Interchange fees explained
Germany is one of the most fragmented markets when it comes to payment methods. Cash is still hugely popular and credit cards aren’t the norm. In a country of 83 million, there are 100 million girocards in circulation, making it a dominant payment method. In this blog we’ll look at the background of the card, the benefits of offering it as a payment method, and last but not least, where Adyen comes into the equation.
girocard is an interbank network that was originally developed by The German Banking Industry Committee (GBIC) to connect their ATM networks and encourage an industry standard. As point-of-sale (POS) payments became more popular in the 90s and 00s, the GBIC saw the necessity to brand their cards for wider adoption across Germany. With that, the girocard was born.
“What started as a network of ATMs became a key method of payment and one the German people trust. Unique in a society that still enjoys using cash.”
68% of card payments in Germany are made with girocard, a huge chunk when considering the country's position in the center of Europe, its international population, and the propensity for its people to use cash. To put this into context, when someone opens a bank account with one of the major banks in Germany (Sparkasse, Volksbanken and Raiffeisenbanken etc), they will receive a girocard. It’s trusted by customers young and old, used in all sorts of stores and locations from the Reichstagskuppel to Kölner Dom
Created by the major banks and used for POS, girocard is trustworthy and has extremely high authorization rates. This is good news domestically, but also for cardholders overseas. girocard offers its holders peace of mind in the form of a co-brand like Maestro, VPay or MCD, meaning that their card won’t be declined when overseas.
In addition to higher authorization rates, local processing lets merchants process the <1% of “girocard only” cards, and last but not least, being able to process a card on two networks (local or international) gives merchants increased agility and stability.
In 2018, the Deutsche Bundesbank revealed that contactless payments equalled a share of just above 1% in overall turnover, but this is changing with the increase of POS terminal availability and shopper awareness. One driver of a spike in contactless payments has come through the unfortunate circumstances of COVID-19. Shoppers feel less inclined to carry cash, and prefer the the relative cleaniless that comes with paying contactless. As of May 2020, 45% are paying this contactless with girocard.
Through Adyen's POS terminals, shoppers will be able to use their girocard for contactless payments wherever they go.
Through Adyen's POS terminals, shoppers will be able use their girocard for contactless payments wherever they go.
As of today, all of our point of sale terminals can accept girocard, single or co-branded, whether in Germany or abroad. As a key payment method in the region, with 50 million cardholders, this means allowing your customers to pay in their preferred way, but what about for your business?
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