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Expert opinion

A preview of the EHI study of the German payments market

Wednesday 17 July 2019 | 10:44 AM CET

Miriam Wohlfarth, partner of Payment & Banking, presents a preview of the EHI study on the German payments ecosystem

The EHI Card Congress for payment transactions in the DACH region presents the latest payment statistics for conventional and mobile payments in stationary retail and online payment. In addition, it discusses how classic payment systems can remain successful in the increasingly global market, how technical innovations are received by customers, and what role fintech plays. A small foretaste is given below; the whole study will be published on 18 July 2019.

The online market

The trend of the most offered payment methods has not changed: in 2018, e-wallets such as PayPal, Amazon Pay, etc. are again among the most frequently offered payment methods by the top 1,000 online shops. On average, the customer can choose between seven payment methods: invoice (27.9%), PayPal (20.5%), Direct Debit (19.7%), and credit cards (10.7%). The highest revenue is generated by payments by invoice, and therefore this payment method continues to be one of the most popular payment methods in Germany.

Compared to 2018, little has changed. Only PayPal recorded a small gain of 0.6%, the other favourites together losing 0.8%. Nevertheless, "the popular four" remain the biggest revenue generators in Germany, with a total of 80%, with invoice purchases at the top.

With regards to PSD2, 40% of the surveyed online merchants who use 3DS are increasingly experiencing shopping cart abandonments as a result of SCA, most probably due to the complexity of the checkout process, with -37% impact on sales. Also, a third of online merchants do not observe any changes since using 3DS, with 3% of online merchants reporting an increase in sales and 7% reporting an increase in turnover since using 3DS. It is interesting to see what will happen after 14 September, when the SCA will come into effect. It is imaginable that the abandon rates will get even worse.

The retail sector

Expected, hoped for, and arrived for the first time: in the stationary retail sector, card payments (48.6%) overtook cash (48.3%) (referring to the total turnover). With a loss of 2.6% compared to 2017 and only 10% left, the SEPA Direct Debit has to go back to the queue again. In stationary retail sector, customers pay with their girocard as part of a SEPA Direct Debit. In order for the amount to be debited from the customer's own account, the customer gives "his permission" with his signature or a PIN-code. Cash is still the undisputed leader in the share of number of transactions: 15.2 billion cash transactions (76%) of 20 billion in 2018 speak for themselves. Only 4.6 billion transactions were carried out with a card.

As data shows, cash is more likely to be drawn for small sums, while cards are preferred for larger sums.

Omnichannel vs multichannel

The trend towards cross- and omnichannels is clearly visible: a large number of German retailers are convinced that all sales channels can be linked (an increase with 14% in 2018); more than 300 shops now belong to this group. The share of pure online players among the top 1,000 is still the highest, with around 450 shops (this corresponds to a growth of 37 shops compared to 2018). Multichannel, on the other hand, is becoming increasingly unpopular (65 shops). In short: at all or not at all. This is the result of the new EHI study "Omnichannel-Commerce 2019".

Instant payments - added value or low value?

Instant payments, the predicted trend: this is where spirits differ. While some criticise the lack of added value for the customer, others see the future in a positive light; after all, Rome was not built in one day. However, the fee structure might have to be reconsidered. The fees charged by financial institutions for sending, and sometimes even receiving instant payment transactions, are likely to prove counterproductive for the end customer's benefit. Perhaps 2020's trade will be a little closer to a solution that is mature enough for the masses.

But as we know it from mobile payments, it all takes time. Thanks to Apple Pay and Google Pay, mobile payment is the "new normal". The success of contactless and mobile payment has prompted 44.8% of large companies to adapt to progress and invest in IT infrastructure again after years of "doing nothing". Every fifth company wants to change or add something in 2019.

And what about voice commerce as the coming up trend? Here, too, it remains to be seen how quickly it will be accepted by consumers.

The study "Online-Payment 2019" contains data from 111 online merchants (Pureplayer and Omnichannel merchants) of different industries and turnover sizes. Of these, data from merchants with a net turnover of EUR 21.1 billion were included in the calculation of the market shares of the payment methods. 39 of the dealers also took part in the qualitative survey.

The study "Omnichannel Commerce 2019" was based on 312 cross- and omnichannel shops in Germany based on the top 1,000 online shops. From December 2018 to January 2019, the distribution and communication of omnichannel services were examined. The revenues relate to amounts from the 2017 fiscal year.

The EHI panel "Card Payment in German Retail 2019" comprises 435 companies with approximately 85,000 businesses from 35 retail sectors with gross sales (2018) of EUR 274.4 billion, of which relevant stationary retail sales in the narrower sense of EUR 251.2 billion (approximately 58.4% of retail sales in the narrower sense of EUR 430 billion).

About Miriam Wohlfarth

As Managing Director and Founder of RatePAY, Miriam Wohlfarth is one of the first female fintech founders in Germany and has almost 20 years of experience in online payment and sales. With RatePAY, she actively shapes developments in the payment industry and is always on the ravages of time. She has worked for several international companies (Worldpay, Royal Bank of Scotland) and is an angel investor for startups. Miriam is a member of the FinTech Council of the Federal Ministry of Finance, the Bitkom Executive Committee, the MRC European Advisory Board, mentor at Accelerator Axel Springer Plug and Play, board member at FinCompare and partner of PAYMENTANDBANKING, a leading Fintech blog in Germany, which organizes the events Payment Exchange and Banking Exchange.

About Payment & Banking

Launched in May 2011 as a simple link list, Payment & Banking provides a regular overview and assessment of developments in the financial industry. To date, Paymentandbanking.com has developed into one of the most important contact points for the industry in Germany, 2018, with over 600,000 page impressions. In the meantime, there is not only a linklist, but also the Fintech Map Germany and since 2015 also the regular Paymentandbanking Podcast. More than 35,000 listeners a month now listen to our Podcasts.

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