In Germany, buying goods online is gaining in popularity: 63%[1] of Germans stated that they shop online more often than ever before. This tendency is rather explainable: online purchasing is easy, comfortable, and does not require as much time and energy as traditional shopping.

On average, Germans spend around 670 Euro[2] annually on online shopping. How do they make their online payments? Which payment methods are used most often by consumers and online merchants? This article will answer these questions, as well as draw a general picture about online payments in Germany.

Is There a German Way of Paying Online?

Germans don’t differ that much from the majority of Europeans in their choice of products they buy online. Clothes, home electronics, and books belong to the top three product categories that German buyers most often pay for online. Surprisingly, it’s not the kind of goods bought online that makes Germans stand out from the crowd, but the expectations and requirements of the process of paying online.

Germans are well known for expecting reliability and simplicity. They’re well-organized and stick to their habits. One could say, these values seem to be rather stereotypical and far too general; how come these traits have penetrated so far as to the way Germans pay online?

When choosing an online payment method, German people value security, ease of use and, transaction speed. The German consumer also wants to “touch” the product and make sure that the purchase fulfills all requirements before making their final decision. Therefore, Germans prefer the simplest refund process possible, as they have a high percentage of returned goods bought online.[3]

24% of Germans will cancel their checkout process if the e-merchant does not provide their preferred method of payment.

Germans’ love for routine is even mirrored in the choice of online payment methods: 24% will cancel their checkout process if the e-merchant does not provide their preferred method of payment.[4] That makes it an almost impossible job for any PSP, as they have a limited number of payment methods to offer.

 

Payment Methods: Traditions vs. Innovations

Germans stay true to their traditions: despite all of the new types of online payments, invoicing has remained number one, and is used by 39,9% of the population. According to IFH ECC Köln, this relatively high percentage is based on consumers who don’t shop online on a regular basis. Furthermore, the average user of invoices is predominantly in the 50+ age group, and thus chooses said payment method because he knows them and trusts them.

Nevertheless, invoicing had already passed its peak of popularity and is experiencing its decline at the moment. A Reason for that could be the continuously growing popularity of PayPal. Ease of use and high payment speed have already convinced 30,9% of Germans to use PayPal to pay online on a regular basis. In contrast to invoicing, PayPal is chosen mostly by the younger generation and especially used by heavy shoppers for whom online shopping is a part of the daily routine.

Even though almost every German citizen has a bank account and 34%[5] of Germans regularly use their credit cards, neither credit card, nor direct debit are preferable methods of online payment. The main reason being the complexity of entering the credit or debit card data over and over again.

Innovative ways of online payment, for example mobile payments, are still on the rise in popularity among Germans. Such payment methods are not that wide spread yet and are mostly used by technological innovators and early adapters. Since 60% of the German population possess smartphones, and on average every person posesses more than one contract, Germans have many paths open to shop online with their phones. A TSYP study reports, that the reason behind the low mobile payment usership lies in the lack of education about the possibilities to do mobile payments.

 

The Merchant’s Perspective

German online merchants enjoy a wide range of global and local payment methods which they can offer to their customers. According to optile’s Open Payment Market, 36 global and 34 local payments methods are at every German merchant’s disposal. Therefore, it is up to merchants to integrate the methods which are widely used in their specific industry. They can create a perfect mix of payment methods that would generate the highest possible conversion rates. Below you can see which payment methods are implemented most in German e-businesses:

Cutting-edge but with a heart for tradition. Easy, quick, and at the same time reliable. Online payment in Germany definitely has its own special style and character. With the development of new technologies and a high-tech generation growing up, the German way of paying online is destined to shift more and more towards an innovative one. Eager to know about online payment tendencies and statistics in other countries? Stay with us and you’ll soon be able to explore our next destination on the payment map.

[1] http://www.royalmail.com/sites/default/files/Delivery-Matters-Germany-Edition-2015.pdf
[2] http://www.postnord.com/globalassets/global/english/document/publications/2015/en_e-commerce_in_europe_20150902.pdf
[3] https://mycommerce-a.akamaihd.net/images/PDFs/germany-infographic.pdf
[4] http://www.thepaypers.com/expert-opinion/online-payment-in-germany-security-and-tradition/763371
[5] http://tsys.com/Assets/TSYS/downloads/rs_2016-de-consumer-payment-study-english.pdf