Payments carried out through your Girokonto (current account) can be made online, by phone, at the bank’s customer service terminal or by using transfer forms (Überweisungsformulare) provided by the bank. You may want to inquire about the fees before choosing a particular transfer method. Many banks, for instance, do not charge any fee for online or terminal transfers, but will raise a fee for a transfer form submitted to the bank that still has to be processed by a bank employee.
For any transaction, you will need to provide the creditor’s name, bank, bank account number and his or her bank’s identification code, all of which is usually included in the bill. Bills from companies, governmental agencies or public utilities often include a pre-printed transfer form featuring all account details.
For international transfers you will need the recipient’s IBAN (International Bank Account Number) and BIC (Bank Identifier Code).
An IBAN consists of a two-letter country code, a two-digit check number, the bank’s national identification code followed by the account number. The BIC is an international bank identification number. You should ask your bank what your IBAN and your BIC are. You’ll have to provide them to receive payments from abroad.
To cut down on the paperwork, it is useful to set up a standing order (Dauerauftrag) for regular bills of a fixed amount, such as rent, insurance premiums or electricity. This way you make sure that payments are transferred automatically at regular intervals. Standing orders and transfers can easily be handled online. Your bank will provide a personal block of TANs (transaction numbers) or a small device that generates a TAN each time to insert your bank card. Each TAN can be used once to conclude an online transaction. Since only you will be in possession of your personal TANs and know which ones you’ve already used – you should keep track of this – this system gives you extra security for transactions once you’ve logged on to your online account with your PIN.
Direct debit authorization (Einzugsermächtigung) also helps you pay recurring bills for varying amounts. It authorizes a company or an individual to deduct a certain amount from your account once or at regular intervals. This service is widely used in Germany and although you may feel apprehensive at first about giving various companies like Deutsche Telekom the right to take money out of your account, you’ll probably never encounter any problems. That said, a bit of common sense is required as it gives somebody or some company access to your bank account. Although you can limit the amount that can be withdrawn, you should never extend this power to people or groups whom you have any doubts about.
Though to those unaccustomed to this way of paying bills, such practice may appear strange at first, there are some clear advantages to standing orders and direct debits for steady payment schedules. They prevent you from missing a payment and then facing a penalty fee for late payment. This is especially important if you travel a lot, or you’re planning to take long vacations out of the area. It’s doubly important with utilities, where you may find that if you miss a couple of electricity payments, the power will be turned off.