Physical cards still key as German debit use surges

Giesecke+Devrient has argued that physical payment cards remain central to banks' customer relationships as digital payments grow, an issue it says is becoming more important as card use rises in Germany.

Annual debit card transactions in Germany increased from 3.9 billion in 2018 to 10.9 billion in 2024, according to figures cited by the company. The increase has come as payment activity shifts to smartphones and smartwatches, changing the role of the physical card rather than removing it from transactions altogether.

Banks are under pressure to rethink how they position cards as competition for customers and market share intensifies, Giesecke+Devrient said. It argued that cards now need to serve both as payment tools and as part of a broader digital banking experience, with wallet integration, personalisation and design taking on greater importance.

The group's assessment reflects a wider tension in retail banking. Digital wallets have become more common, but many still rely on card credentials in the background, meaning the card remains the underlying payment instrument even when consumers pay by phone or watch.

Changing role

This shift is changing what banks expect from a card product. Giesecke+Devrient said the physical card remains a visible and tangible link between a bank and its customers, including at fintechs built around digital-only processes that still issue cards.

That visible presence matters in a market where mobile apps and account terms are increasingly similar across providers. In that environment, cards can become one of the few parts of a banking relationship that customers can physically hold and use every day.

It also argued that the physical card retains practical advantages. Unlike a smartphone, it does not depend on battery life, network coverage or apps, which can make it a more dependable option for some consumers.

The company said this is particularly relevant for older adults, people with physical disabilities and customers in rural areas with poor network access. It described the card's continued availability as an issue of social inclusion as well as convenience.

Competitive pressure

The argument comes as banks face stronger competition not only from established rivals but also from fintechs and large technology platforms seeking a larger role in payments. Giesecke+Devrient warned that banks risk losing an important point of contact with customers if they fail to define how cards fit into digital services.

It suggested that cards could be extended beyond basic payments into areas such as identification, authentication and loyalty services. Virtual cards, meanwhile, were presented as a route to greater online security through tokenisation.

Those developments point to a broader strategic question for banks: whether they continue to control the payment relationship or allow wallet providers and platform operators to dominate the customer interface. In many cases, the card may no longer be the most visible part of a transaction, but it remains a critical layer of the payments infrastructure.

Mikko Kähkönen, Head of Payment Cards Portfolio at Giesecke+Devrient, said banks should not treat the physical card as an outdated part of the banking model.

"The decisive question is not whether the physical card has a future, but who will shape it," Kähkönen said.

"With the card, banks have a unique physical source of trust that no app or wallet can easily replace. Those that fail to actively protect this position ultimately risk handing it over to platform operators, for whom the relationship between customers and financial service providers has long been a key target market segment," he said.

The company's position is that the physical card's role is changing, not disappearing. As more payments move into digital channels, banks may need to decide whether the card remains simply a piece of plastic in the customer's wallet or becomes a more deliberate part of how they differentiate themselves in an increasingly standardised market.