Country Series: Germany Online Banking and Payments Landscape

Germany has a thriving and highly developed online payments market. According to a report from German trade agency, Germany Trade & Invest, the E-commerce market in Germany is estimated to grow from $36.8 Bn in 2012 to $44.7 Bn in 2017 at a CAGR of 21.4%. High internet penetration (89% of Germans between the ages of 25 and 44 use the Internet) and increased smartphone based purchases (25% of Germans claim to have used their phone for purchases), the demand for efficient and secure online/mobile payment services is likely to increase.

Currently, the most preferred mode of online payment is through online banking. Germany has a very well developed banking industry. The demand for online banking has been increasing in the last few years. According to DB Research, there were 27 Mn online banking users in Germany in 2010, and the number is projected to be 44 Mn by 2030. The development of online banking has also been aided by the closure of bank branches. According to the Bank of International Settlements, between 2006 and 2011, the number of bank branches in Germany fell by 6.6%. Offline bank branches are being closed down, and their operations are being replaced through online banking services.

Some of the major providers of online banking services in Germany include Deutsche Bank, Commerzbank, HypoVereinsbank and Postbank.

After online banking, the other preferred mode of online payments are through invoices and debit cards. Debit cards are extremely popular in Germany. According to a report by Cybersource, in 2010, the ratio of debit cards to credit cards were 5:1. An extremely popular debit card service in Germany is Elektronisches LastsschriftVerfahren (ELV). This is a debit card which behaves like a credit card in case of online transactions.

The following figure shows the preference of customers for different online payment options:

As can be seen from the graphs from ECC Handel, the most preferred mode of payment online is through Web-based services followed by Invoice, debit card and credit card. Prepayment and Cash on Delivery are relatively less popular.


The key factors which encourage people to use online payment services are the convenience and Security.

The banking system in Germany is extremely robust and well trusted.The trust in banks has helped in the adoption of online payment services offered by banks. Customers trust banks and believe that the transaction done online through their banks is secure.

According to Steinbeis Research Centre on Financial Services, 73% of Germans consider security to be the most critical factor in online payments.

Security is also the reason why Mobile payments such as NFC based systems have not gained popularity in Germany. The belief right now is that in NFC systems, the signals transmitted by NFC-enabled devices can be detected. This makes the system susceptible to hacking or phishing. For this reason, German banks are reluctant in adopting mobile and NFC enabled technologies for online payment services.

With some customer education done by German mobile payment startups such as SumUp, PayEleven; companies like Square, iZettle and recent developments in this field, customers are looking at embracing these mobile payment technologies. Some German credit and debit card companies are slowly adopting NFC-enabled cards for transactions. For example, MasterCard has introduced its NFC-enabled PayPass service in Germany, which allows for contactless credit card payments at the point of sale. MasterCard has partnered with Sparda bank to introduce this technology in Germany.


Mobile payment services are expected to gain popularity in Germany. Because of the security issues, banks have been reluctant to venture into m-payment services until now. But an increasing number of customers want their home banks to offer these kind of services, as depicted by the following chart:

This will possibly encourage more number of banks to offer m-payment services. PSPs and Telcos also stand a chance but Germans trust their banks a lot therefore a collaborative effort with banks involved could be popular.