The mobile phone replaces the cash

Business

A cash register in a German supermarket operates on the same principle: put goods online, wait, prepare, pack too fast. Then the cashier announces in a short time the amount and you rushed "Please with card" – or search for change. Starting this Monday, savings bank clients may oppose a third option: "please with the cell phone."

More than 300 of the 385 Sparkbaden in Germany begin this day with their own mobile payment offer. From now on just put the smartphone on the terminal of the card, and already the purchase is paid – provided that users have the application and an Android smartphone with NFC function . NFC stands for Near Field Communication. At the same time, devices spaced a few centimeters apart exchange information in seconds, in this case the point-of-sale terminal and the mobile phone. The payment process is as secure as with a contactless transfer or a credit card. From here the end of the year, the service should be available in all savings banks. A large part of the Volksbanks and Raiffeisenbank, which already have a pilot phase in Hesse, will follow in mid-August, and a year later, all institutions will be on board

With the entry of the financial groups , the mobile payment could finally be established in Germany. Until now, it is a marginal phenomenon. Only seven percent of people in this country have already paid by mobile phone. The result is also distorted because the value includes buying online via a smartphone. At the checkout, there were even fewer users.

Paying the wireless bill at the cash register works without a credit card

At Deutsche Bank, approximately 300,000 customers could use the system. In fact, it is only used by a good five-digit number. Google Pay, which has been in the German market for about a month, can only use the customers of Commerzbank and some online banks.

Sparkbaden, on the other hand, launches mobile payments in a jiffy for potentially 50 million customers Soon to be the market leader and therefore a serious opponent of Google Pay. Increased competition from co-operative banks should make it even more difficult for Google to establish its payment system in Germany on a large scale.

"We offer our customers an innovative payment solution on the market," says Helmut Schleweis, President of Sparkbaden (DSGV). For him, the introduction is an important pillar of what he calls "the 2018 digital year". As an attack on the DSGV cash chairman does not know the offer included. Rather, mobile payment is one of the many possibilities

Retailers that accept the new system are now available. According to figures from the German Association of Savings Banks and Savings Banks, more than 75% of all German card terminals are NFC-compatible and around 60% accept not only credit, but also contactless girocards. But if you want to pay with your mobile phone, you still need an Android device because Apple refuses to let the banks access its NFC interface in the iPhone.

At checkout, this is enough for the savings banks up to 25 Euro, to briefly activate the display of the mobile phone and place it on the terminal. For larger purchases, the customer must also enter a pin into the POS terminal. Anyone who already pays with his contactless card in the supermarket knows the principle.

The fact that the launch of savings funds can be an accelerator for mobile payment is not just due to the number of potential users. The savings banks are the first German financial group to offer customers the opportunity to deposit their credit card and their girocard in the application, whether it is contactless or not. In cooperative banks, customers do not even need a girocard in their wallet to pay for their cell phones from mid-August.

Anyone wishing to use the Deutsche Bank, Commerzbank or N26 systems must deposit a credit card in their application. But this is rather unpopular with customers of banks in Germany. Their share of sales over the past year has been only five per cent, as shown by the figures of the Bundesbank. Debit cards, especially girocard, are quite different: their share of sales was already 35 percent last year, only 13 percentage points below the cash portion. "This is an essential step towards the acceptance of mobile payment solutions, which customers of savings banks and cooperative banks can deposit their girocard," says Oliver Hommel, payments expert at Accenture . Always paid in cash

The two German financial groups have decided not to be partners of Google Pay, but they could also have other reasons, says Hommel. "Because the company collects a lot of data, it is critically viewed in public." So banks prefer to follow their own path. DSGV President Helmut Schleweis points out that savings banks do not pbad on customer data to third parties. For the savings funds, the final step is also a step in the future, says Christopher Schmitz, expert in payment methods at the consulting firm EY. "Savings funds are service-related, especially young customers."

Up to now, mobile payment has only one manageable benefit: you do not have to search the wallet. Apart from that, the question arises as to what concrete added value it brings to users. If banks and savings banks are able to offer their customers useful services, such as discounts on purchases or additional loyalty points, young adults may have a reason to change their bank less, says Schmitz. The mobile payment offer could even serve as a shield against new digital banks or Google Pay.

The fact that payment by smartphone prevails currently remains uncertain. Banks push the problem, but the numbers speak a different language – especially when it comes to small sums. 96 percent of all payments up to five euros continue to pay people in cash in Germany. Little search for change included.