Germany POS Terminal Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Germany POS Terminal Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The German POS terminal market is estimated to register a CAGR of 8.2% from 2022 to 2027. The market is already developed for the pre-requisites for POS to flourish across different regions. The developed infrastructure welcomes the expansion of POS terminal devices for payments throughout the country.

Key Highlights

• The government regulations and measures shape the payment scenario in the country. Several laws are introduced to promote different incorporations in the all-in-one POS terminals, complying with the rules. For instance, according to epay.de, in November 2021, the German Banking Industry Committee (GBIC) issued a new Technical Annex (TA) 7.2, or TA7.2 Errata update for POS systems, which defined amendments for the "single tap" functionality for requesting PIN in case of contactless payment. The incompliance of the same post 1st January 2022 would incur 2.9 points (or EUR 29 cents) after 30th September 2022.
• Such measures guide the compliance of the new terminal devices and the need for upgrading the existing devices accordingly. This also defines the cyber security measures, ensuring universal conduct across all POS terminals. The security systems like TA and incorporation of Value Added Tax (VAT) regimes also define the relationship of the device and the software and payment interface services provided by the companies, updating the device kernels regularly.
• The market is seeing a rise due to the increasing preference for electronic cards for card-related and contactless payments among the German crowd. For instance, according to Euro Card System Institution, a recent survey conducted among 1,200 consumers in June 2021 highlighted that 47% of the consumers indicated they preferred to pay at the register with a giro card (formerly known as an EC card), followed by 13% of the consumers selecting a credit card, and 10% to chose another method. The increasing preference among the crowd generates huge significant demand for POS terminals.
• Despite the strict measures, cyber security and data breaches are constant threats to the system, still affecting the conservative share of the German population. The inconsistency of the software raises concerning questions. For instance, in May 2022, according to hackaday.com, Verifone's POS Terminal, H5000, stopped processing payments as one of its certificates expired, affecting the transactions for days. The certificate was not an over-the-air update and required visiting the company's website. Such issues also emphasize the importance of compliance with the law and the requirement for smoother technological options and cybersecurity measures.
• The increased use of online shopping and payment modes through the COVID-19 pandemic has encouraged users to prefer payment modes other than physical transactions through terminals. However, incorporating NFC and QC codes has enabled users to use their online payment and virtual cards through contactless fund transfer methods provided by the POS terminals. The aware and hygiene-conscious users also use their smart wearables and smartphones for contactless payments at the POS terminals, providing constant growth to the market.

Key Market TrendsRetail Industry to Significantly Help Grow the Market

• The retail sector is shifting towards electronic and online payment modes for the new norm, replacing cash. Introduction of hyper stores and retail chains operating throughout the country prefer centralized payment records and systems, implementing intelligent POS solutions. Such systems are implemented by complying with the government norms, ensuring safe and reliable payments. The evolution of technology is also witnessing smart integrations for a better user experience.
• For instance, Diebold Nixdorf and McDonald’s Germany signed an expanded IT service partnership agreement. According to the agreement, Diebold Nixdorf will provide installation, commissioning, and maintenance services for all new McDonald’s Germany restaurant openings or upgrades, coordinating and implementing through its exclusive IT-service partner, SOS Industrieservice GmbH. The partnership also included the deployment of self-service terminals and payment transaction technology like the TSE Connect Box to implement the Kassensicherungsverordnung (KassenSichV; a German security regulation for POS systems).
• The significant shift in consumers’ preferences is another factor supporting the change in payments from cash to electronic media, creating considerable demands for POS terminals. For instance, in May 2022, according to the Global Payment Report 2022 presented by Worldpay, cash transactions accounted for 40% in 2021, compared to 55% in 2020, along with 25% of the transactions to be debit card transactions in 2017, compared to 38% in 2021. Similarly, Credit Card transactions too registered a slight growth from 1% in 20217 to 7% in 2021.
• The widescale shift after the Covid-19 to avoid cash payments for hygiene has resulted in drastic changes in the market, creating more demand for POS terminals. Moreover, integrations of POS terminals as all-in-one solutions for counter-top options, providing data-driven results for the transactions, has helped retail businesses track their payments better, along with tax and other requisites conveniently. The hand-held form factor and self-service stations will drive the market’s future, leveraging Germany’s developed retail infrastructure.

Increasing Adoption of Contactless Payments Driving the Market

• The market is witnessing heavy adoption of contactless modes of payments like "tap-to-pay" with the introduction of NFC. The adoption of users is increasing at a considerable rate. For instance, according to the survey results presented by Postbank, most of the new POS terminals are equipped with NFC as an option to facilitate contactless payments, along with alternatives.
• The adoption post the COVID-19 pandemic is evident, shifting the German population toward contactless payments. For instance, according to the Postbank Digital Study 2022, 59% of Germans believed digital payment methods to be faster and easier than cash, compared to 50% in 2021. The survey also highlights that 32% of the participants use cards only, and 7% use mobile phones for making payments. Further, 49% of the participants admitted using contactless payment supported by carrying their smartphone with them.
• The well-established networking infrastructure in the country leads to internet penetration, facilitating the adoption of POS terminals even in remote areas of Germany. According to a survey from "E-Commerce Report in Europe 2021" by Postnord, the proportion of internet users in Germany is 96%. The survey also highlighted that 94% of the citizens had shopped online. This reflects the readiness to expand and adopt contactless payments through POS terminals, including the unreached locations.
• The widescale introduction of NFC-enabled devices in Germany is what popularized contactless payments for its ease of action. The POS with NFC is gaining popularity for easy and fast payments, leveraging NFC. According to Verifone, 27 million payment cards and 6 million smartphones are enabled for NFC, with options like "tap and go" gaining popularity. Hence, the POS terminal market will benefit significantly from the developments and advancing consumer behavior, considerably driving the growth of POS Terminal devices in Germany.

Competitive Landscape

The Germany POS terminal market is moderate to highly fragmented, with intense competition among the service providers. Further, the service providers invest strategically in acquisitions and partnerships.

• February 2022 - SumUp and PrestaShop enter a partnership to support SMEs and easily enable merchants to grow their business in Europe. The users can connect the PrestaShop platform directly to their SumUp account, which activates SumUp as a payment method for online stores, synchronizing all data automatically with their SumUp transaction history. As a result of the partnership, PrestaShop merchants benefit from several additional products and services that SumUp offers its merchants, including card terminals, invoices, the SumUp business account with the SumUp Card, and point-of-sale solutions customized for retailers from the micro and nano segment.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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