A perspective on German payments

For German banks, payments are a key revenue source and a connection to customers. A changing market landscape could challenge that position.
Germany has a reputation for being a high-tech country with a cash-dominated economy. Its cash usage is indeed high (67 percent of total number of consumer-to-business transactions in 2018), but the payments infrastructure is well developed, with approximately 165 million cards, roughly 1.1 million terminals, and a well-established processing landscape.

For incumbents, payments are an important source of revenue and the most important customer touchpoint. The question now is whether developments such as Apple Pay or Alipay, ubiquitous card acceptance, and emerging specialists such as Adyen and Wirecard lead to a leapfrogging moment that relegates banks to the role of high-cost providers of cash, cards, and infrastructure, pushing them further away from the heart of the vibrant payments industry. Or more succinctly, will nonbanks and fintechs be able to reap the benefits of the shift away from cash?