KnowGermany

Receiving payment from your customers

  • German consumers are big online spenders; the average e-shopper in Germany is forecasted to spend a massive $1,604 (USD) online in 2015, charting well above the world average.
  • As an e-retailer it is absolutely essential that you offer a localised set of payment methods in order to unlock the huge potential this market has to offer. Integrating payment options that German consumers know and and trust will have a significant impact on your conversion rates at checkout and therefore a positive effect on your revenue from this market.
  • Despite being one of the most developed e-commerce markets in the world, the use of credit and debit cards online is still not as strong as it is in other European countries. Alternative payment methods therefore currently account for the vast majority of online transactions in Germany.
  • The security-conscious German consumer maintains a strong traditional preference for cash on delivery, online bank transfers and other payment on invoice options.
  • Whilst bank card usage online is comparatively low, there are still some 53.3 million personal credit cards registered in Germany, a market which is largely equally shared between Mastercard and Visa.

Popular payment methods

Alternative payment methods account for around 75% of total online transactions in Germany.

Unsurprisingly, studies have shown that e-retailers who added alternatives such as ELV and Giropay to their checkout processes saw a 20-30% uplift in their revenue from the German market.

 

Payment method Key considerations
ELV (Elektronisches Lastschriftverfahren) – German Electronic Direct Debit.

By far the most common method of online payment, ELV can be used for one-off payments as well as recurring transactions. In order to offer this method to prospective buyers, an e-retailer will need to conclude an agreement with a German back and have a local bank account, or alternatively engage with a payment solution provider who can process payments on its behalf.
Sofort Uberweisung – (DirecteBanking)

This payment method consists of real-time bank transfers and is arguably less risky in terms of charge-back and late declines than ELV. The user simply logs in and makes a transfer to the merchant from their bank account. Sofort has over 90% of the German banking market!
Giropay

Similar to Sofort, Giropay is a real time bank transfer payment method. Giropay transactions are guaranteed and so there is no charge-back risk to the merchant. This internet bank payment scheme is available to over 40 million consumers across Germany.
Payment on Invoice

A vast number of German consumers still demonstrate a preference for payment on invoice when shopping online and, unfortunately, this cash on delivery payments habit can often be seen as riskier for merchants than the stated alternatives. However, solutions such as Klarna Invoice are growing in popularity. Here the third-party solution provider assumes the risk by paying the merchant in full at the time of purchase and then collecting payment from the consumer themselves.

 

MOBILE PAYMENTS

Whilst m-commerce in Germany is growing, the use of mobile payments by German consumers is still very low. In fact, at present just 1.7% of Germany’s total e-commerce revenue is generated by mobile transactions!

Of this tiny market share, PayPal dominates the use of e-wallets with 10.4%.

Despite Germany boasting the perfect environment for mobile payments in terms of its financial services and regulatory framework, the lack of consumer engagement with mobile payments is hindering any real chance of this payment method gaining much traction in the near future. Just 4% of German consumers have expressed a willingness to use mobile payments, whilst 40% reported that they would never even consider this option. It

Just 4% of German consumers have expressed a willingness to use mobile payments, whilst 40% reported that they would never even consider this option. It will, therefore, take a strong campaign to change consumer opinion and encourage trust in mobile payments before we see any dramatic change in this area.

Other areas of interest

Meeting your regulatory responsibilities

The legislation and tax applicable to you when selling to German consumers will vary depending on whether you are an EU incorporated entity or operating outside of the Union.

Reaching and engaging your consumers

Germany boasts a well-developed e-commerce environment therefore giving German consumers the option to be picky when purchasing from online stores.

Getting the goods to your customers

The German logistics market is the most developed in the world and ranks first in the World Bank’s 2014 International Logistics Performance Index.

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