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FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.
For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.
Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.
Introduction
Attitude of the country towards modern payment services
Although cash payments still play a significant role in Germany, card payments have grown substantially and now account for around 60% of all retail transactions. Contactless payments, especially via physical cards, remain the preferred method, with mobile payments steadily increasing as smartphone adoption and retailer acceptance improve. As of 2023, approximately 80% of respondents reported making contactless payments at least once a week, with 75% favoring cards, 23% using smartphones, and a small share opting for wearables like payment rings.
In e-commerce, PayPal continues to dominate as the most popular payment method with about 30% market share, followed closely by invoicing (“purchase on account”) at around 24%. The Covid-19 pandemic accelerated online shopping behaviors, leading to greater demand for diverse and flexible payment options.
Two major innovations shaping the payment landscape are the rapid growth of Buy-Now-Pay-Later (BNPL) models in online retail and the rise of invisible payments—frictionless, biometric, or automatic payment solutions—in physical stores. These trends reflect a clear consumer preference for convenience and flexibility, signaling a steady shift toward modern payment technologies in Germany.
Legal affairs
Obligations and requirements to provide payment services or ancillary services described above
In Germany, payment services are regulated in the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG). In addition to the ZAG, anti-money laundering and data protection regulations are also to be complied with.
According to the ZAG, a license is required to offer payment services as long as the service does not only consist in the provision of the technical service for the implementation of the payment service. The costs of a license range up to EUR 13,523.00 and additional time spent costs depending on which and how many kinds of payment services the license is supposed to cover.
To get a license, among other things, the applicant must have a business model setting out, in particular, the type of the envisaged payment services and evidence must be shown that the payment institution has the amount of initial capital of up to EUR 125,000.00 depending on the exact payment service to be offered; for e-money institutions similar requirements apply with the difference that an e-money institution needs an initial capital of at least EUR 350,000.00. The license also covers the provision of operational and closely related ancillary services.