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.

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.

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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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Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.