recently obtained, are facing significant challenges. The variable interest rates have increased significantly since the initiation of these loans, resulting in higher monthly repayments, reported Der Standard.

Few people can afford their own home in Austria, especially in Vienna. Photo by Christian Lendl on Unsplash

Experts suggests fixed rate loans and cooperative housing models

Andreas Ederer, Head of Banking at durchblicker.at, recommends loan takers with variable-rate loans to change to fixed-rate loans. He suggests that fixed-rate loans have become more attractive as they are currently cheaper than variable-rate loans, reported Kurier. 

Unlike fixed-rate loans, which have a steady interest rate throughout the loan term, variable-rate loans can change over time in response to shifts in market conditions or the economy.

Experts also suggest alternative models for increasing affordability. One idea is to create more opportunities for cooperative ownership with mandatory purchase options. This could offer a more affordable option where costs such as maintenance and taxes are shared. According to Der Standard, cooperatives also often have access to loans with better terms.

READ NEXT: How can I move into affordable cooperative housing in Vienna?

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