Banking as a Service – embedded banking, regulation and how partners become competitors

Anyone who has looked into private financial investments in recent months has often become aware of various deposit offers with attractive interest rates. High-risk investment opportunities that can be classified as “high risk & high return”, such as in cryptocurrencies, are a thing of the past, as the current trading volume within Germany shows. Consequently, it has to be decided whether there is sufficient motivation to change and take up one of the time-limited lure offers of some local or international direct banks, or whether the deposits should be managed by the German blue and red banks, despite the fact that they are not quite willing to pass on the increased deposit interest rate to their customers.

Either way, it is clear that consumers’ appetite for risk and willingness to invest has declined due to anticipated uncertainties – inflation, war, increased raw material and heating costs, interest rate rises – and the visible real erosion of savings balances (on average 5.5 %). This is undoubtedly reflected in various sectors and, has at least some influence on the adjustment of the forecast for negative growth in the German economy.

But is it only consumers who yearn for security or can this be transferred analogously to the institutional world? In addition, the question arises as to how capital-intensive companies in the payment industry are reacting to this situation and whether there are Gallic villages like in the Asterix comics which, despite the challenging economic situation, are experiencing success with a product portfolio apart from “save now, buy later” products, while others are disappearing?


Wind of change for companies in growth

In July 2022, the European key interest rate was raised by the ECB for the first time since July 2011. But even before this increase and the ten subsequent corrections to the key interest rate, it was clear to many young companies that the investment behaviour of institutional investors would adjust. This assumption materialised in a decline in investments in risky sectors, such as venture capital. Secured financing rounds fell through, formerly celebrated “unicorns” had to lay off more than ten percent of their workforce, and private equity firms and venture capital funds declared that profitability, and not the ever-popular hockey stick that indicates new customer growth, remains the most relevant metric, even if it did not seem so in the past. Despite these fundamental changes in the business reality of many FinTechs, there have been companies that grew against the trend from venture capital investments to deposit investments due to their specialisation in services that were previously provided by classic banks. These companies can differentiate themselves because they often focus on a part of the entire product and value chain range of a bank and rent it out as a service to FinTechs and companies. The attentive reader will certainly have already thought that these are companies in the Banking as a Service (BaaS) sector. Nevertheless, the question remains why a market that is widely considered to be divided between infrastructure providers – FIS, Avalog, Sopra Steria or the young star Mambu – and banking providers – Solaris, Trezoor, Modulr or Raisin – regularly creates innovations and business models derived from them.


Why is Banking as a Service so attractive?

Banking as a Service is not a completely new concept, as popular providers such as Solaris Bank, currently supervised by BaFin, Banking Circle or TrueLayer have been selling precisely this service as a core product for several years. As the name already suggests, the acronym BaaS hides the provision of banking services from a fully licensed bank to unlicensed companies. In this way, the unlicensed companies are enabled to offer their customers products that were previously reserved for banks. Besides the provision of payment transactions within and outside the European currency area as well as an account, primarily companies that specialised in issuing a credit card in the corporate segment gained popularity in the past. By “lending” the banking licence, it is possible to gain a foothold in the market as a financial company quickly, without high equity capital and with manageable personnel.

The BaaS provider profits from the use of the software, as in addition to platform fees for the provision of the software, a fee for each transaction is charged to the FinTech. If the FinTech also decides to issue loans, an additional fee is charged for the provision of equity and the issuance of the loan, also known as fronting. The sum of the individual items makes it clear that the BaaS provider does not generate serious revenue by providing access on the core banking system, but by scaling customers on a transaction basis, regardless of whether it is a credit card payment, a SEPA transaction or the issuance of a loan. From this perspective, it is understandable why ADAC (Automobile Club in Germany, largest automobile association in Europe) or Amazon are so interested in terms of issuing processing. And if they are corporate cards with a corresponding surcharge, even better. The fact that many second-generation BaaS providers are strongly technology-driven becomes clear from the fact that the consumer does not always recognise who is operating the systems from processing to settlement in the background.


Embedded Finance enables the fusion between customer and core banking system

In addition to providing regulatory permission, BaaS providers enable their clients to build the services into their own ecosystem, making them invisible to the client and seamless from a process perspective. In practice, onboarding, account management, etc. are presented in the FinTech’s front-end, but the relevant data is managed in the BaaS provider’s core banking system via appropriate interfaces. This approach is called embedded banking and goes far beyond the widely known “white label”. Despite the fact that this model has gained popularity in the German market through intelligent marketing of BaaS clients as well as the establishment of their own brand, many of the companies acting as banks have found it difficult to follow the path to profitability via participation in the generated interchange fee or a booking item. One possible explanation for this is that consumers or businesses without access to credit lines at an established bank were targeted and they generate manageable transaction volumes. Finally, it becomes clear that BaaS users have the customer contact but act as intermediaries in the value chain.


Love it, leave it, change it

According to this motto, FinTechs are more and more interested in offering services themselves. The modular approach of BaaS providers is now being misappropriately applied to regulation and its limits. In concrete terms, this means that young companies, by being authorised as payment service providers or as e-money institutions under the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG), themselves take a place in the value chain that they have previously rented and in this way cut out the middleman. For example, e-money institutions in Germany can offer accounts, credit interest-free deposits, issue e-money, participate in the SEPA scheme or issue short-term loans under certain conditions.

Tasks that are not in the focus of these providers, cannot be secured with sufficient own funds or are too costly are in turn outsourced to competitors. For example, it is possible for a company to provide accounts but outsource the underlying payment transactions and clearing, issuing and credit checking, including fronting, repayment and servicing, to third parties. The end customer sees only one provider through which services are obtained. This strategy is interesting from many points of view, as the companies can offer services in their core business and also assess the need for, a full banking licence for themselves. We certainly do not want to take on the role of a trend barometer, but we still find the number of payment service providers and e-money institutions that are allowed to offer their services in Germany highly interesting.

More than 390 payment service providers and 200 e-money institutions are allowed to offer their services within Germany. To put this into perspective, it must be mentioned at this point that not all of them are active in the area of banking as a service. Nevertheless, it is relevant for the 590 licence holders that are allowed to operate in Germany to continue to be positioned innovatively and to have regulatory protection. The implications for payment service providers and e-money institutions resulting from the Payment Service Directive 3 (PSD3) and the associated merger of Electronic Money Directive 2 (EMD2) and Payment Service Directive 2 (PSD2) into Payment Service Directive 3 (PSD3) and Payment Service Regulation 1 (PSR1) will pose a particular challenge.



The draft of PSD3 published by the European Commission in June 2023 creates further exciting use cases for regulated companies. The PSD3, supplemented by the PSR1, which will be directly implemented into German law as a regulation, takes another step towards the harmonisation of European payment transactions. Based on the current draft of the PSD3, e-money services and payment services are to be merged in the future and subsumed under the term payment institution. PSR1 aims to introduce changes to the existing open banking framework, remove barriers to the provision of open banking services and ultimately stabilise and improve banking and financial services. Account Information Service Providers and Payment Initiation Service Providers will in future have the ability to create custom interfaces and use them to connect with banks and other financial institutions. This interplay of Banking as a Service services, embedded banking and innovative regulation enables existing firms to grow and gives market entrants a raison d’être. This innovative power answers the question posed at the outset as to why a few firms in technology-driven industries persist, but a large proportion disappear through insolvency or through consolidation of many non-competitive firms.

Finally, the question remains about the outlook and what it may look like. Will BaaS firms be able to exist in their current form in the future, or will FinTechs seize the opportunity to map part of the value chain themselves and use BaaS providers to outsource less strategically relevant products? The influence of regulation on these questions in particular remains to be watched with interest and will show whether today’s partners will become competitors in the future.

Worldcoin – a cryptocurrency? Or the holy grail of authentication?

It’s the next big thing. Or at least it is supposed to be: Worldcoin – the next stroke of genius by Sam Altman, the brain behind ChatGPT. But what exactly is Worldcoin? Just another digital currency? Or a tool that will soon influence our business processes and many other aspects of our everyday lives?

You can find the whole classification at our colleagues at finanz-szene (only in German)

How EPI (despite all scepticism) could become a success after all

The European Payments Initiative has only just started – and yet there is already a “EPI is doomed to fail” mood in the market. The scepticism is certainly understandable. After all, the plan for a European payment system raises countless questions. For example: Why does the customer need another payment procedure? Or: What motivation should PSPs and merchants have to work towards the success of EPI?

Nevertheless, instead of adding another swan song to the many, I would rather ask today: What would have to happen to make the European Payments Initiative (or more precisely: “EPI 2.0”) a success after all? To this end, I first shed light on the perspectives of the parties involved (politicians, European banks, German banks, PSPs, merchants, customers) – in order to formulate a series of suggestions for the future of EPI at the end.

Read my suggestions at our partners of finanz-szene (only in German)

OSTHAVEN Practice: Optimising the eCommerce payment infrastructure for an omnichannel future

Payment processing in e-commerce is subject to constant change. Merchants are repeatedly confronted with the question of how to position themselves properly for the future. OSTHAVEN’s experts are therefore often called upon for the market analysis and tendering of payment services. Today we give you an insight into one of our exciting projects, which is exemplary for many other similar projects. 

A large omni-channel retailer is faced with the challenge of putting the processing of PayPal and credit card payments on its e-commerce platform on a new footing. The client’s previous payment service provider (PSP) has taken over several competitors, including their PSP technology, in the course of market consolidation. In order to simplify the PSP’s internal processes, the interface previously used by the merchant is to be put to bed. The change to the alternative chosen by the previous PSP as future-proof is to be made palatable to the dealer with a small advertising cost subsidy (WKZ). Since system failures and errors in payment processing have occurred from time to time in the past anyway, the merchant is certainly willing to make the switch. However, after intensive testing, the alternative offered by the PSP turns out not to be 100% suitable, as important and frequently used functions cannot be covered. Consequently, the retailer decided to search for other possibilities and commissioned OSTHAVEN GmbH for the market analysis and tendering of the PSP service.

During the preparation for the project, the following points were identified as particularly relevant for the selection of the new PSP interface:

In addition, internal processes between the web shop and ERP should continue to run as identically as possible, so that the need for internal adjustments in IT development and accounting processes is minimised.


Functional requirements

Particularly important for the retailer’s business model is the delayed settlement of transactions with two-step authorisation and redemption (capture) over a longer period of time. For the processing of subscription models, PayPal accounts and credit cards require the storage of the means of payment and the customer’s consent for permanent use. The storage should take place entirely at the PSP in order to ensure the lowest possible PCI requirements (the shortest questionnaire SAQ-A is the target) at the merchant.

The service provider to be selected must be able to process credit card and PayPal transactions from all of the merchant’s webshops in three countries as well as PostFinance transactions in the Swiss webshop. The merchant handles prepayments, SEPA direct debits and payments against open invoices as well as the scoring of customers and the payment type control based on this to prevent fraud.

Since omnichannel business is becoming increasingly important and is also a major priority for the retailer, the omnichannel capabilities of the potential service providers are queried in detail.


Technical requirements

Payment processing should be integrated as seamlessly as possible for customers in the merchant’s web shop. A jump via redirect as in the past is no longer desired. The look and feel should be influenced 100% by the merchant. Due to the growing popularity of e-commerce, performance guaranteed at all times (24/7) and a corresponding guarantee by means of a service level agreement (SLA) are essential. In addition, the permanent availability of a test environment is required, via which all relevant business transactions can be tested analogue to the productive environment.


Selection process

All service providers in question receive tender documents prepared by OSTHAVEN together with the dealer. This includes a detailed description of the functional and technical requirements and a questionnaire on further features in the provider’s offer which may be used in the future. All PSPs are given the opportunity to ask questions themselves. The answers to these will be made available to all providers. All payment service providers who return the tender documents in full are given the opportunity to present their offer in detail in a digital workshop.

Following the workshops, the various stakeholders on the trader side prepare their evaluations of the suppliers using a detailed evaluation matrix that was jointly developed prior to the tender. In order to make the different price components comparable, an extensive simulation of the costs for the next 5 years is created, incorporating scenarios for different business developments.

Further talks and negotiations will be held with the two best-rated companies in the following. With both of them, the technical and business requirements are examined in greater depth. IT experts from the retailer look at the interface documentation of the competitors in terms of feasibility, technologies used, effort and risks from an e-commerce and ERP point of view. Questions and problems arise at various points, but these can be solved between the experts of the retailer and the providers.

In the end, the retailer’s management decides in favour of the minimally more expensive provider, especially for the following reasons:



Immediately after signing the contract, the various teams of the retailer (IT e-commerce, IT ERP, accounting, customer service, fraud prevention) start to conceptualise the interface connection. In the process, special emphasis is placed on ensuring that all changed processes are designed to be future-proof and performant. For example, the processing of the settlement files of the PSP must be adapted. Since a change is pending anyway, instead of the batch processing used in the past, the processing of individual transactions via an interface (API processing) will be changed. This leads to a higher degree of automation, accelerated processing and permanently lower load on the systems. In e-commerce, a significantly improved monitoring of customer interactions will be implemented so that problems can be detected much more quickly with the help of automated monitoring and rule-based alerts.

For customers, the process will become much simpler, as the improved use of tokenisation means that they no longer have to enter any payment data if they agree to their data being stored. For example, there is no need to enter the three-digit CVC code for credit card payments or to log-in to PayPal.

The go-live of the individual webshops, i.e. the changeover from the old to the new PSP, takes place successively starting with the smallest, which also has the lowest process complexity. This helps to identify and eliminate errors with the least possible customer impact.


Measuring success

In the end, almost all goals can be achieved. The technical requirements can be completely covered by the new service provider, the processes between web shop and ERP only have to be changed slightly and the price of the service is at a similar level as before. By switching to modern technologies and through improved processes in the interface from the webshop to the PSP, further improvements can also be achieved: PayPal and credit card transactions are processed much faster and with a higher acceptance rate of credit card payments by the acquirer. For customers with saved payment methods, the abandonment rate also decreases.

Only the internal effort is slightly higher than previously estimated, since the PayPal connection via the interface of the new PSP and the migration of the tokens from the old to the new PSP requires more coordination effort from the parties involved than assumed (Merchant, PSP and PayPal or Merchant, old and new PSP respectively). However, the slightly higher implementation costs are more than compensated for by the higher conversion and the resulting increase in turnover.


Success factors

Key success factors of the project are the development of the requirements and the preparation of the tender documents by all departments involved. Through the direct involvement of the latter, a greater commitment to the project was also achieved. It was also crucial to look at the future viability of the provider, especially with regard to technologies and processes, which facilitated the subsequent implementation.



E-commerce merchants are reluctant to change functioning payment processes because customers are particularly sensitive to changes and especially to errors at this critical point in the checkout process. However, with a thorough assessment of the requirements and a careful selection of the appropriate service provider, merchants can avoid problems, improve the processes for their customers and improve relevant and result-impacting key figures while making their payment processing fit for the future.

Request to Pay (RTP): Romance, farce or thriller in improv theatre – suspense to the end

Who hasn’t sat in one of these crime dinner events and let themselves be drawn into a gripping murder plot by the charm of the actors in a perhaps cosy atmosphere? Well, if this event is also presented by an improv theatre, the outcome and the distribution of roles between murderer(s), aides, conspirators and murder victim(s) is often all the more opaque and uncertain. And under certain circumstances, the original idea of murder is no longer the primary purpose of this entertainment.

Theatres are often only images of our everyday life circumstances. And since this mirrored reality also seeks its “model” in the world of payment processing, the appropriate scenario for this play has been found in “Request to Pay”.

You can find the whole play at our colleagues at finanz-szene (only in German)


Long live the girocard…

The swan song for the most popular debit card in this country has often been sung – and now again, with the imminent discontinuation of Maestro, the traditional co-badge solution of the girocard is also facing its end. But is the girocard really doomed to die? Who benefits from this scaremongering? And what is the future of the girocard?

Where does the girocard actually come from?

Everyone in Germany knows it and probably still calls it the “ec card”: the girocard. Only the older ones among us will remember that this was issued as a cheque card and pure payment guarantee card by German banks more than 50 years ago. At that time, no one knew that this Eurocheque card would lay the foundation for later electronic payment. With the help of the magnetic strip, the card was later expanded to include a debit function and it was possible to withdraw cash from ATMs or pay at petrol stations, grocery stores or restaurants together with the PIN. At this point, it should be briefly mentioned that “ec” was originally the name for the Eurocheque system and both “electronic cash” and the logo long used for today’s girocard were derived thereof. It is interesting to note that the rights for the brand and the logo are held by Mastercard and the use by The German Banking Industry Committee (GBIC) as the governance and operator of the girocard system was based on an agreement between these two parties. This circumstance led to the development of a separate word and picture mark by GBIC for the girocard in 2007. However, it took many more years until money was spent on marketing, in order to finally break away from the brand dependency. However, it is difficult to get some firmly anchored names out of one’s head and so even today many people still call the girocard “ec-card”.

Since the beginning of the new century, cards have been successively issued with an EMV chip, which increased both security and the number of possible applications – such as the cash card or contactless payment. In the meantime, contactless payment transactions with the girocard are well over 70 percent in 2022 and it is also deposited in payment apps such as “Mobiles Bezahlen” of the savings banks, the “Pay” app of the Volks- und Raiffeisenbanken or the Apple Pay Wallet in order to be able to pay smartly and digitally at the POS. And the digital girocard has now also made it into e- and m-commerce (and much too late) thanks to the Apple Pay solution of the savings banks. The integration as a further “funding source” in the new giropay product of paydirekt is about to be launched. At this point, it should be mentioned that it was the discounter effect, i.e. the entry of Lidl (2003) and Aldi (2005), that marked the beginning of the triumphal march and thus the strong increase in girocard transactions.


The German’s favourite card…

Today, the market coverage of the girocard is comprehensive, both on the part of the cardholders and the points of acceptance. And this despite the fact that some private and new banks have degraded the product in recent years, taken it out of their portfolio or not even considered it at all, but more on that later. According to a representative Allensbach study on the use and acceptance of cashless payment methods, around 97 percent of the citizens surveyed aged 16 and over in Germany owned a girocard in 2021. In total, more than 100 million of these cards are in circulation and the Corona pandemic has ensured an unprecedented increase in acceptance points.

In the last 3 years, almost 250 thousand points of acceptance have been added. Now you can finally pay with your girocard at the bakery around the corner… And the growth in transactions and turnover is also impressive. According to EURO Kartensysteme, the 3 billion transaction mark was broken for the first time in 2022. Turnover in 2021 was 253 billion euros (134 billion euros in the first half of 2022).


Maestro is being discontinued – and what does that mean for the girocard?

So, is all that glitters gold with the girocard? Of course not, but the press articles and comments on the girocard and especially on the discontinuation of the Maestro co-badge by MasterCard in recent weeks and months border on ignorance. But perhaps the supposed end was deliberately spread on the net with the hope that many articles would simply be copied blindly from one another. Even so-called “payment experts” speak of a “near end of the girocard”. Other examples of headlines one can read lately are: “EC card on the brink of extinction”, “The classic EC card probably no longer has a future in Germany” or “Discontinued model girocard”. To get straight to the point, this is of course complete nonsense and one can ask oneself who could profit from this panic and opinion mongering?

But first, let’s deal with the facts. Mastercard has been dealing with the discontinuation of Maestro for some time. The girocard did not play a role in this, as it is a debit card system that is used worldwide and the announced end affects all countries in Europe. This step is likely to follow in other parts of the world as well. In fact, Maestro is not just a separate debit card brand, but an international payment network with a separate technical infrastructure from the Mastercard credit and debit card networks, which was launched back in 1985.

In the first place, therefore, the realisation of synergy effects and cost savings will have played the decisive role in Mastercard’s decision. Another important factor concerns the biggest disadvantage of the Maestro card, namely that it cannot be used in the growth market of e- and m-commerce. In other words, issuers were not obliged to approve them for e-commerce and that was the rule in Germany. Mastercard and Visa have been positioning their new debit card products (Debit Mastercard and Visa Debit, respectively) for the strong trend towards digitalisation and online commerce for several years. As EVP Product & Innovation Europe Mastercard, Valerie Nowak explains about the abolition of Maestro: “This is not exclusively about the ability to use a debit card more easily and smoothly in a digital environment. For example, a debit Mastercard can also be used – just like a Mastercard credit card – to guarantee travel bookings.”


Long transition period does not yet make Maestro disappear immediately

Maestro has been integrated as a co-badge and thus with its own payment function on a girocard since the 1990s. As long as the cards were used at ATMs or payment terminals in Germany, these transactions were processed via the electronic cash system (today girocard). It was only when the girocard was used abroad or at a SumUp / Zettle terminal (these are the small white payment terminals that do not accept girocard) that Maestro with its international payment network was used. In this case, the debit of the bank account behind it, corresponding to that of a girocard, basically took place on the next bank working day, so that the cardholder felt no difference to his or her dear bank card.

And what now follows directly from Mastercard’s decision regarding Maestro? Maestro cards may only be issued until the end of June 2023. The Maestro co-badge on girocard cards with a validity beyond the above-mentioned date will continue to exist. One of our employees was recently issued a new savings bank card by one of the largest savings banks in Germany because his old card had expired. The validity of this card is dated 12/2026, so in total this card will still be able to run on both the girocard and Maestro networks for over four years.


And how are the individual banking sectors preparing for the Maestro phase-out?

The validity periods of the girocard are in the range of four years for most banks and decisions regarding card portfolios are therefore always strategic in nature. For the savings banks alone, a complete replacement of the approximately 46 million savings bank cards (this is the name of the girocards in the savings bank sector) is likely to lead to costs in the small to mid three-digit million range. The savings banks therefore made a strategic decision in favour of the girocard a long time ago and expanded the savings bank card to include the option for a co-badge with Debit Mastercard (DMC) as early as 2020. Admittedly, only a few savings banks have made use of this so far, but that will change as the day for stopping the issuance of Maestro cards draws closer. And Mastercard surely hoped to put the German banks under pressure by discontinuing Maestro. They would be too happy to replace the large German market and the girocard with their own debit card brand. Payment service providers such as SumUp or Zettle, which do not accept girocard and currently rely on the co-badge Maestro, can also continue their business model, as they already accept the international debit and credit card brands of Mastercard and Visa. So what changes then in relation to the existence of the girocard? Exactly, nothing!

With regard to the Sparkassen-Finanzgruppe, it could well be that Mastercard has scored an own goal. Perhaps, in view of a Maestro co-badge share of well over 90 percent, they felt too confident to migrate it to the Debit Mastercard. There are currently rumours that Visa was able to win over 40 percent of the savings banks for Visa Debit, even though the solution is still being implemented and Mastercard enjoyed a time advantage of more than two years.

The other large banking sector, the Volks- und Raiffeisenbanken, are also preparing for the conversion of the co-badge to Debit Mastercard or Visa Debit. The cooperative sector has also decided in favour of the girocard for the long term, and it seems that the last word has not yet been said among the cooperatives with regard to their possible participation in EPI 2.0. Together, the two banking sectors account for well over two-thirds of girocard cards and even without the private banks, the girocard is not at its much-vaunted end in the medium to long term.

But the private banks are also preparing for the change of the co-badge with some delay. For these banks, too, DMC and Visa Debit are considered the primary solutions, which also ensures the continued use of the girocard abroad beyond 1 July 2023. As mentioned at the beginning, there are direct and neo-banks that have either dispensed with the girocard altogether or have downgraded it compared to the international debit card brands. At this point, a DKB, N26, Targobank, Comdirect or Santander can be mentioned. However, we always ask ourselves whether this is really about product strategy aspects (which we cannot really understand) or whether it is rather the incentives by the international credit card organisations (ICS) that are decisive. But there are also other examples of the expansion of the girocard, as shown by the plans of the major US bank J.P. Morgan Chase, which is apparently working on a licence to issue girocards in Germany.


What do customers and traders think?

It doesn’t really matter to the customer and cardholder, and as long as the card is accepted and works and the account is debited the very next bank working day, he will not complain, regardless of whether he holds a Debit Mastercard, Visa Debit or girocard in his hand or has deposited it in the digital wallet. At most, he could cite nostalgic reasons for refusing, because he has grown so fond of the girocard or because he is fundamentally critical of American companies. On the acceptance side, retail stores with POS in Germany are still firmly in favour of the girocard, not least because of the high market coverage, but especially because it is significantly cheaper than international debit cards. Some retailers still use the girocard to process guaranteed direct debits, although the loss of market share and importance of direct debits compared to the girocard has been quite significant in recent years.

We can therefore state that the girocard will continue to run after the end of Maestro card issuance and is not a discontinued model or even doomed to death. Either because the girocard initially continues to have a functioning Maestro co-badge or this co-badge has been replaced by the DMC or Visa Debit.


And where does the girocard journey go …?

So is everything OK with the girocard and we can sit down again?

Not at all! As briefly mentioned at the beginning, the girocard and thus GBIC completely missed the trend for online retail. The strong positioning of the girocard in stationary retail could not be achieved in e- and m-commerce. On the contrary, it is non-existent there. It is very difficult to understand why the girocard was not introduced as a separate payment method in the checkout many years ago. Instead of making up for this step with a long delay, a strategic decision was made to integrate the digital girocard into payment platforms or payment methods. So you will still not be able to select the girocard directly as a payment method in online shops or apps. Instead, it will now be integrated into the “new” giropay together with paydirekt, for example. Whether this further development of paydirekt with the integration of the girocard will be a success story can be doubted based on the history, especially since EPI 2.0 is probably not yet off the table and it is difficult to imagine two parallel online solutions.

In this respect, one can only welcome the efforts of EURO Kartensysteme (EKS) as a joint venture of the German banking industry and responsible for the marketing and business development of the girocard. In exchange with market participants and merchants (especially online merchants), requirements for a digital girocard as well as corresponding use cases for e-commerce are being defined. In this context, the EKS should probably play a stronger role in the operational development of the girocard at the POS, but especially in e- and m-commerce. Any improvement in the time-to-market and the strengthening of the online capability of the girocard that can be achieved in this way can only be endorsed and supported. If you then reunite the product strategy and pricing, you are not far away from a “real” scheme. However, it should not go unmentioned that the future girocard co-badge cards with the DMC or Visa are already online-capable and can be used directly in e- and m-commerce. It will be exciting to see how this competition on the card between the two payment methods develops – but that would be real competition for once.

Perhaps the double regulation will then be dealt with once again. The girocard is the only regulated payment system in Europe that is affected by two regulations. In addition to the interchange fee regulation (MIF regulation), authorisation fees must also be freely negotiated between merchants and card issuers since 1 November 2014. The separation of product and price has led to a high degree of complexity and can have a huge impact on acceptance and competitiveness in online retail compared to other alternative payment methods.

In the growth market of e- and m-commerce, the girocard is still in its infancy and we will see whether the strong positioning at the POS can be transferred to online commerce. In this market segment, far too much time has been lost and it will now depend on the right decisions. For the stationary retail, we are very sure that the future of the girocard is secured in the long term for the end customer but also for merchants. When asked in an interview with the IT-Finanzmagazin whether the girocard will still exist in 10 years, the managing director of EURO Kartensysteme Oliver Hommel answered: “Yes, the girocard will still exist in 10 years! And we can only agree with that…