2019/09/04

Did the German banks miss the mobile payment trend?

Fintech | Reading time - 2 min

The time has finally come: Since the second half of 2018, Apple Pay and Google Pay can be used to pay at German cash desks. Some German banks are already cooperating with the tech companies. Not enough? In recent years, when mobile payment with smartphones has been discussed, it has been Apple Pay. Google Pay, the rival product, stood in the shade. However, due to its earlier launch in Germany and at the latest since its cooperation with PayPal, it has moved into the spotlight.

What’s the point of mobile payment?

The benefits of mobile payment are obvious: I can safely leave my wallet, credit card and cash at home – just hold my mobile phone or smartwatches to a terminal, and i am done. Another advantage: I can pay quickly and easily on all channels with one payment method. For example, if I see Google Pay as a payment solution on my Android phone when I shop online, just a fingerprint is enough. The banks were the reason why Google Pay and Apple Pay took that long in coming to Germany. In order to be integrated with Google or Apple, one’s own bank cards have to be connected with Google or Apple in the systems of Mastercard or Visa. The banks control this process.

At the moment Apple Pay and Google Pay can only be used with credit and debit cards – giro cards are not yet supported. Google has made short work of it: Through the cooperation with PayPal, not only credit card holders of participating banks can use Google Pay, but also anyone who has a PayPal account and an Android mobile phone. The following progress at Apple: While the Sparkasse expressed their opposition to support Apple in 2018, they are now in negotiations with the company to introduce Apple Pay for their own customers.

Why would the banks have joined in?

Basically, the banks could not care at first whether their customers pay by card or by mobile phone. But if more people pay with their mobile phones and less with their cards, at some point the entire payment transaction could move away from the banks. It seems that the European banks have overslept the trend. They can only win if they take part – in my opinion it‘s too late for their own sector solutions. How quickly Google Pay and Apple Pay will assert themselves in Germany will be shown by the strategic orientation of the large private customer banks in the coming months. A look at Asia or the US could help.

 

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