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For 50 years, Germany’s central bank has actively promoted the
adoption of electronic payments. The reward is one of the world’s
most advanced and widely used electronic payment systems. However,
reducing consumers’ still-high preference for cash in the retail
environment remains a challenge.
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Pivotal to the adoption of electronic payments in Germany has been
the role played by its central bank, the Deutsche Bundesbank (DB),
which itself offers services in the field of payments and
processing. The DB’s initiatives, which date back to its formation
of banking industry bodies such as the Working Party on Automation
in 1959, have left Germany with one of the most advanced electronic
payments systems in the world.
According to data from the DB, there were 17.2 billion electronic
transactions processed in Germany in 2006. According to payments
software developer ACI Worldwide, this made it the world’s
third-biggest electronic payments market after the US (about 80
billion transactions) and the UK (about 18 billion transactions).
Based on retail electronic payments transactions only, Germany
ranked second after the US.
In its 2007 review of Germany’s payments market, the European
Central Bank (ECB) highlighted the unique role played by the DB in
the development of electronic payments in Germany. The ECB
explained that in the early 1950s the German government took a
decision to avoid going down the route of regulation by state
regulators or the DB. Instead, policies are determined by binding
multilateral agreements concluded by common accord by all of the
central associations of the banking industry, including the
DB.
In practical terms, the primary industry body responsible for
decision making is the Zentraler Kreditausschuss, or Central Credit
Committee (CCC) of the German banking associations. The ECB
explained that the CCC and the DB draw up various payment
agreements, which are the most important basis for interbank
payments. This also includes the creation of new technical
standards and the adoption of already existing standards, such as
data formats.
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By GlobalDataThe agreed procedures and standards are binding on all credit
institutions that are members of the associations forming the CCC.
Institutions that are not members of a credit sector association
must accept the various agreements by specific contractual
arrangement before taking part in interbank clearing. “The
mechanism of binding self-regulation by the market has played a key
role in enhancing efficiency in German payment operations,” noted
the ECB in its review.
