eCommence in Germany: the Achilles Heel

This is a guest post by Kathrin Hollinger from our German research partner UID.

On Saturday, as usual, I went to the super market around the corner to do my weekly shopping. I strolled along the aisles, crossing things off my shopping list and filling up my shopping cart. I finally headed for the checkout, which by the way was quite a challenge. Why do so many people always carelessly leave their shopping charts in the aisles blocking other people’s way? "Calm down, don’t get stressed on Saturday", I said to myself and continued on my way. But something seemed out of the ordinary. I took a look around. What is happening here? The closer I got to the checkout the more abandoned shopping carts I saw. They were all full to the brim but looked lonely and forlorn. Their owners had obviously bailed out.

Have you ever experienced a situation like this? To be honest: me neither, at least not in the off-line world. However, in the world of online shopping, this is a sad reality, regardless if it’s while buying shoes or booking a holiday. Why are users spending hours filling up their virtual shopping carts to eventually abandon them in the end?

There are various reasons, of course, often grounded in "bad usability" (whatever that is, in each particular case). But what if your online shop or booking website is actually working quite well in the UK or in the US but fails in the German market?

There's one simple answer we hear over and over again when doing Usability Tests for our international clients: In most cases, users are ready to fork out money for your products, they just can't - because you haven't given enough consideration to your payment gateway and the payment options you offer.

The world speaks VISA - Germany doesn't

Preferred payment types are culturally and socially conditioned and vary greatly from country to country. Moreover, not every payment method has found the same acceptance amongst users.

Credit cards, for example, are not as widely used in Germany as they are in the US/UK. One of the reasons is the accessibility of the EC card, provided free or charge with a standard checking/current account. It enables people to draw cash in many European countries, as well as pay in various shops all over Europe, without paying extra fees – rather like debit cards in the UK.

Payment by bank transfer is also very popular in Germany. This is either done during the checkout process or via an invoice after purchase.

Although the credit card is getting more popular, it is still not as frequently used in Germany compared to other countries. By offering credit card payment only, you force some users to book their trip to the Caribbean on your competitor's website. You might even have scared a potential customer away forever. Would you be happy if you spent hours searching for a good deal on a website only to find out, at the very end, that you have to start all over again somewhere else?

Better safe than sorry

Security awareness is another typical characteristic of German online shoppers.

A survey published by FIDUCIA for 2011, one of Germanys leading IT service provider in the banking and finance industry, reveals that 0.4% of consumers, a sizably number, do not undertake online transactions for fear of fraud. There is also a perception that there is a risk involved with prepayment methods as consumers may receive a defective product.

These concerns about online payment security and misuse of data help keep traditional methods such as payment by invoice, bank transfers and cash-on-delivery at the top of payment methods for online purchases in Germany.

There are alternatives to traditional methods and Germany is a growing market for payment service providers; Clickandbuy, Paypal and Giropay.

The idea behind these services is to centralise and regulate online money transfers providing high security standards and professional risk management. In doing so, they try to address users' fear about disclosing credit card and bank information online However, the current diversity of service providers clearly shows that there is still no standard that has is widely accepted in Germany.

Check-out or pack up

The integration of payment methods can be costly. Technical processes have to be implemented; individual negotiations with each payment provider, and some payment methods that are an advantage to the user but carry high risks for the retailer.

The right choice of payment methods is absolutely crucial to the success of your e-business.

Listen to your users, and try to take the following simple but basic rules to heart:

1. Offer more than one payment option tailored to the local market
2. Offer payment options that are appropriate to your target audience