November 8, 2024, 8:39 am | Read time: 3 minutes
Pay securely online and send money in real time – these were the words used by banks to promote the Giropay payment service. As a German alternative to PayPal, Klarna, and the like, Giropay was supposed to make it easy to pay in online stores using your own bank account. But the project failed.
Just a few years ago, banks and savings banks in Germany operated their own, sometimes different, online payment methods called Paydirekt, Giropay, and Kwitt. They were only merged into one brand in 2021. From then on, Giropay – the name agreed upon – was marketed as an alternative to its major US competitor, PayPal. The goal was to allow customers to pay for online purchases and, if desired, to transfer money to friends in real time. As this was a service linked to the customer’s own online account, no separate access data or accounts were required. Giropay also took the lead in data protection, as all payment process information stayed with the customer’s own bank and wasn’t shared with third parties.
Overview
Giropay failed to be a success
In recent years, banks and savings banks have invested a substantial amount in the hundreds of millions of euros to advance Giropay. Nevertheless, the hoped-for success failed to materialize. In a ranking of brand awareness of digital payment services, Giropay only came in 5th place in 2023 – behind PayPal, Klarna, Payback, and Amazon Pay. The result was even clearer when it came to the market share of payment methods in Germany in terms of turnover. According to Statista, Giropay only achieved a share of 0.4 percent, putting it in last place in the ranking. Instead, people mainly used PayPal (27.7 percent), purchased on account (26.7 percent), and by direct debit (16.7 percent) to make payments in 2023. These were followed by credit cards, pre-payment, installment purchases, and others.
Giropay was active on millions of bank accounts and scored highly in terms of data protection and the fact that customers did not have to register for another service. However, despite all these advantages, the online payment method was unable to overtake the competition. According to experts, transactions recently amounted to only a few percent of the market.
Online payment method to be discontinued
For this reason, it became apparent in the summer that Giropay could soon be discontinued. A little later, it was official. paydirekt GmbH announced that the online payment method of German banks and savings banks would be discontinued on December 31. New registrations have no longer been possible since September 23. The company has also started to inform registered customers by e-mail about the end of Giropay. The provider has also set up a help page.
As the company emphasizes, the Giropay portal for the personal customer area will remain available until January 31, 2025. However, Giropay payments in participating online stores will only be possible until the end of the year. The same applies to sending and receiving money via the app. However, some merchants may no longer accept Giropay payments even now.
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What comes after the end of Giropay?
Despite Giropay’s failure, the commitment to offering a standardized payment service in Europe persists. With Wero, the European Payments Initiative (EPI) is building a new PayPal alternative with the support of the EU. Originally scheduled for a 2023 launch, the release has now been postponed to summer 2024. Currently, Wero’s involvement is limited to only selected banks. However, the Sparkassen, Volksbanken, and Deutsche Bank are all on board.
Wero promises to transfer money without an IBAN and in less than ten seconds via the bank’s app. Later, it should also be possible to pay in online stores and even supermarkets with Wero.