Germany is an interesting market for retailers because of its high internet permeability, its population of 83.2 million and the openness to Cross-Border Payments. Germany follows right behind the US and UK cross-border transactions. In the following years, E-Commerce and M-Commerce are expected to grow - e-commerce in single digits and m-commerce in double digits. However, German consumers are particularly worried about the privacy and security in e-commerce. Online merchants should clearly display their payment authentications and digital certificate logs in order to reassure them.
Cash payment is slowly being replaced by other payments, even in Germany. Credit and debit card payments are gaining traction and transaction volume as retailers, restaurants, hotels and other businesses are beginning to accept them more and more. The European Union is helping credit and debit card payments grow in popularity, as new regulations limit the interchange fee to 0.3% of the value of the transaction. In total, credit cards currently make up 14% of transactions in Germany.
Recent measures taken by the European Union indicate a decline in cash payments. In 2016, the European Central Bank ceased to produce the 500 euro banknote. The same year, the validity period of cheques was reduced to six months instead of a year.
The most popular methods of payment in Germany are still billing on account, direct debit and transfers. E-Wallets currently make up 25% transactions. Most of these transactions are processed through Paypal. However, in the next few years, Paypal is predicted to lose its dominance. In addition to the gaining popularity SEPA payments, German banks have begun to introduce the alternative e-wallet Paydirekt to the market. Users can make easy transfers using only their usernames and passwords after registering.
Contactless payment is slowly becoming more popular for stationary retailers in Germany. PayPass, Paywafe and Girogo are the big names in contactless payment. Recently, a fourth player has joined the other three in the market: Girocard Contactless from the federal association of German banks (Bundesverband der Deutschen Volksbanken & Raiffeisenbanken, BVR).
Another alternative method of payment in Germany is immediate transfers. Sofort, formerly Sofortüberweisung before its recent purchase by payment giant Klarna, offer a simplified bank transfer option. Consumers do not need to create an second account (wallet) in order to use this payment method. Widely popular, Sofort is offered by more than 35 000 e-merchants and used by 50% of all German online shoppers. Nearly all banks can be used to make immediate transfers. The company also displays various privacy and security protection certificates, thus reassuring customers.
Bank transfer 27%
Credit card 18%
Charge debit card 11%
Pay on delivery 9%
97 Bil. USD
Population: 82.8 Mil.
Internet Usage: 93%
Euromonitor International - Financial Cards and Payments in Germany 2018
Worldpay - Global payments report 2018
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