Sparkasse to take on Google Pay with new app

Germany's huge network of public sector Sparkassen savings banks will on Monday launch its own mobile payment app, taking on Google Pay in a country where cash is still king.

Sparkasse to take on Google Pay with new app
Photo: DPA

The service, which lets customers make contactless payments using just their smartphones, will initially be available only on Android, not iPhones, and comes a month after rival app Google Pay made its debut in Europe's top economy.  

“It's going to take time to make inroads because Germans are traditionally sceptical about new methods of payment,” the editor of the industry website, Florian Treiss, told AFP.  

Working to the advantage of the locally- and municipally-owned Sparkassen is their large network of over 15,000 branches nationwide, serving some 50 million customers.   

“Sparkasse's entry into mobile payment should reach significantly more customers” than similar services offered by other providers, Treiss said.   

Google Pay for its part has teamed up with several private banks in Germany whose customers can use the app for contactless payments. The largest partner is Commerzbank.   

Already well-established in countries around the world, contactless payment has been slow to catch on in Germany where cash is still used in three out of four purchases, according to a 2017 study by the Bundesbank central bank.

But it's not for a lack of infrastructure, with over 800,000 terminals available in shops or supermarkets that allow customers to pay simply by placing their credit or debit cards, and now their phones, over a reader.

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Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.