Finance Monthly - October 2021

61 Finance Monthly. F i nanc i a l Innov a t i on & F i nTech Embracing PSD2 to drive massive growth Meanwhile in Germany, the growth potential is even more obvious. While the country is unarguably Europe’s economic powerhouse and a global leader in banking, there is still relatively high use of cash, while card use is not as high as some other regions, with 153 million cards held by a population of 84 million people — just under two cards per person. These cards were used for 6.29 billion payments with a total value of €350 billion via 1.15 million POS terminals and online in 2019. Like Spain, there are solid foundations for digital payments players to build on. Digital transactions are expected to grow at a compound annual growth rate of around 11% in the next few years. While debit cards are most commonly used to pay online, low digital wallet use at just 7% suggests an openness to new solutions other than wallets. Germany has not sat on its hands when it comes to embracing the EU’s PSD2 regulations. The Berlin Group has created a common standard for open APIs, opening the way for innovative players to muscle into the payments market. With a high number of permissioned intermediaries now able to deliver payments services thanks to the new regulations, smaller companies in Germany now have better options for accepting payments, reducing their reliance on more expensive third-party players. There are also plans to bring together Germany’s various instant peer-to-peer (P2P) and person-to- business payments schemes. Instant payments are experiencing very rapid growth in Germany, though with only 20% of banks offering this function the room for growth is obvious. Look out for “PayX” — a merger between schemes like Geldkart, Paydirekt and Kwitt — in the coming months and years. Overall, there look to be plenty of opportunities for players in the payments space to take advantage of in these two key European markets. While restrictive infrastructure has previously made these two nations something of a chal- lenge for payments innovators, recent regulatory and systemic changes coupled with public appetite for new services make Spain and Germany an exciting place to be right now. GERMANY: