How does cashless payment work?

The most important things at a glance:

When do we speak of cashless payment transactions?

Cashless payment transactions, together with cash payments and so-called half-payable payments, make up all payment transactions. As the name suggests, cashless payment transactions are all payments where no cash is moved.

In today's society in particular, cashless payment transactions are an indispensable standard. There are now almost innumerable ways to pay without cash. In order for cashless payments to be possible at all, the basic requirement is that the parties involved - whether private individuals, companies or state institutions - have bank details.

What cashless payment methods are there?

Various types and instruments are used to process payments without cash:


A bank transfer is, so to speak, the basic type of payment transaction. Transfers can be made in person at a bank branch using a transfer form filled in in writing, or via online banking.

By specifying the recipient's name, their IBAN (account number), the transfer amount and a purpose, the transfer will be sent to the beneficiary from the current account - more precisely to the beneficiary's account at the bank holding the account.

Standing orders are also transfers, which, however, are carried out recurring in fixed periods.

Direct debit

With direct debit, an account holder allows another party to automatically withdraw funds from the account. This is also referred to as a direct debit authorization. A common example of direct debit from practice are mobile phone contracts. The contract costs are usually collected monthly by direct debit from the bank account.


Submitting a check is also a cashless payment transaction. Here, the debtor issues a check with a sum of money, which a bank then pays out to the payee at the expense of the debtor.

Card payments

Payments with girocard (EC card), cash card and debit or credit card are summarized here.

Card payments are mainly used when shopping in stores and shops. Credit card payments are also very common when shopping online. In general, the card is usually linked to a current account.

When paying by card, it is usually necessary to confirm the payment at the terminal via PIN or signature. The amount to be paid is then first blocked on the card by the merchant and then debited accordingly.

Mobile payment

With mobile payment, payment is made using a mobile device such as a smartphone or smartwatch. A digital payment card is stored in a mobile payment app, which is then used to process the payment. This also corresponds to a card payment, but in digitized form.

How do cashless payments work?

Usually credit and financial institutions are involved in cashless payments and carry out the cashless payment or book money payment accordingly. By transferring the necessary data, an amount of money is then transferred from bank account to bank account.

With online banking, for example, the data is encrypted and transmitted to the bank when making a transfer. The data usually contain instructions that determine how much money is to be transferred, from which account and at what time.

When paying at card terminals, the data is transmitted via a TCP / IP connection. If, for example, you pay with a card in a shop and confirm the payment by PIN, the financial institution transfers the amount from the buyer's account to the respective card company - e.g. Mastercard. After checking and authorization, the card company forwards the money to the merchant accordingly.

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Via Pay Here

The German e-money institute Pay Here has specialized in payment services with Debit Mastercards and accounts without Schufa. Individual solutions are offered for both private and corporate customers.