Growth Tails off for Germany’s Payment Card Business

The Frankfurt-based firm, the German member of the European Payments Consulting Association (EPCA) reports that for 2013 the sales transaction volume generated by payment cards in Germany increased by €15.6bn to €292bn, a rise of 5.6%, and almost certainly surpassed the €300bn level last year.

However, the increases for 2013 and 2014 are down on the double-digit rises of previous years.

Card market statistics for Germany covering the period 2004 to 2013 issued by PaySys show the main driver of growth to be the German domestic debit card system, aka the ‘ec-card’, with a 9.2% increase, while the three major credit cards of MasterCard, Visa and Amex recorded a 3.4% increase. Credit card transactions now represent 23% of all card transactions in Germany.

Card sales volumes in Germany 2005-2013:
PaySys German card spending volumes
*Figures in €bn and represent domestic and foreign cardholders.
**plc = private label cards, including store cards and fuel cards.

Source: PaySys Consultancy GmbH

In 2013 debit card transactions with the ELV (Elektronisches Lastschriftverfahren) system – an electronic direct debit payment method supported by German banks – were flat, with annual volume of €63.5bn after a lengthy period of growth. In some retail sectors, this signature-based method has been replaced by personal identification number (PIN)-based electronic cash.

Early figures for 2014 suggest that this growth plateau for ELV may only have been a temporary blip. “The future of the ELV depends in particular on the long-term price developments in the electronic cash system,” comments PaySys.

“As required by the Bundeskartellamt (Germany’s competition authority) the abolition of the uniform merchant service charge for ec cash (from November 2014 onwards) has already led to price reductions for merchants.”

The firm expects the debit card interchange fee cap of 0.2% proposed by the EU Commission and soon to be adopted to result in a further reduction of the ec cash merchant fees over the next few years.

“Despite the resistance of the German banking industry, the German ec cash system will fall according to the Commission under the new interchange fee regulation [IFR],” says PaySys. “Thus, the popular German ELV will lose its appeal.”

The firm adds that the IFR will have a much greater impact on Germany’s credit card market, with the proposed fee cap of 0.3% resulting in a significant shift of the overall system cost from the acceptance to the card issuer side.

Shifting Costs

Reducing the interchange revenues of German credit institutions, which issue MasterCard and Visa will amount to annual loss of revenue of €340m based on 2013 figures, equivalent to about €11 per card. Banks are likely to compensate for these losses by introducing additional cardholder fees.

“It is an interesting question how this overall cost shifting from the merchant to the cardholder side will affect the entire credit card business,” the firm comments. “Until now, experience in other countries show that such a re-adjustment of the cost burden on both sides of the market has no negative impact on the card sales volumes.

“The active card users have a lower price elasticity than expected. They are willing to pay, where appropriate, a higher price for their much-used credit card.”

The firm notes that more than a third (34.5%) of consumer spending in Germany is now represented by card payments, against a percentage of around 20% a decade ago. Nonetheless, there remains significant further potential. Card business related to gross domestic product (GDP) stood at 10.7% for Germany in 2013 – still well below European average of 18.2%.

PaySys comments that comparing Germany’s card figures to those of its European neighbours is complicated by the fact that the European Central Bank (ECB) estimates annual card volume to be only €194bn, rather than the 2013 total of €292bn recorded by the firm.

The discrepancy of nearly €100bn is explained by the fact that the ECB’s figure for Germany is based on reports from the issuing banks. It omits turnover both from foreign cards and private label cards issued by high street and petrol retailers. In addition the ECB statistics only register ELV turnover partially, with the rest of these transactions added under direct debit.

Further information on PaySys Consultancy’s survey may be accessed at


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