Open banking payments are transforming the financial landscape across the globe, and Germany is no exception. Open banking payments offer consumers another payment choice with convenience and transparency leading to increased conversion rates – as well as a cost-effective solution that reduces fraud risk for businesses.
Here are three ways that open banking is gaining momentum in Germany.
#1 Fast, frictionless payments with open banking
There’s no doubt that open banking is transforming the way payments are handled in Germany. The implementation of open banking payments brings a multitude of benefits. While increasing conversion rates for businesses and merchants, open banking payments offer consumers all the choice, convenience and transparency they deserve. This benefits all parties involved, making it a key driver of open banking’s success in Germany.
Open banking enables frictionless payments by leveraging APIs that facilitate secure and real-time data exchange between banks and third-party providers. By creating a seamless connection between different financial entities, open banking ensures that funds are transferred fast, providing consumers and businesses with convenience and efficiency.
The integration of open banking APIs into payment systems has not only expedited the transaction process but also enhanced the overall security and transparency of financial operations compared to traditional methods like bank transfers, making instant payments a cornerstone of the modern banking experience in Germany.
See more about our open banking offerings in Germany
#2 Invoice payments in eCommerce are growing
Invoice payments are another area where open banking is making significant inroads. According to EHI Retail Institute, invoice payments now account for more than 26 percent of total eCommerce revenues in Germany, showing notable growth compared to the previous year. This trend highlights the increasing preference for this payment method among both consumers and businesses.
Several factors contribute to the rise of open banking for invoice payments. For consumers, digital invoice payments offer a convenient and secure way to manage their finances. They allow customers to receive goods and services upfront and pay for them later, providing a level of financial flexibility that is highly valued.
For businesses, open banking payments reduce the risk of fraud and chargebacks, as transactions are initiated by the customer and authenticated through secure banking channels. This integration also helps streamline accounting processes, reducing administrative burdens and improving overall efficiency – increasing the likelihood that they will get paid online, which also helps with cashflow management.
With Mastercard as your open banking platform, your customers can choose how they pay their invoices by either tapping a button or scanning a QR code to pay directly from their bank account and avoiding filling out long forms or manual data entry. The amount and reference are set by the merchant, reducing the steps for the consumer and making it easier for the merchant to reconcile payments.
Our open banking solution works for both digital invoices and physical invoices. We ensure that the link can only be paid once, and we provide full transparency on all the unique payment attempts.
See more about our invoice payments offering here
#3 Customer cases are rising
Consumers are increasingly turning to open banking solutions for better payment experiences, driving further innovation and competition in the market.
According to Mastercard research set to be published in October 2024, a majority of UK, US and Nordic consumers use open banking today, whether they know the term or not. 76% of respondents connect financial accounts, even though only 17% are familiar with the term open banking.
We’re seeing a similar picture in Germany where one of the most compelling indicators of open banking’s success in that market is the growing interest in open banking.
Earlier this year, Nexi, one of the leading PayTech in Europe, chose Mastercard as its strategic partner across Europe to support open banking account-based payments. Through the partnership, Mastercard Open Banking will facilitate e-commerce payments across Nexi’s gateways serving merchants across Europe.
Together, Mastercard and Nexi are building an integrated digital payment ecosystem by advancing Mastercard Open Banking-powered solutions that offer secure, seamless payment experiences with more choice for consumers when shopping online.
Benefits for merchants include real-time payment authorization and settlement, enabling quick access to funds and improved management of cashflow and revenue streams. By leveraging innovative technologies and payment methods, merchants can better align with heightened customer expectations for fast and frictionless payment experiences in the digital landscape.
Explore more customer use cases here
To learn more about the latest developments in open banking and its impact on the financial services industry, make sure to follow us on our Mastercard Open Banking LinkedIn or visit our European home for everything open banking.
