EXCLUSIVE: “Spending Time in DACH” – Jennie Johansson Carnhamre, Nexi in ‘The Fintech Magazine’

A year after Nexi announced its further expansion into Germany, Austria and Switzerland, Jennie Johansson Carnhamre tells us how it’s meeting the existing and future payment needs of this diverse region

Anyone strolling through a traditional German market this Christmas is likely to be carrying a pocketful of euros to exchange for the brightly coloured lebkuchen swinging in delicious coloured posies from the stalls. Because in Germany, cash still counts for 51 per cent of transactions by volume at point of sale, according to the country’s central bank.

And yet Statista figures show that, overall, online payment services or digital wallets are used by 66 per cent of German customers, with pay by invoice (Rechnungskauf mit Ratepay), a peculiarly local form of buy now, pay later, coming second in popularity. Meanwhile, Switzerland has taken a relatively new payment method completely to heart, with mobile service Twint now the second most popular method of digital payment behind PayPal. And next door, in Austria, 61 per cent of consumers prefer to use digital payment methods over cash, according to the 2023 Austrian Visa Payment Monitor, which also showed that, on average, 25 per cent of Austrians pull out their mobile phone or wearable to pay at the checkout.

Twenty-six per cent are even beginning to actively avoid shops that do not offer digital payments, it says. Although Germany, Austria and Switzerland share a rich cultural history, they are nonetheless very diverse when it comes to their payment habits and trends. And that’s why Italian-owned Nexi Group’s strategy for expanding into the region has been to partner with homegrown technology players, merchants and financial institutions in the DACH region, on the basis that the closer you are to a market, the better you understand it.

And DACH is, by nature, a bit of an enigma, albeit one that’s ripe for disruption.

There is no one-size-fits-all in payments, so understanding your customers (who they are, where they are from) is essential, says Jennie Johansson Carnhamre, senior partner marketing manager at Nexi Group.

“Nexi has a long track record across Europe of working with merchants small, large, domestic and international to understand this complex equation. Our approach is ‘local by nature and European by scale’ – and therefore we offer all the local payment methods wherever we operate. We understand consumers, their preferences and behaviours to ensure that whichever industry you are in, we know the way to support sales growth in the most effective way possible.”

This approach has already seen it partner with many PSPs who are deeply embedded in the DACH region. In Germany, they include ecommerce payments solutions specialist Computop, based in Bamberg and Berlin’s Orderbird, which provides hospitality and small businesses with digital POS systems that are compliant with local tax authorities. These and other partnerships across the region, allow Nexi Group to configure its products in the most effective way and be a merchant’s partner on their growth journey, says Johansson Carnhamre.

Germany in particular has a number of distinctive characteristics when it comes to ecommerce payments, she says. While PayPal plays a major role as does payment by invoice, account-to-account payments are seeing increased adoption and new payment methods are coming to the fore. Buy-now, pay-later (BNPL) is also on the rise in the region. The German BNPL market generated a revenue of $417.4million in 2023 and is expected to reach $2,212million by 2030. In fact, BNPL transactions in Germany are so far 14 per cent higher in 2024 than in 2023. Klarna, one of Europe’s leading providers of BNPL, has been in the country since 2017, contributing to this growth.

With more and more people shopping online, it’s no wonder that customers are looking for these options at the checkout. Nexi’s own recent report on the region found there had been a 12 per cent growth in online spending during 2023 compared to 2022 and in DACH roughly 90 per cent of the people surveyed had purchased something online in the previous 28 days.

“Nexi’s approach is ‘local by nature – European by scale’ – and therefore we offer all the local payment methods wherever we operate”

Collaboration is key

The growth of account-to-account payments, as in other areas of the world, has been largely influenced by Europe’s revised Payment Services Directive (PSD2), soon to be upgraded by PSD3 with its focus on secure authentication, which is likely to impact A2A payments. PSPs and merchants also need to consider the Consumer Credit Directive, which goes live in 2025 and further enhances consumer protection around new forms of credit.

This directive, driven by the European Central Bank (ECB), is partly a response to the growth of BNPL, which some feel has not been appropriately regulated so far. Rather than stunting innovation, the hope is the Consumer Credit Directive will allow the consumer to safely engage with newer forms of payment. But its impact on instalment payments, particularly payments on invoice has yet to be seen.

Adding extra layers of security always comes with the concern that it may lead to greater friction for genuine customers. Collaboration between ecommerce gateways and payment companies can help mitigate risks and strengthen security measures, according to Nexi. But it can also often lead to the creation of innovative payment methods, and streamlined checkout experiences – if first you understand local payment preferences, shopping habits and desires. That’s especially true in a region where home-grown merchants benefit from loyal consumers, who have quite a high propensity for buying local.

According to Nexi’s 2023 report, 49 per cent of internet users across Europe indicate they want to buy from businesses in their own country, but that rises to 78 per cent in Germany. Nexi has recognised this rise in localism as a phenomenon that stretches around the world, pointing out in its report that it’s not merely a ‘pandemic-inspired trend’. But the numbers are particularly high in the DACH region where it found that ‘consumers agree that it feels good to support small and local businesses and it also feels more personal or familiar. Price was also a big factor in their decision’.

Having an acquirer that understands these nuanced behaviours and sentiments among shoppers in the DACH region is an asset for PSPs who are trying to provide the best payment options. But it goes beyond that.

“Partnerships can help mitigate risks and strengthen security measures. Cybersecurity threats and fraud are constant concerns in online payments. By partnering with cybersecurity firms and fraud detection specialists, ecommerce gateways and payments companies can bolster their defences and stay ahead of emerging threats,” continues Johansson Carnhamre

“Collaborating with regulatory bodies and compliance experts also ensures that they adhere to industry regulations and standards, reducing the risk of legal and financial repercussions. Furthermore, partnerships drive customer satisfaction and loyalty.

“By integrating complementary services and offering bundled solutions, payments companies can provide added value to merchants and consumers alike. For example, partnering with shipping and logistics providers can offer merchants discounted shipping rates or expedited delivery options, enhancing the overall shopping experience.”

This article was published in The Fintech Magazine Issue 33, Page 30-31