Giropay – banks and savings banks are promoting uniform payment services

Banks and savings banks in Germany are pushing ahead with standardizing their online payment processes. From this Monday (May 10th) onwards, the institutes will gradually offer customers and retail a bundled payment offer for everything to do with checking accounts. “We are turning the current account into a hub,” said Joachim Schmalzl, member of the board of the German Savings Banks and Giro Association (DSGV), the German Press Agency in Frankfurt. “Customers want more transparency about their payment transactions – regardless of whether they pay while shopping on the Internet or transfer money to their friends via the app.”

In March, the five major banking associations, which are part of the Deutsche Kreditwirtschaft (DK), announced that they would merge their online payment methods Paydirekt, Giropay and Kwitt under the Giropay brand. Public law, cooperative and private institutes are pulling in the same direction. The aim is “the bundling of the payment offers in the German banking industry, one could also say: tidying up our various approaches,” explained Schmalzl. The DSGV is DK leader this year.

Consumers will be introduced to the new brand in a transition phase lasting several months. At the start of this Monday (May 10th), savings banks as well as Volks- and Raiffeisenbanken are converting their mobile-phone-to-mobile payment system Kwitt to “Giropay money sending”. From Wednesday (May 12th) onwards, customers can choose the Giropay payment method at merchants who use Paydirekt.

With the new joint approach, the domestic banking industry wants to enable consumers to pay as easily as possible and to transfer money quickly from account to account – regardless of which bank the account is ultimately held with. The project, also known as “#DK” or “XPay”, aims to establish an alternative to PayPal, Apple Pay and Co.

So far, the online payment offers of the German banks and savings banks have played a minor role in comparison to the US competitor PayPal. While PayPal had a good 29 million active customers in Germany at the end of 2020, the Paydirekt payment service launched by the domestic banking industry in autumn 2015 only has around 4.1 million registered users, according to the latest information.

“As the German banking industry, we must have underestimated how much customers like paying with just a username and password,” Schmalzl admitted. “We have learned from the experience with Paydirekt and are now making access for customers much easier,” said the DSGV board of directors. “Customers no longer have to register separately, but can trigger a payment with their normal access data for online banking.” At the same time, the Paydirekt network will continue to be used, which is already linked to half of the large e-commerce shops.

“We will continue to expand and strengthen Paydirekt as an operational operating company with additional responsibility. This is still the unit for us that organizes the payment processes in e-commerce for us,” explained Schmalzl.

In the short term, a market share “in the high single-digit range” is being sought in online trading solely through the new, standardized payment offer, said Schmalzl. According to his information, Giropay and Paydirekt together currently cover around two percent of the German market for online payments. In the medium term, the domestic industry sees potential to increase its market share to up to 50 percent.

Whether the new offer is really spread across the board depends on the individual institutes. “In the end, it’s always a business decision,” said Schmalzl. “There is, however, a broad consensus that it makes sense to further develop banking systems and offer payment methods from a single source.”

In the future, the Girocard – the most widely used debit card in Germany – is to be integrated. “Of course we are also working on merging the payment methods at the checkout,” affirmed Schmalzl. With the Girocard, however, there is no comparable pressure to act. “The Girocard is an extremely popular product. However, customers and retailers are demanding an omnichannel solution in the medium term. We still have to do conceptual work.”

The Federal Cartel Office approved the gradual consolidation of online payment processes that is now beginning. However, the competition watchdogs had made it clear that detailed questions still need to be clarified in the further course.

Schmalzl was confident that there would be a constructive dialogue with the Bonn authority. It is “no longer up-to-date that dealers on the Paydirekt basis have to talk to each individual bank or group during contract negotiations,” explained Schmalzl. “That is also a question of efficiency, that you do not have to negotiate several contracts. We will of course involve the Federal Cartel Office in our corresponding planning in good time and coordinate any steps.”


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