Expert article • 20.12.2016

Mobile Payment – Germans don’t like to pay with their mobile phones

Point solutions are an integral part of spreading mobile payment solutions

In Germany, the mobile payment issue is actually an illusory giant: every year business consultants outdo their predictions on its enormous potential to increase sales. In its recent market analysis, the information technology company GFT, for example, predicts the mobile payment transaction volume to surpass 1 trillion U.S. dollars globally in 2019. That’s quite a big pie that Germany apparently doesn’t want a piece of. After all, when you broach the subject of “mobile payment“ in this country and review it for its practical application, this giant shrivels very quickly. That is somewhat surprising in a country where the rate of new digital innovations could not be any higher. Germans simply don’t like to pay with their mobile phones – but why is that?

Explanation run the gamut from a lack of technical standards to a lack of innovative spirit among German buyers. The love of cash and the fear of data leeches seem far too great for consumers. Meanwhile, low numbers of users keep retailers cautious. And that’s why other nations are already busy utilizing mobile payment options while Germans still pull out their actual wallets. Let’s take a look at America for a side-by-side comparison: in the land of unlimited (payment) possibilities, customers are already used to paying with credit and debit cards. That’s why taking the leap to the virtual wallet was no longer much of a leap. It comes as no surprise to learn that last year 12.7 percent of U.S. smartphone users already utilized mobile payment options on a regular basis. This number is expected to increase to 24 percent by 2017. In Denmark, every third person also already uses a mobile device to pay for purchases. The Danske Bank is responsible for the technical implementation of this payment method.  It utilizes Bluetooth low energy (BLE) versus NFC (near-field communication) that has been rolled out in Germany as an interface. So does this mean we have simply bet on the wrong horse?

Germans love their cash money.
Germans love their cash money.
Source: panthermedia.net/dasha11

Smartphone manufacturers, banks or users – who is standing in the way in this case?

The line of reasoning that Germans traditionally have a hard time accepting technical innovations – especially when it comes to payments – seems to be a pretext. After all, the Danes are also not necessarily known for their love of credit cards. I believe there is one possible explanation for this that’s more of a technical nature: in Germany, the highly praised NFC is not going to take root as the standard in mobile payment for the time being. Unlike contactless payments, it doesn’t prove to be solid enough in light of the many different Android devices available on the market. What’s more, Apple users are almost entirely being excluded. In Berlin, commercial partners and cell phone carriers already joined forces last year with the “Zahl einfach mobil“ (English: Just pay mobile) initiative to promote mobile payment options in Berlin. 750 retailers – including GALERIA Kaufhof and REWE – jumped on the bandwagon and rewarded initial users with a 10€ credit voucher. However, despite all of these efforts, the buzz for the pilot project has been remarkably quiet. The same can be said for the ”Bargeldlos bezahlen“ (English: Cashless payment) initiative by Aldi North. In short, NFC does not gather momentum. Given the successful mobile payment rollout in Denmark, one might conclude that Germany uses the wrong interface.

Added to this is the fact that Apple – while otherwise not exactly pulling any punches when it comes to enforcing its own standards – has a real problem with banks in Germany: too many of them, too heterogeneous, too small. Negotiations are drawn out, an agreement is currently not foreseeable. What’s more, Germany is still rooted in a cash and direct debit culture – not an easy feat for the credit card-based Apple Pay system. Nevertheless, the tech giant cleverly positions itself with headlines in the media. In early November, Germany appeared in a map with areas where Apple intends to roll out its payment system in the medium term. However, several hours later, it disappeared again from the map – meanwhile we are still waiting in vain for an explanation by the company. That’s why it remains uncertain whether and when the system will launch in Germany.

André Boeder, CEO at Paymorrow
André Boeder, CEO at Paymorrow
Source: Paymorrow

Land ahoy – point solutions pave the way

Far away from major technology companies, commercial enterprises are increasingly battling for a position in the mobile payment world. It’s retail chains like EDEKA or Netto that want to become emancipated and hedge their bets on third-party providers when implementing their own solutions. Their apps rely on a directly stored payment system and facilitate mobile payments after a one-time registration process. The drawback of so-called closed-loop systems is that consumers are generally not able to visit other retailers with their app. Each point solution requires its own app including a separate registration process. To some extent, this is done deliberately because of the fear of competition. The bad taste left by numerous apps and registration processes is practically forced on people. Yet despite all that, it’s those lone fighters that provide the overall industry sector with an opportunity because their point solutions contribute significantly to the spread of mobile payment solutions and the acceptance of smartphones as an integral part of the payment process in brick-and-mortal retail. If the individual providers manage to win over customers and use mobile payment methods, it will increase the relevance of mobile solutions and thus the pressure on technology and payment providers to come up with a uniform solution.

The solution: taking small steps to success

Netto, dm-drogerie markt, real,- and others are already setting great examples with their solid point solutions. Thanks to their reward systems and numerous customer incentives, they also lower the inhibitions of users to utilize mobile solutions. To turn this illusory giant into a real heavyweight, we now essentially need one thing: for all stakeholders – banks, retailers and service providers –  to be ready for a mutual, open solution. The closed-loop systems of individual retailers already show that this can work. To finally promote mobile payments and make them stronger, we need a comprehensive, uniform and reliable solution. It’s not just Denmark that shows us that this is possible!

Author: André Boeder, CEO at Paymorrow

related articles:

popular articles:

Thumbnail-Photo: Light up the future with Posiflex at EuroShop 2020...
11.02.2020   #kiosk terminals #Trade fair special EuroShop 2020

Light up the future with Posiflex at EuroShop 2020

Serviced IoT solutions: personalized, flexible and connected

The Posiflex Group, a synergy of world-leading POS, kiosk, and industrial computing technologies — will bring its Serviced IoT solutions to EuroShop 2020, the leading Europe trade fair for the retail industry, from February 16th – 20th ...

Thumbnail-Photo: Wirecard and Klarna launch joint payment solution for merchants...
27.03.2020   #payment systems #digitization

Wirecard and Klarna launch joint payment solution for merchants

Wirecard embeds all three Klarna payment methods into merchants' checkout

Wirecard, the global innovation leader for digital financial technology, and Klarna, a leading global payments and shopping provider, announced today the launch of a new enhanced joint payment solution. All three Klarna shopping methods, Pay Now, ...

Thumbnail-Photo: Wow factor affects the bottom line at Denmarks largest garden center...
22.01.2020   #consulting #electronic shelf labels (ESL)

Wow factor affects the bottom line at Denmark's largest garden center chain

ESL results in time savings for employees and creates a positive customer experience

The rollout of electronic shelf labels is in progress at Plantorama, which expects both economic and operational benefits by replacing the paper shelf labels in all of the chain's garden centers. Staff members need more time for customers and it ...

Thumbnail-Photo: Helpful customization or furtive manipulation?...
26.02.2020   #customer satisfaction #data management

Helpful customization or furtive manipulation?

How Germans see personalization of online services

To ensure that our online experience is closely tailored to our interests and preferences, algorithms collect our personal data and analyze our online behavior. The data collected are used to infer sensitive information and to shape our digital ...

Thumbnail-Photo: Successful local grocery store: Here is the recipe...
10.01.2020   #electronic shelf labels (ESL) #food retail

Successful local grocery store: Here is the recipe

Fast price adjustment with electronic shelf labels

Many small local grocery stores have difficulty getting a profitable business, but in the Danish cottage area between Nymindegab and Hvide Sande, the local Min Købmand store in Bjerregaard has found the recipe to be successful. Now, the ...

Thumbnail-Photo: 3D product configuration: individualization online and in real time...
24.03.2020   #online trading #online marketing

3D product configuration: individualization online and in real time

Video interview with Yusuf Sahin, sales consultant at Derwid

The more attractive the presentation of a product, the more likely customers are to decide to buy online.One way of doing this is 3D product configuration, in which all the data and options of a product flow into the background. This allows the user ...

Thumbnail-Photo: Solid Lines 2020, a product range …
01.02.2020   #refrigeration cabinets #Trade fair special EuroShop 2020

Solid Lines 2020, a product range …

… designed with the idea of generating unforgettable shopping experiences

New architectural and design concepts are appearing in the conceptualization of current supermarkets, especially aimed at improving the customers' shopping experience by incorporating solutions that generate value, allowing to optimize energy ...

Thumbnail-Photo: Digital tool helps MENY in the fight against food waste...
13.02.2020   #sustainability #app

Digital tool helps MENY in the fight against food waste

Printing discount labels directly from the app

After a convincing test, Dagrofa rolls out the food waste app ‘Whywaste’ in all the Danish MENY stores. At MENY in Solrød, the store has already managed to achieve a significant reduction in food waste. In addition to the app, the ...

Thumbnail-Photo: Online payment fraud losses to exceed $200 billion...
02.03.2020   #online trading #mobile payment

Online payment fraud losses to exceed $200 billion

Ongoing high level of data breaches and fraud innovation driving losses

A new study from Juniper Research has found that businesses in e-commerce, airline ticketing, money transfer and banking services, will cumulatively lose over 200 billion dollars to online payment fraud between 2020 and 2024, driven by the increased ...

Thumbnail-Photo: Poindus VariPOS TSE Solution
11.02.2020   #security #pos systems

Poindus VariPOS TSE Solution

TSE for German fiscal regulations

Kassensicherungsverordnung (KassenSichV) regulates the technical requirements for electronic recording and security systems, such as Point-of-Sale (POS) systems & electronic cash registers in order to end the manipulation and potential tax ...

Supplier

APG Cash Drawer (Germany)
APG Cash Drawer (Germany)
Leichtmetallstr. 22a
42781 Haan-Gruiten
VR Payment GmbH
VR Payment GmbH
Saonestraße 3a
60528 Frankfurt am Main
Burkhardt Leitner Modular Spaces GmbH
Olgastrasse 138
70180 Stuttgart
Adasys GmbH – a Poindus Company
Adasys GmbH – a Poindus Company
Max-Planck-Straße 10
70806 Kornwestheim
POSIFLEX GmbH
POSIFLEX GmbH
Flinger Broich 203
40235 Düsseldorf
Frost-Trol s.a.
Frost-Trol s.a.
Ctra. Valencia-Barcelona, km. 68,9
12080 Castellon
Poindus HQ - Taiwan
Poindus HQ - Taiwan
5F., No.59, Ln. 77, Xing-Ai Rd.,Neihu Dist.
Taipei City 114
SES-imagotag Deutschland GmbH
SES-imagotag Deutschland GmbH
Bundesstraße 16
77955 Ettenheim
SALTO Systems GmbH
SALTO Systems GmbH
Schwelmer Str. 245
42389 Wuppertal
GLORY Global Solutions (Germany) GmbH
GLORY Global Solutions (Germany) GmbH
Thomas-Edison-Platz 1
63263 Neu-Isenburg