Unbearable solitude you endure
In the ever-evolving world of payments, German banks are treading a unique path by maintaining and developing both Girocard and the new Wero system. This strategic move aims to cater to diverse customer needs while driving cost efficiencies and enhancing cross-border and instant payment capabilities within Europe.
Girocard, a long-established debit card system, remains critical for face-to-face payments, fulfilling German consumers' preference for secure and reliable payment options. Wero, on the other hand, addresses online and mobile payment gaps, offering merchants lower transaction fees by avoiding traditional card network costs and providing instant payments via bank apps or the Wero app. It is designed to eventually extend to account-based POS payments, offering a modern alternative to the card-centric system.
Nils Heck, the founder of the journalist bureau dreimaldrei, author, and editorial director at Payment and Banking since March 2024, expresses some confusion about the need for such an elaborate and costly infrastructure to be built twice. However, he acknowledges the strategic nature of this decision. By maintaining both systems, banks can gradually transition towards pan-European and instant payment solutions without abandoning trusted, well-established card systems that German consumers continue to rely on.
Wero, issued by the European Payments Initiative (EPI), is being promoted by Volks- and Raiffeisen banks to their customers. The European solution is expected to make online payments available this year, and POS payments next year. Volksbanks, which have over 40 million customers in the Benelux countries and Germany, have already seen more than half a million of their customers activate Wero for account-to-account payments.
The dual infrastructure also supports the banks' efforts to promote European payment integration. Wero is supported by a consortium of 14 major banks including Deutsche Bank, aimed at strengthening Europe's payment sovereignty and interoperability, which further motivates banks to integrate rather than replace existing infrastructure immediately.
Volksbanks joined EPI to enable cross-border, simple payments, which is possible with Wero, unlike Girocard which does not work abroad or online. This duplication allows banks to meet the varying needs of their customers, both in physical and digital transactions. Volksbank customers may be offered the option of using their Girocard or Wero for POS payments, both of which could run in parallel in the Volksbank app.
The duplication of payment infrastructure by German banks serves a dual purpose: it balances continuity with innovation to meet varied payment scenarios, preserves consumer trust, and promotes European payment integration. As we move towards a more digital and interconnected world, this strategic approach seems to be the way forward for banks seeking to cater to the diverse needs of their customers while staying competitive in the ever-evolving payments landscape.
[1] Payment and Banking, 2024 [2] dreimaldrei, 2024 [5] European Payments Initiative, 2024
The dual infrastructure maintained by German banks, consisting of Girocard and Wero, not only balances continuity with innovation to accommodate different payment scenarios but also facilitates the gradual transition towards European payment integration. [1]
In the digital era, where technology plays a pivotal role, this strategic approach allows banks to preserve consumer trust and cater to the diverse needs of their customers, whether in physical or digital transactions. [2] This is evident in the European Payments Initiative's Wero system, which addresses online and mobile payment gaps while promoting cross-border, simple payments. [5]
