5 reasons Why Instant A2A Payments are the Best Giropay Alternative

The hunt is now on for a Giropay alternative in Germany. Yet, for many experts, the news of Giropay’s demise did not come as a surprise. The online payment method failed to achieve mainstream adoption in Germany despite the consolidation of Giropay, Paydirekt, and Kwitt under a single brand. Indeed, its market exit now leaves an important gap to fill for many German merchants. So, what are the Giropay alternatives?
Here are five reasons why instant A2A payments, powered by open banking, are set to take off.
What are the alternatives to Giropay?
Firstly, a recap: The Giropay project was launched as a data-secure European alternative for online account-to-account payments. Although large German banks such as Sparkasse, Deutsche Bank, and Commerz Bank pushed the idea, it never achieved the critical breakthrough and significant adoption with consumers.
Even after merging with other payment initiatives, Giropay (Paydirekt and Kwitt under the name Giropay) did not lead to the hoped-for success.
What are the potential Giropay alternatives on the horizon?
Waiting in the wings is the European Payments Initiative (EPI), which after several delays, is slowly rolling out its Wero app across Europe. It is another attempt to build a European competitor that challenges the dominance of the global card schemes. Wero will initially launch as a person-to-person (P2P) payment solution, initially for transfers to friends and acquaintances, but its ambition is to build a user base that translates into checkout success with merchants. Like Giropay, Wero’s success depends upon effective long-term collaboration between member financial institutions. In the near-term, the limited availability of Wero and initial focus on P2P mean many merchants will be looking for a solution with more comprehensive coverage.
What about Sofort as an alternative?
Sofort was founded in 2005 in Germany and was one of the pioneers in offering A2A payments in Europe. Its popularity in Germany continued after its acquisition by Klarna in 2014.
Ten years on, and Sofort is now fully integrated into Klarna – with the result being higher costs for merchants. Klarna has also used Sofort’s positioning in Germany to shift merchants towards offering its broader range of services, including buy now, pay later (BNPL) options.
Instant A2A payments as a Giropay alternative and Sofort alternative
Against this backdrop, Instant A2A Payments – including solutions underpinned by open banking – have become an attractive alternative for merchants and consumers seeking faster, more secure, and more convenient online payment. And importantly for merchants accepting payments, a more cost-effective solution.
Today’s instant A2A payment options, such as Brite Instant Payments, use the latest technology and Europe’s increasingly mature open banking infrastructure to simplify payments and ensure top-level better security.
Merchants have the flexibility to integrate such payment methods directly or through e-commerce platforms such as Shopware. Modern A2A solutions can also be combined with additional value-added services (read more in our account information and financial information services articles), serving both businesses and consumers even more effectively than other Giropay alternatives.
5 Reasons why Instant A2A Payments are the best Giropay alternative for e-commerce merchants:
- Instant A2A Payments offer a more cost-effective option compared to credit cards, wallets, and BNPL payment methods
Payment acceptance and processing is a significant cost center for retailers, with the fees that accompany credit card transaction, as well as digital wallets such as Alipay or PayPal significant.
One of the key benefits of instant A2A payments is that payments are processed without intermediaries (i.e. card schemes) resulting in lower costs.
For merchants, customers are paying immediately, meaningthe money is in their account – making liquidity more predictable.
- Demand for Instant 2A Payments is increasing
A study by Brite Payments and YouGov has shown that A2A payments are in demand by customers across Europe. In Germany, 37.3% of consumers already use Pay by Bank (A2A) payment methods at least once a month.
50.9% of Germans in Generation Z already regularly use “Pay by Bank” for online purchases. And this is not surprising: Younger people have grown up in an instant economy. Everything is always available on demand. Can you imagine explaining the principle of a video rental store to someone who grew up with video streaming? The demands of younger demographics, with growing spending power, indicate how payment preferences are likely to evolve in the years ahead.
- Instant A2A Payments simplify returns processing
Around 20% of online purchases are returned, with this figure even reaching 50% for fashion items. This trend has been constant for years. For buyers, it is now standard to order a selection of their favourite products online, try them on, and return the items they do not want. Refunds become an unnecessary and unwanted expense for merchants. But those shoppers who pay in advance want to get their money back quickly.
Wallet solutions can provide a remedy, but the money is often stuck in the wallet and must be paid out first. Instant A2A payments are the faster way to achieve this. The money arrives directly and within a few seconds where it belongs – in the customer’s account. Thus, businesses achieve better cash flow via superior payment reconciliation.
- Instant A2A Payments are one of the most secure payment methods online compared to other Giropay alternatives
Credit card theft is still a profitable criminal activity, and people are still susceptible to phishing and similar scams, resulting in significant financial losses for retailers. However, the error rate with instant A2A payments is much lower.
Instant A2A Payments made via the Pay by Bank option at checkouts are authorised directly by the customer through online banking access, benefiting from the customer bank’s high-security standards. Access is typically secured with at least one additional authentication factor, making it difficult for fraudsters to proceed without the login data. This level of security, Strong Customer Authentication (SCA), makes every instant payment as safe as a bank transaction.
- Instant A2A Payments give the EU greater payments sovereignty
The EPI project reflects the fact that the European Union wants to reduce reliance upon international payment schemes – including U.S. based Visa, Mastercard, and PayPal. According to the EU regulation on instant payments, banks in the European Economic Area (EEA) that already offer regular SEPA transfers must now also enable instant payments, a change that is hoped will be a catalyst for adoption of homegrown EU solutions.
The end result will be that a fund transfer of 1 to 3 business days will sooner or later cost customers—in fact, according to Brite’s data, over one-third of consumers expect a payout in five minutes or less. Those who start dealing with A2A payments, especially instant A2A payments, today can gain a competitive advantage tomorrow.
Maintain your competitive advantage with the best Giropay alternative and Sofort alternative
Brite Payments is revolutionising online payments. The way Brite’s instant A2A payments are aggregated and processed in real-time makes it a key Giropay alternative.
What’s more, Brite’s proprietary instant payments network reduces reliance on third parties, allowing merchants to benefit from cost efficiencies. Furthermore, Brite IPN relies upon Europe’s open banking infrastructure regulated by PSD2, meaning that it is not reliant upon effective collaboration between financial institutions.
Brite Instant Payments and Instant Payouts are tailored to bring the benefits of instant A2A payments to consumers and businesses across the EU.
If you’re interested in learning more about instant A2A payments and Pay by Bank at checkout, get in touch with one of our payment experts today.