Financial institutions determine to suspend Giropay services by the close of 2024.
The end is near for the joint online payment method Giropay/Paydirekt, used by German banks and savings banks. At their shareholders' meeting on June 12, 2024, Paydirekt GmbH's shareholders (subject to approval from their committees) will make the decision to discontinue the Giropay payment method by the end of this year, a spokesperson revealed. However, final decisions on this matter are yet to be made.
Giropay/Paydirekt, launched as a competitor to PayPal in the fall of 2015, experienced lackluster results in terms of popularity among both consumers and merchants. This situation didn't improve when the German financial industry united and grouped the payment methods Paydirekt, Giropay, and Kwitt under the Giropay brand in the spring of 2021.
With disappointing market performance, there was seemingly little interest among shareholders in investing more in Paydirekt/Giropay. Additionally, the European Payments Initiative (EPI), a project backed by the German Savings and Loan Association, German Bank, and DZ Bank, is gaining momentum in Europe.
Shareholders of Paydirekt GmbH include Commerzbank, Deutsche Bank, DZ Bank for the cooperative financial group, and GIZS GmbH & Co. KG for the savings bank group.
The German financial sector had launched Paydirekt in the fall of 2015, wanting to challenge the dominance of Paypal, Visa, and Mastercard in the thriving online trade. By allowing users to conveniently make internet purchases through their checking account, they aimed to offer consumers a speedy and simple way to pay for goods and services online.
One of the selling points of Paydirekt/Giropay was that payment data would be kept securely with the user's house bank and on servers located in Germany, ensuring more privacy and security compared to credit card companies.
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Despite the Giropay setting being a point of contention in the upcoming shareholders' meeting, the decision to discontinue Giropay services by the end of 2024 seems imminent. This shift may intensify Paypal's competition in the German market, as it could leave a void in the online payment landscape that Paypal might be poised to fill.
