German banks have decided to shut down Paydirekt, the local PayPal competitor, and instead support a startup called European Payments Initiative (EPI) which spans across the continent.
Paydirekt Loses Support
Paydirekt has been around for almost a decade since it was initially launched in 2015. As it expanded over the years, it also merged the Giropay online payment system, building up a service that grew to be one of the largest competitors to PayPal in Germany today.
It operates as a joint mobile and online payments initiative of Germany’s largest banks, including Deutsche Bank, Commerzbank, comdirect, Sparkassen Finance Group, and Postbank.
However, with the rise of EPI, the banks have decided to abandon both Giropay and Paydirekt and throw their weight behind the new solution instead. The decision was made during the shareholder meeting, and their spokesperson confirmed it.
They said: “There are currently coordinations at the shareholder level on the future of Giropay and Paydirekt GmbH as an operating company.”
It is also worth noting that the decision to shut down Paydirekt came just before the launch of EPI’s payment wallet Wero. This indicates that the banks believe that EPI has greater potential and are more than willing to bet everything on the success of the startup.
The Rise of EPI
EPI launched with the goal of building a unified pan-European payment system — something that would transcend the banks themselves. It was initially baked by 31 major Eurozone banks, as well as acquirers Worldline and Nets. Since its inception, it also created a digital wallet that would support account-to-account-based instant P2P and consumer-to-business payments.
This was followed by the launch of online and mobile shopping payments, and lastly, the PoS terminals.
While most major banks in the Eurozone support the startup, a few of them actually decided to distance themselves from it, including Commerzbank and DZ Bank. However, Deutsche Bank decided to remain a shareholder. The project’s launch plans include the upcoming deployment in several more countries, including Germany itself, but also Belgium, the Netherlands, and France.
Now that Wero is finally ready to launch, Paydirekt stakeholders felt that its arrival would undermine Paydirekt, which is understandable, given that this is exactly what happened. However, this prediction also influenced the company earlier, causing its failure to generate a sufficient uptake in the cash-conscious German market.