Nielsen’s recent Global Connected Commerce Survey reinforced what we already know; consumers are continuing to expanding their shopping to online retailers outside their geographic region. In other words, the idea of closed domestic markets continues to erode. This trend is evident globally, but in Germany 73% of online shoppers have purchased from an overseas website, a notably higher percentage than the Western European average of around two-thirds of shoppers.

The size and relative affluence of the German eCommerce market (worth about EUR 50 billion annually) has made it an attractive destination for globally-oriented merchants. Those payment providers and merchants who have been successful in expanding into Germany are well aware of the need to localize the shopping and checkout experience, which extends to offering the most relevant payment methods.

In contrast to the card-dominated U.S. market, German consumers are typically debt-averse and wary about sharing card details online. Not to mention that German attitudes and legislation around consumer privacy are quite different to North American and some other European countries.

Consequently, open invoice payments are extremely popular and also expected (used for around 28% of eCommerce purchases), although this entails a certain amount of risk for the merchant. Direct debit and PayPal are also popular (22% and 20% respectively), while credit card use lingers behind with an 11% share of online payments.

International payment providers and merchants need to bear this preferred payment mix in mind. And with the launch of paydirekt – an initiative of the German banking industry – this mix might be getting a shake-up.

What is paydirekt?

The new online payment method (launched in Q4 2015) is a joint initiative of the major German banks including Commerzbank, comdirect, Deutsche Bank, HypoVereinsbank, and Postbank, which are already registering their current account holders for paydirekt. The Sparkassen finance group and private banks are following suit in Q2 2016. By the middle of this year, almost all German credit institutions will support paydirekt, and consequently online retailers will be able to reach more than 50 million online current accounts held by German consumers.

These banks and financial institutions already own and operate the core banking infrastructure in Germany, although it is extensively leveraged and used by competing payment methods. The bank-led initiative could be seen as a way to boost customer retention and offer a streamlined and secure, mobile-friendly payment option.

paydirekt has been developed to appeal to both merchants and consumers. Merchants receive direct payment authorization and a payment guarantee, plus the backing of robust fraud protection. Additionally, merchants can reinforce their brand with branded checkout pages.

For consumers who have activated paydirekt via their own online banking portal, completing a payment via paydirekt requires only username and password. The direct connection means that all sensitive data and account information remains within the German bank infrastructure. Privacy-wary German shoppers are also reassured that shopping cart information will not be sold on, and customer-related data is not processed or stored abroad.

Both merchants and consumers benefit from services such as a dispute and returns management portal, as well as the high security standards (infrastructure and data protection) of the German banking industry. With the development of an online payment method that connects directly to the bank account, paydirekt brings together best practices for fast and secure online payment.

What remains to be seen, is how quickly and to what extent consumers adopt the new payment method. The number of registrations is rapidly rising, and while widespread merchant acceptance will be a key success factor, both domestic and international players should take note.

AllSecure integrates paydirekt

AllSecure completed integration of paydirekt in Q1 2016. As a result, we can immediately activate this payment method for OUr eCommerce merchants. The integration of paydirekt is part of our ongoing mission to deliver clients the most comprehensive, relevant, and up-to-date global payment network of acquirers and alternative payment methods. For more information on paydirekt visit

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