A new law makes it mandatory to issue receipts in Germany. Blessing or curse for merchants?

Starting next year, most merchants in Germany have to provide a receipt for their customers after a purchase. If you have travelled or lived in other countries, this might be very normal to you. I know quite well the signs in cafes and restaurants in India that say “If you don’t receive a receipt, consider your meal free”.

Providing a receipt is not a legal requirement in India, but it was implemented by merchants themselves in order to avoid stealing from employees, but in Germany, it is a legal requirement. The legislator wants to prevent tax fraud and is hoping that more merchants will record accurate sales numbers, and thus, tax payments will increase.

Some background

The law actually goes back to the end of 2016, however, the final details were adopted just in June 2019. Therefore, merchants have to comply with the new law at the latest in September 2020. The law applies to all merchants who are operating an electronic point-of-sale (ePOS) system, which means that for example a kiosk just using a cash drawer will not be affected (but the merchant needs to apply for this exception). The receipt has to contain details such as the name and address of the merchant, a timestamp, purchased items, a transaction number, applicable tax rate and the serial number of the electronic cashier.

The public debate

As you might expect, there is currently a lot of discussion about the law and its impact. As I was researching last week around the topic of “green FinTech services”, I have read quite a few articles on this topic. In summary, I can say that against the only pro argument of forcing merchants to record correct sales numbers to increase tax payments, there are quite a few contra arguments:

  1. ePOS systems already record each transaction even when no receipt is issued
  2. Waste & pollution (Paper waste and chemicals on receipt)
  3. Longer time for each purchase for printing receipt and changing papers

While the first argument makes it sound that the law is not required, I believe that the receipt is an important step as it is the first that the customer gets involved. An ePOS system might not allow changing the data afterwards, however, this is only helpful if the cashier has operated the ePOS accordingly. If he or she has not operated the ePOS, the transactions will not get recorded. And the receipt is an appropriate way to include the consumer into this process to enable him or her to check if the transaction was recorded. Surely, not every customer will know about this immediately, nevertheless, once this becomes the new standard, I am sure that it will quickly put pressure on those merchants that are trying not to comply with the law. And who knows, maybe the German government is getting as creative as the Latvian government: Customer in Latvia could upload their receipt during a specific time frame to a governmental homepage and had the chance of winning different prizes including cash. The purpose? Check if the merchants have issued proper receipts and the result was that about 20% of the submitted receipts were not in line with tax laws (story).

My opinion

As you might have guessed from my writing, I am in favour of this law. Some of my friends have owned a restaurant or café in the past and they have been telling me that even though you want to be honest, you know very well that many of your competitors are not. Especially, when you are opening a new business, this must be a constant thought in your head and just not recording “a few transactions per day” might make a big difference for you. Of course, the legislator is mostly looking at increasing tax payments through a more accurate record of sales figures, however, I hope it will also cause fairer competition.

But of course, there is still the question if all these efforts are worth it. Are all the paper waste and pollution worth the increase in tax payments and competitive effects? I am an optimist and believe the law might be the perfect catalyst for new digital receipt services. The law actually does not require a paper receipt and a digital receipt is completely fine. Currently, digital receipts are not common in Germany even though a few providers have tried already to offer such solutions. When merchants are currently speaking out against the new receipt law, they mostly use the environmental argument in their favour. If this is actually their main concern, then working together with a digital receipt provider should be inevitable.

Digital receipt services

If you do a quick google search you will find many solutions around the globe that target the need for a digital receipt. In Germany, I know the team behind Leaf personally, and additionally, I have heard of Admin and Wunderbon. In other countries, you have probably heard about Flux (UK) or ReceiptHero (Finland). Unlike the German providers, Flux and ReceiptHero are going for an approach to be integrated into the banking app. This probably makes sense for countries with a high percentage of cashless payments, however, this strategy might not work so well in Germany. Therefore, integration into ePOS and merchant processes becomes a lot more important and will be a deciding factor for the winning solution. The best product might not be as important as the right integration strategy.

Personally, I am pretty excited about the opportunity of a digital receipt. But not just to avoid paper waste, which alone is already very promising. But I believe that the digital receipt offers a big business opportunity: offline merchants might be able to benefit from more digital engagement opportunities. The typical offline shopper is mostly unknown to the merchant and only can be reached through loyalty programs. The digital receipt might be a better way to achieve this.