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BANKING

Why you should be careful when having your salary paid into a Spanish bank account

The Bank of Spain has warned bank customers they should carefully read the conditions of any contract they sign up to when setting up their "nómina" salary payment as Spanish banks often include hidden but stiff penalties for early cancellation. 

Why you should be careful when having your salary paid into a Spanish bank account
Photo: Gabriel Buoys/AFP

To domiciliar la nómina refers to the act of setting up the direct payment of your monthly salary into a specific bank account, which effectively becomes your payroll account in Spain. 

Spanish banks actively seek existing or new customers to choose them with enticing offers, as nóminas are one of the safest ways of guaranteeing regular income for the bank. 

It’s a scenario which can prove advantageous for customers, offering them an easier way to open a new bank account or enjoy financial or savings products that were previously unavailable to them or at a cost. 

But the central bank of Spain – El Banco de España – on Sunday blew the whistle on the financial entities it watches over, warning customers they should review all the nómina contract conditions in detail, especially clauses relating to permanencia (the minimum amount of time you have to keep the account open if you want to avoid financial penalties). 

Spanish money website helpmycash.com states that  this minimum fidelity period varies between banks, going from 12 to 48 months, and there can be other conditions attached to this permanencia.  

The financial penalties are not made readily available online by Spain’s top banks but they usually depend on how early the account holder has closed the nómina account. 

According to the Bank of Spain, “you can close your account at any time without prior notice.

“There is no charge for closing an account if it was opened with indefinite duration or if it has been held for more than six months in the case of a fixed-duration account.

“If the terms and conditions include the payment of periodic account fees and charges, you will have to pay the proportional part accrued when you close the account.

“However, the bank will have to reimburse you for the proportional part of any fees paid in advance.

“When closing an account, the bank must inform you of any outstanding fees you need to pay, such as the account maintenance fees or transaction charges, to ensure that your account is not overdrawn.”

In their latest statement on its banking customer portal, the Bank of Spain advises customers to “check the rest of the conditions, such as possible commissions of the account, commissions for associated services (transfers), commissions for credit or debit card. 

“The fact that a bank offers you more than any other bank to set up your payroll does not mean that its offer is the best overall , it may be the cheapest but it doesn’t necessarily suit your needs best.”

Not all Spanish banks require customers with nómina accounts to keep them open for a minimum amount of time, with ING and Bankinter currently offering “sin permanencia” payroll accounts.  

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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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