However, due to growing security concerns at the U.S.-based payment company, the question arises as to how well payments can be managed without PayPal.
More than 30 million users in Germany use PayPal, whether for sending money to friends or for paying for purchases online. PayPal functions as a digital wallet connected to one’s bank account. To send money to another person who also has a PayPal account, only the recipient’s email address or username is required—and the transfer is completed within seconds.
In recent months, however, PayPal has experienced several security incidents. While it remains the most well-known payment provider in Germany, it is by no means the only option. Online retailers usually offer their customers a range of payment methods, including credit cards, payment on invoice, or alternative service providers.
PayPal and Klarna as Established Providers – Wero Under Development
Alongside PayPal, the Swedish payment service provider Klarna has become firmly established, and in the future, the European initiative Wero could also gain significance. Wero is a system launched by European banks that is still in development in Germany but is already available in countries such as Spain and Belgium. There are also other smaller providers, although some, like Giropay, have already failed. One distinction is worth noting: transfers between friends are possible with PayPal and Wero, but not with Klarna.
Costs, Fees, and Security Considerations
When choosing a suitable provider, possible extra charges, the level of transaction fees, and ease of use are key factors. Can a payment be completed contactlessly with a single click, or is a two- or three-factor authentication process required? The latter may be more complex but also provides greater security, especially for online shopping.
Many users describe PayPal as more convenient than credit card payments online. Nevertheless, additional fees can arise not only with PayPal but also with other providers.
Risks for User Data at PayPal
Another unresolved issue is whether criminals have managed to steal millions of customer data records from PayPal. In addition, there was a security disruption that led to banks blocking PayPal transactions worth billions. It is clear that PayPal collects a great deal of sensitive customer data. According to its own privacy policy, users consent to practices such as:
- sharing personal details such as name, home address, or email with merchants,
- creating profiles based on shopping and browsing habits,
- obtaining creditworthiness information.
- By contrast, banks are not permitted to pass on such data to third parties.
Payment on Invoice as a Popular Alternative
In Germany, payment on invoice is the second most popular method of online payment. Goods are paid for only after delivery, provided the customer does not wish to return them. PayPal also offers a deferred payment option, allowing payment up to four weeks after purchase, similar to many credit card providers. Klarna, like some credit card companies, promotes “buy now, pay later” installment payments. However, these credit offers often carry high, sometimes double-digit, interest rates, which consumer advocates warn can become a serious debt trap.
Modern Payment Methods Using QR Codes and PhotoTAN
Many banking apps continue to expand their features. Today, invoices frequently include a QR code, which can be scanned with a smartphone camera. The system automatically recognizes the invoice data and processes the payment directly via PhotoTAN. Without a banking app, such processes are hardly feasible, but they open up many new options for both online and in-store transactions.
Storing Bank Data with Other Payment Services
Anyone with a bank account can also store debit or credit card information with third-party providers such as Apple Pay or Google Pay, enabling convenient payments via smartphone. PayPal has introduced a similar function in order to remain attractive to younger users, who tend to prefer mobile payment methods.
It is also possible to grant a SEPA direct debit mandate to retailers or online platforms that one shops with frequently, such as Amazon or a winery. The advantage of this method is that payments can be reversed for up to eight weeks if an error is discovered.
Source: with material from dpa
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