To reduce administration costs and prevent misuse of asylum benefits, German states will replace cash benefits to asylum seekers with payment cards. But it is not uniformly adopted by all Länder and does not come without criticism and warnings of discrimination.
Following the decision made last November by 14 out of 16 German states, payment card models are being introduced this month in Hamburg to replace cash payouts by municipalities to asylum seekers. This move anticipates a nationwide launch this summer, aligning with the existing payment card mechanisms in other European countries such as France.
Breaking free from bureaucracy
The envisioned benefits of the payment card system include relieving German municipalities from administrative costs and reducing the long queues for cash payments at payment points. Prime Minister Olaf Scholz outlined the card’s goals as “reducing administrative burden” and “combatting inhumane smuggling crime.”
The federal states in Germany have agreed on common standards for the card to standardize the practice of benefit payments. The card will use a credit-based system without a connection to an external account. Each state will then decide on individual functions, such as the potential provision of cash as pocket money and restrictions on card cash withdrawals.
Nevertheless, Bavaria and Mecklenburg-Western Pomerania have chosen to adopt their own payment cards. Markus Söder, Bavaria’s Minister-President, stressed on X that the payment card system in Bavaria “comes faster and is tougher,” signaling the possibility of implementing stricter measures than agreed common standards.
Under the Asylum Seekers Benefit Act, asylum seekers in Germany are legally entitled to pocket money of 182 euros at initial reception facilities, along with provisions for food and bedding. If the refugee is self-sufficient, the allowance is increased to 410 euros.
However, the required effort for successful implementation, and therefore the positive impact on the administrative process, remains uncertain for now. Municipalities may initially face an increased bureaucratic workload as preparations to join begin and will have to convert around 800 existing beneficiaries to the new card payment scheme.
Progress or discrimination?
But the card, dedicated to refugees undergoing the asylum process, will also come with restrictions to prevent misuse of state benefits such as smuggling and payments to families abroad: It has a cash withdrawal limit, may only be used within the same region, and cannot be used for online payments or transfers abroad.
In response, Pro Asyl, Germany’s largest pro-immigration advocacy organization, has taken legal action against the measure, citing that local restrictions impede social participation and freedom of movement.
The card system was further criticized by Pro Asyl in a press release as a “discriminatory instrument” impeding asylum seekers’ access to benefits. Center-left German newspaper Süddeutsche Zeitung also highlights the potential increases in xenophobia and humiliation because of the card.
Beliefs of cash being a “pull factor”
This controversy unfolds within the context of heightened political debates on increased asylum seekers in Germany, with the nation consistently handling the highest asylum caseloads in the context of labor shortage. In November 2023, Germany recorded more than 37,000 asylum requests, which accounts for nearly a third of all applications lodged in the European Union, according to the European union agency for asylum.
The debate over asylum seekers in Germany has led many to believe that cash payments are attractive for migrants and anticipate that the shift to card payments will lead to fewer refugees entering the country. Christian Lindner, the Federal Minister of Finance, highlighted this view, stating that the project is a “milestone” that will “minimize financial incentives for entry.”
But a research paper by the Barcelona School of Economics published in March last year studied the migration flows to the European Union and found that there was no evidence suggesting that the social welfare of Germany was a “pull factor” for migrants.
