Digital payment options - German banks cease support for Paydirekt/Giropay.
The German joint online payment system, Giropay/Paydirekt, which began as a competitor to PayPal almost nine years ago, is on the brink of extinction due to little acceptance. Insiders suggest that the shutdown of this joint venture might be decided at a shareholders' meeting this Wednesday. Various media outlets had earlier reported about this.
A Paydirekt spokesperson commented, "We have ongoing discussions with the shareholders over the future of Giropay and Paydirect GmbH as the operating company. We will provide updates once a decision has been reached." The shareholders include Commerzbank and Deutsche Bank, representing the cooperative financial group DZ Bank, and GIZS GmbH & Co. KG for the savings bank group.
Soaring hopes in 2015
Paydirekt was launched by the German banking sector in the fall of 2015, having worked on it for more than three and a half years. They intended to compete with the American giant Paypal and credit card companies Visa and Mastercard in the thriving online trade. The German banking sector promoted the feature of paying purchases online swiftly and effortlessly by linking to one's checking account. They emphasized that this payment method would keep customer data securely within their bank and on servers in Germany.
In the spring of 2021, the German banking sector consolidated their online payment methods Paydirekt, Giropay, and Kwitt under the Giropay brand. However, the consumer and merchant response remained muted, despite announcing in April that the fuel station operator Esso had agreed to accept payments through Giropay using a mobile app. While Paypal is continually expanding its market share in Germany, boasting about having around 35 million active customer accounts there, Paydirekt/Giropay has reportedly had a challenging time establishing itself independently.
Evidence of a European payment system
Allegedly, there has been a lack of enthusiasm to invest further in Paydirekt/Giropay due to its lackluster market performance. Additionally, a European payment system known as EPI (European Payments Initiative) is being actively promoted at the European level - with German support. It seems that "the German banking industry has abandoned their German solution in favor of the budding European solution," as reported by the industry newsletter "Finanz-Szene." "Indeed, Paydirekt, founded in 2015, never truly thrived independently in the market," added the newsletter.
Read also:
- Despite the shutdown discussions at Deutsche Bank and Commerzbank's shareholders' meeting, Paydirekt continues to engage in dialogues about the future of Giropay and Paydirect GmbH.
- PayPal, a powerful competitor, continues to expand its market share in Germany, boasting around 35 million active customer accounts, while Paydirekt/Giropay faces challenges.
- DZ Bank AG, along with Commerzbank and other shareholders, has invested in Paydirekt/Giropay but has shown a lack of enthusiasm due to its performance in the market.
- The European Payments Initiative (EPI) is gaining traction at the European level, receiving German support, which could potentially divert the attention of banks like Deutsche Bank and Commerzbank from Paydirekt/Giropay.
- Frankfurt am Main, the financial hub of Germany, serves as the center for various banks, including Deutsche Bank, which are major players in the digital payment landscape.
- In the realm of German banking, banks like Deutsche Bank, PayPal, DZ Bank AG, and Commerzbank, among others, play significant roles in shaping the future of digital payments, potentially influencing the rise or fall of systems like Paydirekt/Giropay.
