Digital payment services: Outcomes and recommendations for action

There is no denying that sometimes there are still good reasons to pay in cash. However, cash payments are now a niche market in Germany. Digital transformation has progressed so far that less than one percent of all euro denominated payments, and only around 10 percent of total transactions, continue to be made in cash. A discussion of whether to abolish cash appears superfluous.

Digital payments are no longer offered by banks alone. Global information, trade and telecommunications companies such as Google, Amazon and Apple – and even start-ups – do so as well. These FinTechs (financial services and technology companies) are expanding their information, trade and communications businesses strategically to include finance.

For many people, digital payments have long since become part of everyday life. It is worth exploring the potential of digital payments for practical reasons alone. These services are easy to use and offer high levels of convenience. However, the risks should not be forgotten, especially in terms of privacy.

Everybody should be able to weigh up the costs and benefits, risks and opportunities. In order to do so, however, clear and comprehensible standards are required. Such standards are currently lacking:

  • High-quality, up-to-the-minute information should be made available, for example using standardised templates for operators and providers of financial, commercial and payment services. These should be subject to regular review. This would make it simple and easy for potential users to weigh up the facts and compare services:
    • What risks are involved?
    • What are the direct and indirect costs of use?
    • Which payment and other services are directly linked to the payment account?
  • Transparency for consumers when faced with a range of payment services as to whether any part of the fee for such services is to be paid in personal data – and if so which data – including data being passed on to third parties. Such transparency is currently lacking. Alternatives must be available where consumers reject digital services (competition). Consumers simply doing without a service is not sufficient.
  • The same applies for identifying (IT) security measures, including­ disclosure of any expected/obligatory action on the part of the person making the payment. It cannot be left to individuals alone to ensure IT security and data protection; it is the fundamental responsibility of the State to intervene in matters concerning services of general interest.

A report entitled “The digital world and finance: Payment services and financial advice under a digital agenda” was presented to the public on 19 January 2016.