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MONEY

Why are card payments getting rejected in Germany?

People are currently unable to pay by card in a number of major German retailers. Here's what's going on.

Card payments terminal
Someone makes a card payment using the Verifone H5000 terminal. Photo: picture alliance/dpa | Karl-Josef Hildenbrand

Since Tuesday, numerous retailers in Germany have been operating under a cash-only policy after a major brand of card payments terminal stopped processing payments.

The problem was initially announced by the Konsum retail chain in Dresden, who wrote on Facebook on Tuesday morning: “Attention, an important notice for you! Due to a Germany-wide malfunction, card payments are currently not possible in our stores.”

According to the latest information from Focus Online, several branches of Netto, Edeka and a handful of Rewe branches are affected by the issues. There have also been reports of problems at Aldi Nord, Rossmann and DM as well as some smaller, independent retailers and petrol stations.

People who have tried to pay by credit card, debit card or EC card at these places have reportedly been turned away. 

What’s going on?

The problems with card payments seem to be linked to a commonly used card payments terminal from US company Verifone. According to reports, H5000 card machines at multiple retailers and businesses experienced a software malfunction that stopped them processing payments. 

“As things stand, it will be necessary to install new software updates on all H5000 terminals, which the manufacturer will provide as soon as possible,” the payment service provider Payone said.

“The disruptions are ongoing,” a spokesperson for financial services provider Concardis said on Thursday afternoon. “We’re still waiting for updates from Verifone.”

As of Friday morning, there was no indication of when the problems would be solved, but the card payments processor appeared to be working on a solution.

“We will soon provide a software update for our customers to fix the problem and will inform our customers as soon as it is available,” a Verifone spokesperson said. 

READ ALSO: How Germany’s EC card is set to go digital

How widespread is the problem? 

According to Verifone, thousands of card machines at different retailers, petrol stations and banks across the country are affected. The H5000 terminal is mainly used in Germany, they added. 

However, the Association of German Banks clarified that, though the H5000 terminals were completely out of action, this specific model only accounts for a small proportion of all card machines in Germany. 

“Network operators and technical service providers are working intensively on troubleshooting,” it continued.

Payments processing service Payone confirmed that it was facing issues with the specific H5000 card machine and said that the issues were happening throughout the country. 

“Like other network operators, we are currently experiencing considerable restrictions in the processing of transactions with card payment terminals of the type H5000 from the manufacturer Verifone throughout Germany,” Payone said on Wednesday. 

Financial service provider Concardis warned businesses not to try and fix the problem themselves by rebooting the devices since the card machines needed to be connected to the network in order for the problem to be solved by the manufacturer. 

He said Payone and Concardis were in contact with Verifone and were working to fix the problem.

What should customers do? 

Since card payments may not be possible, it’s a good idea for people to make sure they have cash on them when they go to the supermarket or petrol station in the near future. 

ATMs are apparently unaffected by the problems, so people should still be able to get access to cash. 

Customers are also being advised to clarify in advance at the checkout whether card payments are possible or not – preferably before picking out items.

If card payments aren’t possible, supermarkets and other shops are likely to put up signs at entrances or near the tills, so customers should keep an eye out for those. Petrol stations generally put stickers and signs directly on the pumps when equipment is out of order. 

If customers get caught out with no cash at a retailer where no card payments can be processed, they will generally have to leave the items behind – though some cashiers will be willing to hold the items for when the customers return. 

Things can get trickier at petrol stations, where identity cards, driving licences and health insurance cards can be retained in the event that somebody fills up their tank and is unable to pay straight away.

In some cases, the police can even be called.

READ ALSO: What to know about starting your personal banking in Germany

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MONEY

Should Germany provide more energy relief to middle-income households?

With the new gas levy arriving this autumn, economists in Germany are calling for a new relief package to support mid-range earners with their energy bills.

Should Germany provide more energy relief to middle-income households?

One idea on the table is to provide an “energy fund” of €100 per person that would be paid out monthly for the next 18 months.

This, according to the president of the German Institute for Economic Research, Marcel Fratzscher, would be the “best instrument” for relieving low- and middle-income households during the energy crisis. 

In October, the government will allow energy suppliers to add a levy of around 2.4 cents per kilowatt hour of gas onto customers’ energy bills. This will see bills for an average 160 square metre family home go up by around €556 per year, while people living in 50-square-metre flats could see their costs rise by around €120-170 annually.

The gas levy is designed to help struggling energy firms recoup the cost of replacing cheap Russian gas, deliveries of which have been dwindling in recent months. In addition, energy companies will be allowed to pass a proportion of future excess costs onto consumers. 

READ ALSO: EXPLAINED: How much will Germany’s gas levy cost you?

With household energy bills likely to triple or even quadruple, economists are arguing that more relief is urgently needed – and not only for those on the lowest incomes.

Chancellor Olaf Scholz (SPD) said last week that the government wants to assist working people who have no savings to fall back on and who cannot easily cope with the increased energy costs.

“This applies to quite a lot of citizens,” Scholz said. “I am concerned with those who earn €2800, €3200 or €4000 gross per month, for whom these are all major challenges.”

According to economist Fratzscher, this group includes more than one in five people in Germany.

Marcel Fratzscher

Marcel Fratzscher, president of the German Institute for Economic Research, speaks at an event in Berlin. Photo: picture alliance/dpa | Bernd von Jutrczenka

“These are mainly people in the low-wage sector, which is unusually large in Germany, and also many pensioners,” he told DPA. They tend not to have savings but at the same time don’t receive support from the state.

For this reason, soaring inflation and high energy bills are likely to hit this middle-income group particularly hard. 

READ ALSO: Germany pledges inflation relief tax package worth €10 billion

“We already have a strong social imbalance among this group as well,” Fratzscher said. “This can be seen, for example, in the increase in the number of people who are over-burdened with debt.” 

“Politicians must now urgently implement a third relief package that relieves this group as a top priority,” he added.

For Sebastian Dullien, scientific director of the Macroeconomic Policy Institute of the Hans Böckler Foundation, a second energy lump sum paid out in December would be the preferred option for relieving households.

This would follow the €300 lump sum in September but also take into account groups that were overlooked in the last energy relief package, such as pensioners who don’t receive housing benefit. 

“Another good option would be to introduce a gas price cap for a basic level of consumption per household,” Dullien told DPA. 

‘Left in the dark’

In the summer press conference last week, Scholz reiterated his plans for a third energy relief package in autumn. However, he has so far refused to give concrete details about the measures included, stating that these are still being discussed within the coalition.

Social organisations are calling on the government to announce any new measures before the gas levy is introduced on October 1st. 

READ ALSO: Germany’s Scholz pledges more relief for lowest earners

“The traffic light government has no time left to argue,” Social Welfare Federation (VdK) president Verena Bentele told the Rhein-Neckar-Zeitung on Wednesday. “We need a solution by September.”

Ursula Engelen-Kefer, vice-president of the German Social Welfare Association (SoVD), told the Neue Osnabrücker Zeitung that the government should roll out support soon to avoid social unrest in autumn.

“We cannot impose more and more burdens on the vast majority of society and at the same time leave them in the dark about how they will be supported,” she said. “It is crucial that the federal government quickly decides on relief measures that will directly reach the people”.

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