What is the electronic cash system?

Electronic cash is the debit POS-system in euro operated by the German banking industry. It is a strictly PIN-based debit system where transactions are debited to the cardholders current account immediately after presentment of the transaction by the merchant to its bank. The corresponding card is typically issued to the cardholder in combination with an account opening.

Since its introduction to the market in 1991, electronic cash can be used by almost all bank issued debit cards in Germany. The huge market coverage (about 725 000 terminals) and the participating more than 90 million cards generate round about 2.3 billion transactions yearly.

The electronic cash-system is designed to contribute to the successive replacement of cash in the retail sector. One of its attractive assets from the merchant's perspective is the payment guarantee given by the issuing bank after the effectual authorisation. Thanks to its efficiency, electronic cash is able to grow even in competition with other POS-systems. For cardholders, electronic cash transactions are free of charge.

The electronic cash system is not structured as a four-party model with issuer, cardholder, merchant and acquirer. Electronic cash relies on a three-party-model and therefore slightly differs from most card payment systems.

Originally the electronic cash-system was built on proprietary technical standards in order to leverage the existing domestic debit processing environment. However, with the advent of EMV and the implementation of the Single Euro Payment Area, the technical basis of electronic cash will be migrated to accommodate international standards. Thus, the limitation of the electronic cash-system in geographical coverage to Germany due to proprietary standards will disappear. Based on international harmonised technical standards the electronic cash-system can be used by issuers and acquirers in the entire euro payment area.