Payment Cards in Germany

Introduction

Payment Cards in Germany is an invaluable guide to one of Europe's largest payment card markets. The report provides statistics on market size, competitor market shares and forecasts. It also provides an overview of regulation, competitor activities, issuer strategy and product innovation including developments in contactless, mobile payments, online and prepaid cards.

Scope

*Data and analysis provided on debit cards, credit cards and deferred debit and charge cards.

*Historic market data and competitor market shares are presented for 2004-2008, H1 2009, with market forecasts presented to 2013.

*New this year is data covering transactions by merchant category, premium card branding, benefits per card, card primacy and repayment behaviour.

*Concludes with a detailed analysis of developments in the areas of contactless, mobile payments, online and prepaid cards.

Highlights

The payment card market in Germany is well-developed, but cards are not the preferred electronic method for consumers due to the popularity of credit transfers for high-value purchases. German consumers are uncomfortable with using revolving credit cards, and as a result these products are not especially popular.

The competitive landscape in the German credit card market has changed and now featues a large number of small players rather than being dominated by a few big players. The breadth of products is also approaching that seen in more mature markets. Barclaycard, the Sparkassen and Landesbank Berlin are the largest credit card issuers.

The credit card market in Germany declined in 2009 from 2008, but growth is expected to pick up in 2010 and remain positive through to 2013. The vast majority of payment cards in Germany are pay now products, however, and it is unlikely that this trend will be reversed.

Reasons to Purchase

*Learn how the German general purpose payment card market has developed over the last five years.

*Understand recent developments in the market in terms of consolidation, new entrants and product innovations.

*Use of Datamonitor's five year forecasts for the market to plan your future strategy.


Report Highlights

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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Sizing and forecasting the payment card market in Germany 2
Competitor and product developments in Germany 3
Online, contactless, prepaid and mobile payments 4
Table of Contents 5
Table of figures 6
Table of tables 7
Sizing and Forecasting the Payment Card Market in Germany 8
Overview 8
Key macroeconomic and consumer data 9
Macroeconomic trends and performance 9
GDP 10
Real GDP growth 10
Inflation 12
Unemployment 13
Demographic and consumer trends 14
Sizing the payment card market in Germany 15
Size and performance of the payment card market 15
Penetration of payment cards 15
Number of payment cards in issue by type 19
Number of payment card transactions 20
Frequency of use 23
Value of payment card transactions 25
Average transaction value 28
Trends in payment card use compared to other countries 30
Pay now card use 30
Pay later card use 32
Credit card balances outstanding, revolve rates, usage and repayment behavior 36
ATM and POS terminal numbers 40
Regulatory environment 42
Regulation of German retail banking 42
Key issues facing the market 43
SEPA 43
Driven by SEPA, new initiatives have been launched in the market 43
Interchange is also a SEPA issue 44
Fraud and EMV 44
Acquiring and processing landscape 45
Acquiring and processing structure in the market 45
Forecasting the payment card market in Germany 45
Forecasting the pay now card market 45
Forecasting the revolving credit card market 46
Forecasting the charge and deferred debit card market 47
Competitor and Product Developments in Germany 49
Overview 49
Card issuer market shares and performance 50
Credit card market shares 50
Number of credit cards in issue by issuer 50
Number of transactions by brand 51
Value of transactions by brand 52
Balances outstanding and card repayment rates by brand 53
Pay now card market shares 55
Charge and deferred debit card market shares 56
Significant recent entrances and exits 56
2009: Dresdner Bank merged into Commerzbank 57
2009: Deutsche Bank acquired a minority stake in Deutsche Postbank 57
2008: Citi sold its German retail banking operations to Crédit Mutuel CIC 57
2006: Fortis announced the launch of a chain of credit shops 57
2006: ING entered the card market through its DiBa brand 58
2005: UniCredito acquired Germany's HypoVereinsbank 58
Product design and issuer strategy in Germany 58
Credit card product strategy 59
Card product features by issuer 59
Usage trends by issuer 64
Leading revolving credit products and price points 65
Leading loyalty programs 68
Lufthansa's Miles & More has over 5 million members in Germany 69
Payback remains the leading program in the market 69
HappyDigits has also been successful 70
In addition, Webmiles, a multi-retailer program for online vendors, has also been moderately successful 71
The success of these programs has seen loyalty become an ever-more important feature in the market 71
Card scheme market shares and developments 72
Pay now card scheme shares 72
Number of cards in issue 72
Value of transactions 73
Revolving credit card scheme shares 74
Number of cards in issue 74
Value of transactions 75
Charge and deferred debit card scheme shares 76
Number of cards in issue 76
Value of transactions 77
Online, Contactless, Prepaid and Mobile Payments 78
Overview 78
Online payments in Germany were an estimated €66.5 billion market in 2009 78
Germany is the sixth largest market in terms of potential value and is worth €66.5 billion 78
Flight and hotel purchases account for the largest share of transaction values online 79
However, German consumers are not the highest spenders online 80
Combined credit and debit cards account for the majority of online transactions in Germany, but neither is as popular as bank transfers 80
German consumers are among those making the least use of credit cards online 81
The same is true of debit card usage online in Germany 82
Contactless payments are a $68.6 billion opportunity in Germany 83
Germany is the largest market in terms of potential opportunity in Europe, being worth $68.6 billion 83
The integration of contactless commenced in 2008, driven by MasterCard initiatives 84
The petrol market offers the biggest opportunity for contactless payments, but has witnessed few developments 85
Orlen Germany is set to roll out PayPass terminals in 2010 85
Convenience stores also offer numerous opportunities, but no large retailers have been targeted thus far 86
Fast food is the third biggest opportunity but has not received as much attention 86
Public transport provides fewer opportunities in terms of volume, but there are clear benefits from the consumer perspective that could be leveraged 86
Developments in prepaid cards 86
Developments in mobile payments 87
Germany has witnessed a number of mobile trials, but the technology has been slow to take off 87
Appendix 88
Regulatory bodies 88
Industry regulators 88
Bundesbank 88
Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) 88
Industry associations 88
Zentraler Kreditausschuss (ZKA) 88
Deutscher Sparkassenn- und Giroverband (DSGV) 88
Bundesverband deutscher Banken (BdB) 89
Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR) 89
Bundesverband Öffentlicher Banken Deutschlands (VÖB) 89
Bankenfachverband 89
Credit bureaus 89
Schufa 89
Infoscore 89
Supplementary data 90
Definitions 97
AAGR 97
Affinity card 97
CAGR 97
Co-branded card 97
Credit card 97
Deferred debit and charge card 97
EMV 97
EPC 98
ePurse 98
Merchant service charge 98
Pay now cards 98
POS terminal 98
Private-label cards 98
Methodology 99
Cards and payments database 99
Financial Services Consumer Insight is new to our offering, providing new and valuable insight 99
Forecasting methodology 99
Further reading 100
Ask the analyst 101
Datamonitor consulting 101
Disclaimer 101
List of Tables
Table 1: Germany: macroeconomic indicators 9
Table 2: Germany: demographics and consumer trends 14
Table 3: Datamonitor's forecast for the pay now card market, 2008-13f 46
Table 4: Datamonitor's forecast for the credit card market, 2008-13f 47
Table 5: Datamonitor's forecast for the deferred debit and charge card market, 2008-13f 48
Table 6: Product details for revolving credit cards in Germany, 2010 66
Table 7: Fees and APRs applicable to revolving credit cards linked to loyalty programs in Germany, 2010 68
Table 8: GDP by country, 2008 90
Table 9: Unemployment and unemployment rate in Europe 91
Table 10: Germany: GDP growth, 2005-09 91
Table 11: Card penetration in Europe 92
Table 12: Germany: inflation (% change) 92
Table 13: Average transaction value and frequency of use for pay now cards in Europe 93
Table 14: Average transaction value and frequency of use for pay later cards in Europe 94
Table 15: Number of ATMs: Europe 94
Table 16: Population per ATM in European countries 95
Table 17: Number of POS terminals: Europe 95
Table 18: Population per POS terminal in European countries 96
Table 19: Balances outstanding and revolve rates, 2008 96
Table 20: Current relevant publications 100
Table 21: Future relevant publications 101
List of Figures
Figure 1: Germany had the highest GDP in Europe in 2009 10
Figure 2: Germany's economy contracted by 4.9% in 2009 11
Figure 3: Inflation in Germany reached its lowest rate of the period, 0.1%, in 2009 12
Figure 4: Germany had the third highest unemployment rate in Europe in 2009 13
Figure 5: Germany had 1.5 cards per person in 2008 15
Figure 6: Pay now cards are more dominant in Germany than pay later cards 16
Figure 7: Germany had the fifth highest pay now card penetration in Europe in 2008 17
Figure 8: Pay later cards grew at an AAGR of 29.7% over 2004-08 in Germany 18
Figure 9: Credit cards grew fastest in Germany over 2004-08, but are believed to have declined by 6.6% in 2009 19
Figure 10: Pay now cards accounted for the largest share of cards transactions in Germany in 2004-09e 20
Figure 11: POS transactions are fast replacing ATM withdrawals in Germany 21
Figure 12: Spending split by merchant category varied significantly in pay now and pay later markets in 2008 22
Figure 13: Credit cards are used least in Germany, with negative growth observed during 2004-08 23
Figure 14: POS transactions increased significantly in Germany in 2004-09e 24
Figure 15: Pay now cards accounted for the majority of transaction values in 2004-09e 25
Figure 16: The value of ATM transactions is expected to have declined less than that of POS transactions in 2009 26
Figure 17: Flights and hotels account for the greatest pay later transaction value in Germany 27
Figure 18: Average transaction values were highest for charge/deferred debit cards in 2004-09e 28
Figure 19: Average transaction value was higher for ATMs than the POS in Germany in 2004-09e 29
Figure 20: Germany exhibited above-average POS transaction values for Europe but the frequency of use was comparatively low in 2008 30
Figure 21: Germany had a turnover of €5,601 per pay now card, with the highest proportion of this at ATMs, in 2008 31
Figure 22: At the POS, pay later cards in Germany had a low frequency of use but the average transaction value was relatively high in 2008 32
Figure 23: Pay later cards see more turnover at POS terminals than pay now cards in Germany 33
Figure 24: Pay now spending by merchant category was more or less even across Europe in 2008 34
Figure 25: Pay later spending by merchant category varied considerably across Europe in 2008 35
Figure 26: The majority of credit cards held in Germany are considered to be primary 36
Figure 27: 46% of German credit cards are used all the time 37
Figure 28: Germany has the lowest revolve rate among all European countries 38
Figure 29: In Germany, 0% of credit cards are reported to have no payment made at all at the end of the interest-free period 39
Figure 30: Germany witnessed a CAGR of 2% during 2004-08 in terms of the number of ATM terminals 40
Figure 31: The growth in POS terminals was inconsistent in Germany over 2004-08 41
Figure 32: Regulatory overview of Germany 42
Figure 33: Growth in the value of transactions forecast to drive the pay now market forward during 2008-13f 46
Figure 34: Credit card transaction value is predicted to be the primary driver in the market in 2008-13f 47
Figure 35: Issuance of deferred debit and charge cards is predicted to decline in the market over 2008-13f 48
Figure 36: Barclaycard Deutschland is the largest issuer of credit cards in the German market 50
Figure 37: Deutsche Bank was the most popular credit card issuer in Germany in terms of frequency of use in 2008 51
Figure 38: Sparkassen and Advanzia Bank were the top players in terms of total value of transactions and average transaction value, respectively, in 2008 52
Figure 39: Revolve rates per outstanding balance were the highest for Volkswagen Bank in H1 2009 53
Figure 40: The way that consumers pay off their credit cards varies depending on the issuer 54
Figure 41: Sparkassen is the largest pay now card issuer in Germany 55
Figure 42: Sparkassen dominates the charge card market in Germany 56
Figure 43: Discounts on motor fuel are more common in Germany than the other European markets 59
Figure 44: Reward/loyalty points (not air miles) are the most important credit card benefit in the opinion of German consumers 61
Figure 45: Germany is in third place in terms of premium credit cards in Europe 62
Figure 46: The majority of credit card issuers offer gold cards as the premium products on offer 63
Figure 47: The majority of credit cards in Germany are considered primary 64
Figure 48: In Germany, most credit cards are used all the time 65
Figure 49: The Payback loyalty scheme has a wide range of merchant partners 70
Figure 50: HappyDigits has a popular co-branded card 71
Figure 51: EC/Maestro had the greatest number of pay now cards in issue during 2004-08 72
Figure 52: EC/Maestro accounted for the highest value of pay now card transactions during 2004-08 73
Figure 53: Visa- and MasterCard-branded cards were the most issued in Germany during 2008 74
Figure 54: MasterCard became the lead player in terms of value of transactions in 2008 75
Figure 55: MasterCard and Visa were the closest competitors and the most dominant players in charge and deferred debit card schemes in Germany during 2004-08 76
Figure 56: Visa accounted for the highest value of transactions in the charge and deferred debit card market over 2004-08 77
Figure 57: Online payments made up an estimated €66.5 billion market in 2009 in Germany 79
Figure 58: German consumers were not the highest spenders online in 2009 80
Figure 59: Credit cards were the second most popular payment method online in Germany in 2009, behind bank transfers 81
Figure 60: German consumers are among those making the least use of credit cards online 82
Figure 61: Debit card usage in Germany is low, unlike in the UK 83
Figure 62: Contactless payments are an $45.8 billion opportunity in France 84
Figure 63: The petrol market offers the biggest opportunity for contactless payments 85

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