Digital payment options - German banks end support for Paydirekt/Giropay.
Nine years ago, German banks and savings banks launched a joint online payment method to compete with PayPal. However, this initiative might be on the verge of extinction due to low acceptance. The closure of Giropay/Paydirekt could be decided during a shareholders' meeting this week, according to reports.
The spokesperson for Paydirekt revealed: "Discussions regarding the future of Giropay and the Paydirekt GmbH, as the operating company, are taking place among shareholders. We will update you as soon as definite decisions have been made." The German cooperative financial group DZ Bank and Deutsche Bank make up the shareholders of Paydirekt GmbH.
Hefty Expectations for 2015
The German banking sector launched Paydirekt in the fall of 2015 to challenge Paypal and credit card companies like Visa and Mastercard in the bustling online trading sector. Customers were supposed to make seamless and quick internet purchases by linking their checking accounts. The German banking sector hyped that in this case, payment details would remain with the bank, and servers would be in Germany.
In spring 2021, the German banking sector united its online payment platforms Giropay, Paydirekt, and Kwitt under the brand name Giropay. Although the announcement in April that petrol station operator Esso would accept payments through Giropay via a smartphone app generated some buzz, the overall reaction from consumers and merchants remained lackluster. While Paypal has significantly grown its market share in Germany over the years, with approximately 35 million active customer accounts, according to the company's claims.
Waiving on a European payment solution
It seems that the enthusiasm for further investments in Paydirekt/Giropay is dwindling in light of the mediocre success. Moreover, an initiative for a European payment system called EPI (European Payments Initiative) is gaining traction at the European level with German backing. In the words of the industry newsletter "Finanz-Szene," it looks like "the German banking industry has abandoned its homegrown solution in favor of the future European solution." It's been speculated that the 2015-founded Paydirekt has never really carved out an independent niche in the market outside of EPI.
Read also:
- Despite the efforts of German banks, including DZ Bank AG and Commerzbank, to challenge PayPal with Paydirekt, the initiative's future is uncertain due to low acceptance rates.
- The German cooperative financial group DZ Bank, along with Deutsche Bank, are shareholders in Paydirekt GmbH, the operating company of Paydirekt.
- In 2015, German banks launched Paydirekt to allow consumers to make seamless online purchases by linking their checking accounts and to compete with PayPal and companies like Visa and Mastercard.
- The European Payments Initiative (EPI) is gaining traction at the European level, which could potentially lead to German banks abandoning their support for Paydirekt in favor of this future European solution.
- If the closure of Paydirekt is decided during the shareholders' meeting, it could significantly impact finances in Frankfurt am Main, Germany, and across Europe.
- Consumers and merchants in Europe have been increasingly using services like PayPal, as seen in its significant growth in Germany over the years, making it a formidable competitor for traditional banking payment solutions like Paydirekt.
