Switzerland has around 150 banks and is considered one of the world’s biggest players when it comes to asset management. Just a few specific characteristics: The Swiss franc is considered to be one of the “hardest” currencies. And the Swiss have the world’s most valuable banknote.  

The saying “cash is king” is particularly true for Switzerland. The Swiss love cash: banknotes worth a total of around 80 billion francs are in circulation according to statistics from the Swiss National Bank (SNB).

Stapel Münzen - "Nur Bares ist Wahres"
Gold Foto erstellt von lcd2020 – de.freepik.com

Swiss people attached to cash 

The 100 franc notes are the most widespread. However, there are also huge numbers of the 1,000 franc notes – the world’s most valuable banknote – in circulation. We conclude from this: People in Switzerland obviously keep some of their assets in the form of cash. After all, hardly anyone pays for their shopping in the supermarket with a 1000 franc note. The extremely low interest rates are clearly a good reason for cash. And in large denominations.  

Coins and banknotes are generally still very common in everyday life. On arrival in Switzerland, cash assets of up to 10,000 francs are usually no problem. However, larger sums could make the border guards suspicious. They will then frequently enquire as to the origin of the money.

Money in everyday life: common payment methods 

Since the outbreak of the pandemic in spring 2020, digital and cashless payment methods have become more important. Credit cards are particularly popular in Switzerland (generally debit, credit and bank cards). Those who, for example, already have a credit card as an EU citizen or as a foreign resident can use it very flexibly in Switzerland. Payment methods using a smartphone, such as those from major providers like Apple Pay or Google Pay, have also met with a good response. Alongside this, we also know some other digital services, apps and payment services here in Switzerland that can run on many smartphones and the iPhone (such as the payment service Twint).  

Payment slips vs. “Crypto Valley” 

When it comes to money and payments, people in Switzerland are keen on conventional payment slips. Even for purchases in online shops, this option is still offered alongside PayPal and credit cards. Virtually all payment apps from Swiss banks offer the option of automatically scanning and recording payment slips. As a result, many people still use payment slips to pay their rent, taxes, or health insurance premiums. 

Gängiges Zahlungsmittel Kreditkarte
Kaffee Foto erstellt von jcomp – de.freepik.com

Bank and other cheques have never become established in Switzerland. They are not very popular today anyway within the scope of digitalisation. However, what’s striking is that Switzerland is highly innovative when it comes to new technologies such as Blockchain and crypocurrencies. Particularly in the Zug region, many clever minds and start-ups are concerning themselves with cryptocurrencies. There was a great deal of hype about this in the local business press under the name “Cryto Valley”. However, Bitcoin and the like have so far failed to become established in everyday life.  

Those who draw their wages in Swiss francs and work in Switzerland as foreign residents, settled persons or cross-border commuters naturally want an account with a Swiss bank. As mentioned in the introduction: for many people, account balances in francs and then also with a Swiss bank are considered solid and reliable. Deposits at Swiss cantonal banks enjoy the privilege of a state guarantee. In general, all customer deposits at Swiss banks are protected by the esisuisse system up to 100,000 francs per customer (www.esisuisse.ch.). 

Opening a bank account – but how? 

What do you need to actually open an account with a Swiss bank? 

  • ID card or passport: The bank must always verify the identity of the customer.
  • Legal questions about the origin of the money: In order to combat money laundering, every bank is obliged to clarify the origin of the money. If there are doubts concerning its origin, every bank reserves the right to reject a customer. 
  • Residence status in Switzerland: Documents and written evidence of residence status (visa, residence or work permit, B permit or settlement permit, etc.). 
  • Information about the place of residence: Evidence of place of residence, such as in an official document or current utility bill as a tenant, etc. 

It used to be commonplace at Swiss banks for new customers to visit a branch and hand over the required documents in person. To some extent, the law on money laundering also plays a role, as well as simply the principle of “know your customer”. As part of digitalisation, more and more banks are offering alternatives: It is thus often possible to submit the documents and verify a person’s identity online. This either takes place via an online form or sometimes also via a video link. The applicant must have the necessary documents such as their ID card and evidence of their place of residence to hand. “For people domiciled in Switzerland, an account can be opened online,” says a spokesperson for Basellandschaftliche Kantonalbank (BLKB). However, for people whose place of residence is abroad, this is not possible due to the applicable legal provisions. They need to appear in person for identification purposes.  

The example of BLKB shows that there are otherwise hardly any restrictions for cross-border commuters, foreign residents (B permit) and people with a settlement permit C. However, it should not be forgotten that a Swiss bank is obliged to verify beneficial ownership and the origin of the money. How that is actually put in place depends on the individual case and the bank. To put it somewhat casually, those who declare a case full of cash as a “lottery win” need to be prepared for a more in-depth inspection. 

Selecting the right bank 

There is hardly any interest on bank balances at the moment. On the contrary, wealthy customers are confronted with negative interest rates above a certain balance (from 100,000 francs, depending on the bank and customer relationship). As account management, the issuing of a credit card and administration all cost money, you should enquire about the terms and conditions in advance. Cashless payments within the European payments area (SEPA) are free of charge. This also applies to withdrawals from bank cash machines at your own bank. However, there is usually a charge for cash withdrawals using a credit card or from a third-party bank. More and more digital services are becoming established (such as accounts and apps exclusively accessed on a mobile phone). The digital versions are often very inexpensive or have no monthly or annual fee. 

Switzerland: The state pension system with AHV & BVG 

A desire for great financial independence clearly lies in the genes of the Swiss people. As a result, the greatest possible financial protection is virtually part of the Swiss way of life. Women retire at 64, men at 65. Pension provision (and financial protection in general) is based on three components (called “3 pillars”): 

Old-age and survivor’s insurance (Alters- und Hinterlassenenversicherung) is mandatory. The insurance is regulated by the state and the contributions owed on earned income are based on a percentage of income. Those who work their whole lives get the maximum AHV pension on retirement. For married couples, this is currently 3,585 francs a month (as of 2021).

It is also compulsory to join a pension or retirement scheme (usually takes place via the employer). Only low wages, usually less than 21,500 francs from one employer per year, are exempt from this. These contributions into an occupational pension (Berufliche Vorsorge or BVG) cover risks such as invalidity and death. After retiring, Swiss people draw a pension from the BVG capital (in addition to AHV).

Savings schemes for what is known as pillar 3a at banks are tax-privileged in Switzerland. Those who have sufficient income also pay in annual deposits here to provide for old age. However, the third pillar is voluntary and is considered a private pension. 

Conclusion: Although a situation with very low interest rates makes it more difficult to invest longer-term funds in the Swiss pension scheme profitably over the long term, your own private pension – for instance with property – as well as good financial planning will become even more important in the future.   

For more information on emigrating to Switzerland, click on the following links: