So far this year, online retail in Europe has been growing at a rate of 18%. The UK, Germany and France are the European countries with the highest online turnover according to a study by the Centre for Retail Research. This figure allures to the fact that internationalisation is becoming an increasingly attractive proposition for online retailers. However, they need to be aware of the barriers that come with foreign ecommerce; localising an online store does not just entail international delivery and translation. Germans, for example, tend to go against the tide, particularly when it comes to online payment methods.
Most Europeans are familiar with paying by card. Indeed, credit cards and debit cards are the first choice when paying for goods online in Europe. A survey conducted by a provider of cashless payments found that the most popular payment method is still hard plastic, with 2 out of 3 sales being paid by card, with VISA the number one choice in Europe.
However, the ecommerce Report 2010, published by the Deutsche Bank branch Deutsche Card Services, shows some interesting results – namely that the stats above are not applicable to the German market. This is largely due to the important role of bank accounts in Germany, where bank transfers have historically been the most important payment method for transactions of every kind.
This trend also has a strong influence on the payment methods used online in Germany, with recent surveys such as the one by E-Commerce-Center Handel (ECC) showing that credit cards are only used to pay one out of every nine online sales. The actual numbers for Germany are as follows:
If we add up all bank account-related payment methods for 2010, the resulting share is a remarkable 66.9% of all transactions. Admittedly, there is a downward trend for these kind of payments, but the overall figure is nevertheless far from negligible. On the contrary, it can really mean the difference between success and failure in the German market. No drastic changes are likely in the near future either, not even looking 5 years ahead.
Future innovations such as NFC payments and their expected take off with the launch of the iPhone 5 later this year, or the new Amazon mobile payment service, can perhaps bring about some change, but until that happens the bank account is – and will continue to be – the apple of the German customer’s eye.