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5 Empirical Study

5.2 Specific Business Conditions

5.2.1 Status Quo

Germany and the United States of America are characterized by different underlying situations and economic business conditions. This is true in respect to existing electronic payment structures, the mobile payments readiness, as well as for existing mobile payments solutions. The following paragraphs present supporting information. Electronic Payment Structures

The following paragraph presents an overview of the most commonly used cashless payment methods in Germany and the USA. According to a study carried out by the German Federal Bank (2011, p. 37), the number of non-cash payments is distributed as follows: debit card payments account for 74% of payments, credit card and online payments24 for 10% each, other payment forms for 4%, and wire transfer for 2%. In the USA, all payment methods apart from checks have increased in volume since 2009. In 2012, debit and credit cards were most commonly used for payments accounting for 38% and 21% of total non-cash payments, respectively. Automated-clearing-house (ACH) credit transfers come to 18%, checks to 15%

and prepaid cards to 7% (Federal Reserve System, 2013, p. 10). The pie charts in Figure 8 show the distribution of non-cash payments in the two countries25.

Figure 8. Distribution of non-cash payments in 2011 in Germany and the United States.

From Federal Reserve System (2013) and German Federal Bank (2011).

24 Online payments are payments based on online banking wire transfer (e.g. SOFORT Überweisung) and special online payments (e.g. PayPal).

25 It should be noted that the statistical data were obtained from different organizations. Since both authorities measured slightly different payment methods, for instance ‘online payment’ is not included in the US American data set, it is impossible to directly compare the different categories and associated percentages.



10% 2% 4%


Debit card Credit card Online payment Wire transfer Others







Debit card Credit card ACH Checks (paid) Prepaid Card

The numbers show that by volume, debit card payment is the most important electronic payment method in both countries. Credit card payments are more than twice as common in the USA compared to Germany. This shows that credit cards are far more important in the United States than in Germany. However, regular banks issuing debit cards play the most important role in regard to non-cash payments in both countries. Given that mobile wallets aim to replace actual plastic payment cards, in Germany 84% (i.e. 74% debit card payments plus 10% credit card payments) and in the US 67% (i.e. 39% debit card payments plus 21%

credit card payments plus 7% prepaid card payments) of the number of transactions may eventually be subject to mobile payments. This means that in Germany especially the payment card business of traditional issuing banks is affected. In the United States the effect on banks is – to some extent – absorbed by credit card services. Mobile Payments Readiness

When surveyed in 2012, almost nine out of ten US American consumers (86%) and two out of three German consumers (66%) said mobile payments would become prevalent eventually (Deutsche Telekom, 2012). The number of actual users of mobile payment, however, shows a wide gap between expectations and reality.

The MasterCard Mobile Payments Readiness Index (MPRI) evaluates the readiness to use mobile payments methods through a survey conducted in 34 countries: The United States place 3rd while Germany only ranks on 19th place (MasterCard, 2012a). The study measures the readiness of consumers for two scenarios: mobile POS payments in stores and mobile P2P payments. The underlying criteria are consumers' knowledge of, comfort with, and experience using mobile payments. A comparison of the data for the two scenarios in the USA and Germany is given in Figure 9. The consumers’ knowledge of mobile payments describes to what extent the respondents were familiar with mobile payments. The comfort with mobile payments explains whether the respondents would be willing to use mobile payments (if available). The term use describes what percentage of the respondents did in fact use one or more mobile payments solutions.

5 Empirical Study

Figure 9. Knowledge of, comfort with, and use of mobile payments in 2012.

From MasterCard (2012).

The data reveal several aspects: Below 5% of German respondents are familiar with mobile payments. With this result, Germany significantly trails the United States and the global average. A much higher percentage of 16% and 23% of US respondents know mobile P2P and POS payments, respectively. Similarly, the number of those comfortable with using mobile payments is much higher in the USA than in Germany: 12% for P2P and 21% for POS as compared to 4% and 9%, respectively. The data show that the percentage of mobile payments users is very low in general: 4% of US American and 5% of German respondents use POS payments. In both countries, 2% of respondents report to use P2P payments.

However, on the global level, P2P payments supersede POS payments in all three aspects since P2P payments enjoy great popularity in developing countries.

In sum, the results show that the adoption of mobile payments is still very low in both focus countries. The data also suggest that German consumers' knowledge of and comfort with mobile payments is lower than that of their US American peers. It is interesting that the willingness to use mobile payments in Germany is higher than the actual knowledge of it.

This may imply that an important inhibitor to the dissemination of mobile payments in Germany is the fact that almost nobody is aware of mobile payments; even though people might in fact use such services when existing. The stark difference between the willingness to use mobile payments and the actual use in the USA suggests that a limited availability of mobile payments solutions may present the bottleneck in this case.







US Germany Global





21% 19%



US Germany Global



2% 2%


4% 5% 5%

US Germany Global


P2P POS Existing Mobile Payments Solutions

The mobile payments environment is highly competitive. In addition to the vast number of mobile payments startups, which are currently challenging the industry, several large companies such as PayPal, Apple, and Starbucks are attempting to win the market with their own solutions. Table 5 shows a selection of thirteen existing mobile payments solutions; eight of which are US American. Appendix B provides detailed descriptions of the specific solutions26.

Table 5

Overview of selected mobile payments solutions.

Relevant Payment Scenarios Solution Country of

Operation Provider P2P POS Line Skipping

Mobile Commerce

Softcard USA MNO X

Parkmobile USA Independent* X X

Apple Pay USA Device

Manufacturer X X

Starbucks USA Merchant X X

Google Wallet USA Independent* X X X

Venmo USA Independent* X

Snapcash USA Independent* X

PayPal USA,



Institution X X X X

Netto App Germany Merchant X

MVG Germany Independent^ X

mPass Germany MNO X X

kesh Germany Financial

Institution X X

Yapital Germany Merchant X X X

Opentabs Germany Independent* X

* Start up, ^ Old Economy Company

26 The working definition for mobile payments excluded solutions, which make it possible for merchants to accept card payments with their mobile phone. Square, iZettle, Payleven, and SumUp are examples for such approaches. All of them are available in Germany. Even though this chapter does not further expand on this kind of services they are interesting to mention for the sake of completeness.

5 Empirical Study

The first column contains the name of the individual mobile payments solutions. The second column describes the country of operation. The third column refers to the category of the provider. In theory, several stakeholders may act as providers of mobile payments solutions.

As described in Chapter 4, the following parties can assume the role of mobile payments provider: financial institutions, mobile network operators, and independents. The last category includes startups, old economy companies, and intermediaries. The last four columns describe the relevant payment scenarios that were introduced in Chapter 4. The individual mobile payments solutions enable one or more of these scenarios; the associated scenarios are marked with an X.

Table 5 provides several insights. It underscores that – apart from PayPal – none of the US American players offer their solutions in Germany. In addition, the overview suggests three points concerning the operators of mobile payments: first, financial institutions and especially banks have so far paid only little to no attention to the mobile payments market; second, the inertia might have led to other players stepping in as providers; and third, most solutions are provided by independent providers, and especially start-ups, followed by merchants. While literature only named three stakeholders as potential providers of mobile payments, it should be noted that the inertia might have broadened the provider category. The limited number of offerings might explain the lack of familiarity and comfort with mobile payments that were expressed by German consumers according to the MPRI. An additional important aspect is the focus of the respective solution. Most of the solutions focus on mobile POS payments; ten out of 14 solutions do so. Mobile P2P payments are about as important as payments inside of m-commerce; six and seven out of 14 solutions enable mobile payments in the specific scenarios. The option to skip the line through mobile payments is the least represented; only three out of 14 solutions offer this function.