‘Online payments in Germany need to be more secure’

Germans hate to bug a pig in a poke. That’s why buying on credit, where the consumer only pays after he received the goods, is the most popular payment method in German ecommerce. But online payment methods in Germany should be safer, while not limiting the usability of the end user.

Buying on credit now accounts for 28 percent of the total market of payment methods, a recent study by EHI shows. Compared to last year it even expanded its market leadership as it had a market share of 25.5 percent back then. On the popularity scale second place is for direct debit, with a market share of 21.8 percent (19.3% last year), followed by PayPal with 20.2 percent (19.9% last year). When you ignore Amazon, which – due to simplicity and speed – is known to not offer such popular payment methods to customers, PayPal even has a market share of 25 percent.

Another popular payment method in German ecommerce is the credit card, which lost some market share (from 14.8 to 10.8 percent). Note, however, that credit card transactions also account for an unknown part of PayPal’s market share.

The highest growth rate, although still at a low level, can be found at omni-channel retailers where consumers pay when they pick up their orders in-store. But also then many German customers seem to follow that practice of wanting to inspect the goods before they pay.

Security of online payments
Safety and speed are for retailers as well as consumers equally important for choosing a payment method. The security of online payments in ecommerce shall be increased thanks to the so-called strong authentication, financial authorities think.

But so far, only a few online payment methods meet the requirements. And at the same time there is also criticism that for example an express checkout with a strong authentication procedure would be significantly be more difficult to offer.

EHI asked retailers some questions about security. Although a lot of them think strong authentication is useful for security reasons, many also think a strong sales period is more important than the highest possible security.

Dorothee Frigge, online payments experts at EHI, warns that overly complex authentication methods could limit the usability for the consumers and thus can negatively affect the online trading. “The challenge is to offer security on the one hand, while also offering simplicity and comprehensibility on the other hand.”