SMARTPHONE PAYMENTS

Anti-Trust Authorities Give PayPal-Rival Green Light

Bezahldienst Paydirekt
Forgot your wallet? No problem! Picture source: DPA

Just ask any tourist who has traveled to Germany – Europe’s largest economy has an ax to grind against shoppers who use credit and debit cards. Whether you’re at the bar, in a restaurant or picking up groceries, good-old cash remains the preferred method of payment.

But even in Germany, the times are changing, albeit slowly. Years after smartphone apps such as Venmo enabled peer-to-peer petty cash transfers in the United States, Germany is on the verge of joining the cashless revolution.

Anti-trust authorities, known as the Federal Cartel Office, on Wednesday gave the green light to Paydirekt’s plans for a smartphone cash transfer function. Paydirekt, launched by Germany’s private and cooperative banks in 2015, is an online payment platform similar to Paypal.

Though Paydirekt has more than a million user registrations, it handled just 100,000 transactions in 2016, according to information obtained by Handelsblatt.

It’s a major breakthrough for Germany’s banks. A year ago, the country’s cooperative banks tried to introduce a smartphone cash transfer function through an app called “Geldbote,” or Money Messenger, but the Federal Cartel Office blocked the move.

That decision fragmented the digital payment landscape in Germany. The savings banks, or Sparkassen, set up a cash transfer function through their smartphone app, while Germany’s other cooperative banks, the Volksbanken and Raffeisenbanken – set up their own services.

The launch of a smartphone-to-smartphone payment function through Paydirekt would create common platform that customers at all of Germany’s banks could use. It may also lift Paydirekt’s fortunes. Though service has more than a million user registrations, it handled just 100,000 transactions in 2016, according to information obtained by Handelsblatt.

Despite the digital and smartphone revolution, consumers in Germany are still holding on to their cash – for now anyways.

Katharina Schneider is a correspondent in the finance section of Handelsblatt based in Frankfurt. Spencer Kimball is an editor with Handelsblatt Global based in the United States. To contact the authors: kschneider@handelsblatt.com, s.kimball@extern.vhb.de

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