Payments cards are not the most popular form of payment in Germany. In fact, credit card penetration is around 20%, with only 36 million credit cards issued in 2014. The card picture is starting to change however. There are more cards in circulation every year (27.5m in 2012, 36m in 2014) and is an ongoing trend which should continue as fees are on the decline due to regulatory pressure. There is also an element of generational change that is affecting the use and adoption of cards.
The following four payment methods are the most common in Germany as of 2015: open invoice, PayPal, credit card and direct debit. On mobile devices, open invoice and PayPal are the preferred options. For some readers, it is important to highlight direct debit usage. In many countries, this payments mechanism is used primarily for regular, fixed amounts. For example, monthly bills such as utilities. In Germany, a direct debit can easily be set up for a one-off transaction. The benefits to the merchant include a lower cost of processing and direct transfer of funds to the merchant account. Likewise for the customer, direct debit is easy to control and includes a mechanism for disputing transactions.
How consumers will adapt / adopt to new payments methods is hard to predict. Likewise, new developments often need critical mass before both businesses and consumers feel happy about adopting them. Brands such as Apple Pay go some way to mitigate this but, perhaps widespread adoption will be a generational change. Many e-wallets (‘wallets’) are based on debit / credit card and direct debit payments in the background and whilst credit card usage is limited, debit cards are much more widely available. Wallets consist broadly of a technical solution that contains the core account details required to process a payment. They replace cards as a form factor and store multiple payment types, allowing the user to select the most appropriate one for a transaction. Most commonly they are available as an app for popular mobile devices.
As the market matures customers are getting more used to electronic payment methods like PayPal and SOFORT.
Open invoice is on the decline based, on the payment methods share, but due to the growing eCommerce market is steady in numbers. In some sectors, such as fashion, open invoice is still preferred by consumers due to the high return rates.