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):


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