A good step, but currently more questions than answers
Last week, at Profitcard 2019, surprising news of the EURO card systems were announced by those responsible for Girocard marketing. The German credit industry has obviously decided to make a new, third attempt to equip Girocard for online acceptance:
- For the first time there was a test in 2003 on the occasion of the CeBIT. At that time, it was shown as a showcase how to pay online with a debit card and a class 3 card reader connected to a PC.
- 10 years later banks and Sparkassen started another attempt to bring Girocard into the Internet. Instead of a card reader connected to the computer, the customer was expected to carry a mobile Bluetooth card reader for authentication – analogous to online banking. Rumors had it that the initiative was politically stalled in favor of the Paydirekt initiative.
- Finally, in 2019 and six years after the last attempt, a third approach with Girocard is now becoming to be active in the booming online payment market.
What does one notice in the context of the performance? It was explicitly emphasized that Girocard is “only” in-app online capable. If this has to be emphasized in such a special way, it shows that the protagonists are driving slalom through the political minefield of the banks and Sparkassen. One does not see, for example, Girocard as a “competitor” to Paydirekt, since Paydirekt is not active in in-app-payment. When I read the 2017 press release “Paydirekt with a new payment function for In-App purchases” I am not so sure whether there can be a clear delimitation.
Either way, I’ve always wondered why Girocard, with an established brand, 100 million cards in the field and the largest German terminal base in retail, was not brought online much earlier and why it was not preferred to other initiatives such as Paydirekt?
However, the context of market acceptance is interesting. Although the credit industry has largely separated from its acceptance subsidiaries, the major retailers in the pedestrian zones have long been represented online as well. This means there are accepted contracts which no longer need to be renegotiated. Only the technical network operation has to be added and the first in-app payments are already flopping through the systems.
In view of the favorable 0.2% fee model for the payment guarantee not only PayPal, but also Paydirekt will get a pale face regarding the fee structure. According to Euro card systems, the first Girocard transactions will be processed in-app by the end of the year. We can be curious to see how the situation will develop further, as many questions remain unanswered at the moment. Therefore, in the style of Hanno Bender´s 100 questions to the payment industry, here are the 10 questions regarding Girocard In-App Payment, which we will continue to observe:
- Why should a provider have to pay much higher prices for Paydirekt and conclude completely new contracts if he can access 100 million Girocards from the same banks, and this on the basis of already concluded contracts and processes? Think, for example, of Deutsche Bahn, which sells many tickets In-App and is currently promoting Paydirekt.
- What role does the parallel announcement of Apple Pay play? Was the Girocard In-App solution a compromise to enable the Girocard in Apple Pay? Curiously enough, “end of the year” is also the period of the planned Apple Pay Launch by VR banks and Sparkassen.
- The customer question: “Hello, I would like to pay online, which procedure would you recommend” is now even more complex: “Credit card, Giropay, Paydirekt, Girocard In-App, Kwitt P2B…” Beautiful complex new payment world.
- Is the In-App Payment of Girocard only the preliminary stage for Girocard online and therefore the coffin nail for Paydirekt?
- How does the credit industry plan the in-app cross-border Girocard transaction? In stationary trading, the solution is Co-Badgeing with Maestro and VPay. Is there even a digital In-App Co-Badgeing?
- Mobile and In-App Payments are currently the Hometruf of PayPal and Germany as a direct debit country their profitability cash-cow. How will such a low tariff structure affect the pricing model and market share of PayPal in Germany?
- The interest of the trade in the solution is very great. Do we see here only another announcement of a technical feasibility study or will a real product come?
- What influence does this solution have on the instant payment hopes of trade?
- Since about 2005, the industry has been talking about SEPA (Single Euro Payments Area), the buzz word for the politically desired uniformity of payment traffic in Europe/euro area. Debit cards are still not uniform in 2019. Will this exceptional status be further cemented? A national payment procedure in the borderless Internet payment?
- Will banks and savings banks build further precedents for the face/finger authentication procedures of Apple, Google, Samsung and Co. with Girocard, from which late they won´t hardly get out of?
Questions over questions on a very exciting topic. We will stay tuned, watch the developments here in the blog and are happy that we won´t run out of topics :).