Card payments in times of a pandemic

"The tide lifts all boats, even those with holes in the hull" – thus goes a German stock market saying, verbatim.
In our case, of course, this does not refer to any catastrophic flood scenario, but rather to positive exogenous effects on payments and an entire industry.
The last year and a half of the global pandemic was just that for card-based payments – a tide lifting up almost all parties involved. Transaction figures for card payments went through the roof; some even say that food retailing in particular had four Christmas seasons. Especially the girocard, which is preferred by many Germans, has benefited from this. The number of transactions increased by 4.7% in the first half of 2021 compared to the same period in the previous year, while total sales increased by 2%. The girocard was thus used considerably more, while shopping cart sizes did not change significantly. (1)

The same is true for the increasing prevalence of contactless payments. While the card schemes and issuers have spent years and enormous sums of money promoting the use of the NFC function of cards and reducing customer inhibitions, the pandemic has pushed its popularity to a "new normal" in one fell swoop. As many as 64% of all girocard transactions were contactless in the first half of 2021.1 Customers have finally understood this long-established function and made it a de facto standard – no amount of advertising could have achieved this in such a short time.

The development of the enormous increase in girocard transactions is exciting to observe insofar as there are more and more institutions that are questioning the previous co-badging strategy (i.e. girocard in combination with V Pay/Maestro) and in some cases are moving entire portfolios to the native debit solutions of the major card schemes (Mastercard/Visa Debit). This transformation in the German card market will essentially continue over the next few years and, in the long term, challenge the dominance of the girocard in Germany. With this in mind, it will also be interesting to observe to what extent the acquiring market in Germany – so far dominated by the large network operators – develops.

An important driver in this context is a European payments initiative currently being promoted in Germany. EPI (European Payments Initiative) is intended to provide a pan-European card solution that will enable payments in stationary trade and e-commerce within the European domestic market across borders and independently of international schemes. The current plan is to connect existing national card systems and ideally roll them out in all European countries. EPI is focusing on instant payments as the new European standard and would like to offer a mobile wallet in addition to the card solution. However, leaving Europe in the future will then mean relying on the global brands once again.

If we look at e-commerce, a similar picture presents itself: in Germany, the newly merged payments solutions paydirekt and giropay as well as Kwitt and girocard have been bundled under the "#DK Initiative" in order to present a powerful payments solution. The challenges are similar to those of EPI and success is only realistic if the different interests of many parties can be united.

All these initiatives and changes to the existing systems are continuously challenged by new FinTechs that occupy relevant niches in payments. Here, socially relevant topics, such as the recent "True Name" on credit cards, are also being implemented quickly and with effective advertising.

In summary, it can be said that the pandemic has so far proven to be an accelerator of many existing developments in card-based payments and has triggered changes that will shape the industry for years to come. It remains to be seen whether the specific effects of the pandemic will be followed by the gradual stabilisation of a "new normal" or whether the rapid transformation will continue and lead to fundamental changes in the market.


Sebastian Litschke 

Jonathan Kutkuhn 

(1) girocard mid-year figures 2021 (German):

More convenience for EBICS customers

When it comes to making things more convenient for corporate customers using the EBICS protocol, there are a few hurdles to overcome. The first challenge is configuring the communication parameters to reach a desired EBICS bank server, the next is the complicated exchange of EBICS keys via INI letter and bank key activation.

If we as customer product manufacturers could get help from the EBICS Company for the first task, i.e. the configuration of the communication parameters, we would quickly be able to make the second task, the key exchange process, much easier for users of the EBICS protocol.   

 This scenario could be implemented quickly by the EBICS Company providing authorised and registered manufacturers with a list of all EBICS banks, their technical access and host ID, and the last known bank key as a hash value. Then the customer product manufacturers could integrate the provided values into their EBICS customer applications and considerably simplify the configuration of the technical EBICS access for users. User input errors with lengthy support requests would be a thing of the past and users would have one less hurdle to overcome to use EBICS.

With the data provided by the EBICS Company, the verification of bank keys in customer products could also be simplified. This would reduce the complicated process of EBICS key submission and bank key checks to a minimum. Indeed, it is conceivable that customers would then receive an activation within a few minutes and could immediately begin using EBICS communication. The effort required to activate the EBICS access would then be comparable to the activation of online banking for private customers.
Dear EBICS Company, would you consider creating an EBICS bank list? Like the one DK has been providing in a similar form for FinTS bank servers for years?  

Author: Michael Schunk