Could BNPL Be the Future of German E-Commerce? | Riverty | Nexi Roadshow: Bits & Pretzels Munich

Could BNPL be the future of German e-commerce?

In this interview from the Nexi Roadshow we discover more e-commerce and payments trends across the DACH region. 

In Munich at the Bits & Pretzels festival we spoke to Riverty SVP Business Strategy, Kay Dallmann, who points out that a form of BNPL, ‘Rechnungskauf’ or pay by invoice, has deep roots in German culture. 

More modern forms of BNPL are becoming increasingly popular among younger consumers and Dallmann discusses how regional “payment heroes” like PayPal still foster trust. Ultimately a mix is needed to boost conversions.

Riverty is a well established tech firm in Germany with decades of expertise in financial services, making them the ideal people to speak to about the changing state of payments and e-commerce in the region. 

As with previous interviews in the series, Dallmann is on hand to discuss key trends across the DACH – Germany, Austria, and Switzerland. There’s a lot here about consumer preferences, generational payment habits, and how innovative payment methods are reshaping the market.

The Role of Buy Now, Pay Later (BNPL)

So it turns out the “buy now, pay later” (BNPL) model is not so new to Germany. They’ve had a form of it known as ‘Rechnungskauf’ or Pay by invoice, in the country for decades and has deep roots in the country’s mail-order culture. Originally popularised post-World War II, it allows businesses and consumers to delay payment. More modern forms of BNPL, popularised by Klarna and other platforms, has recently surged due to the flexibility and ease of use it provides, making it one of Germany’s top payment methods. Dallmann points out that this model is particularly favoured by younger consumers, especially for goods like fashion, where buyers appreciate the chance to try items before paying for what they keep. 

Therefore payment habits vary significantly by age group. While PayPal and BNPL dominate among younger Germans, other options like direct debit and credit cards remain popular with older demographics. Riverty has done a lot of consumer research which also reveals six distinct payment personas that reflect diverse attitudes toward financial transactions.

For businesses however it’s worth considering what BNPL can bring to the table. For example it has the potential to create strong consumer loyalty and a differentiated shopping experience, enhancing conversion rates while meeting the local preference for flexible payment methods.

Localization in Payment Preferences

The importance of region-specific payment solutions is another thing that Dallmann touches on in the conversation. Localism has become increasingly popular in the region as noted by Nexi. Dallmann notes how popular PayPal is and that other region specific payment methods enjoy high consumer trust due to familiarity and security. This local approach contrasts with countries like the U.S., where credit card dominance creates a more homogenous payment landscape. European merchants in e-commerce must therefore understand regional nuances to improve user experience and build consumer trust.

Optimising the Checkout Experience

This is all in service of optimising the online checkout experience. And that goes for consumers and businesses. For businesses in e-commerce, the need to offer a curated selection of regionally relevant payment methods at checkout. A streamlined checkout, combined with transparency in payment options, builds trust and reduces friction, leading to higher sales and improved customer loyalty. That being said, there are some instances where so-called ‘strategic friction’, such as return fees to discourage excessive returns, could be an effective business strategy, albeit in moderation.

The Future of Payments

A big part that technology companies like Riverty and Nexi can play is in providing the means to offer a diverse array of payments and make it easy for merchants to tackle this side of things. They also take care of regulatory compliance. 

Dallmann shares his outlook on upcoming regulations like the Consumer Credit Directive and PSD3, which aim to enhance consumer protection and transparency. These frameworks may provide insights into consumers’ spending power by leveraging account-to-account payment mechanisms, thus allowing businesses to make more informed decisions around credit offerings and fraud prevention.

Watch the video to find out more, our DACH e-commerce quiz for more from Kay and indeed more interviews from the Nexi Roadshow right here.