by Christian von Hammel-Bonten
November 24, 2015

Research shows contactless transactions in Germany will double by 2020. Why new mobile payment solution “boon.” will boost the trend

Slowly but surely, mobile payment is gaining momentum in Germany. Why slowly? Because the acceptance of mobile payment among German consumers is not as high as in other European countries. What are the reasons for this? First of all, Germans still love cash and are accustomed to paying with notes and coins at the point of sale. On the other side the option for mobile payments, meaning the number of point-of-sale terminals enabled for contactless payments, is still low in Germany when compared to other European countries.

But times change, that much is certain, and it is predicted that mobile payment will double in Germany by 2020. By then, the volume of payment transactions carried out with a mobile device is predicted to amount to EUR 6 billion.

These figures stem from a study conducted by the market research company Populus on behalf of Visa Europe this year. Five years from now, the average German consumer is expected to make payments totalling EUR 33 with their mobile phone each week, which is 65% more than they do today.

German retailers upgrade their terminals for contactless payments

Germany’s largest discount stores, like Aldi Nord and Aldi Süd, Lidl, Edeka and Metro, are investing in point-of-sale terminals which enable NFC (near field communication) payments alongside the normal cashless card payments. According to Visa Europe, there are nearly 60,000 NFC active payment terminals nationwide. And this number is growing fast: by the end of next year, every card terminal has to support contactless payments. In view of this, MasterCard has just announced plans for its NFC-based devices to be usable by consumers at all contactless point-of-sale terminals in Europe by 2017.

New mobile payment solution “boon.” launched in Germany

Today, a new mobile payment solution has been brought to the market in Germany, as well as Austria, Belgium and the Netherlands. It operates independently of hardware prerequisites like NFC-SIM cards or embedded secure elements and it is called “boon.”. The name reflects the mission: boon is a real boon to the German payment scene. The new payment app for contactless transactions redefines smartphone payment. With boon, mobile payments in Germany will take a big step forward. Android users can easily download boon from the Google App Store. After a quick registration, the user can make mobile contactless payments directly at any location that accepts MasterCard Contactless.

The payment solution boon has the potential to bring benefits to the German mobile payment market because the app combines user friendliness and high safety standards. This solution is therefore the perfect introduction for German consumers to the advantages of mobile payment.

Host Card Emulation is a real game changer

boon relies on Host Card Emulation (HCE). HCE is a smart technology that can emulate a payment card on mobile devices (whether smartphone, wearables or tablet), but only uses software. This means it is independent of any hardware prerequisites and thus more flexible. Furthermore the technology offers safe, NFC-based transactions by following high-secure encryption standards as defined by MasterCard and VISA for cloud-based-payments. Host Card Emulation is thus without a doubt a real game changer, and not only for the German market.

The various HCE projects that are being unveiled by financial institutions, retailers and other players worldwide clearly show that HCE is going to take off in the coming years. HCE allows telecommunications companies, financial service providers, banks and also retailers to enter into the mobile payment market quickly. The real advantage is the independence that this technology offers: it does not require access to the SIM card or Secure Element (SE) as everything is based on software. That makes it much easier for banks or other market players to launch an independent mobile payment solution.

For that reason, there is huge potential for mobile payments in the German market right now. At least 21% of younger Germans aged between 25 and 34 are already using mobile payment via smartphone, tablet, credit or debit card to make contactless payments at the checkout. This was revealed in recent research conducted by Postbank. And clear above all else is that the physical element, namely the plastic card, will gradually disappear – it will be transformed into another form, with digitised card credentials.