Payback Card Moving into Mobile Payments

Germans love their Payback loyalty cards, collecting and redeeming points with relish. Now the company by the same name intends to add mobile payment services to give customers greater flexibility.

German shoppers love collecting loyalty points. Source: Your Photo Today


More than 75 million shoppers - 26 million alone in Germany - use Payback cards that allow them to collect points in selected stores and redeem them at a later time.

Now the Munich-based company intends to expand beyond its popular loyalty card service with a smartphone app in a bid to establish a foothold in the nascent market for mobile payments. The app is currently being tested.

“We will start this year,” Payback Managing Director Bernhard Brugger told Handelsblatt.

Payback, which operates a huge custmomer database, is in a good starting position to launch a mobile payement service, he said.

The mid-sized company, which American express has owned since 2011, meanwhile operates in Italy, Poland, India and the United States. Great Britain and France could follow soon.

Co-managing director Dominik Dommick said “a relevant number of partners will be participating.” He hopes to attract commercial partners by keeping costs under the level of established credit-card providers, but admits it could be a hard sale with retailers not using the Payback card service.

While only one in five German Payback-users has installed the app, the Payback card is already well entrenched in Germany and numerous retailers are part of the points program.

The grocery store chain Edeka is one of them. The company has a partnership with the competing Deutschland Card, and its own app that links its rebates with its own payment system.

“I haven't even thought about Payback," said Markus Mosa, the head of Edeka. "They would have to contact us, first of all.”

While only one in five German Payback users has installed the app, the Payback card is already well entrenched in Germany and numerous retailers are part of the points program.

Payback has revenues of around €180 million, or $202.4 million, in Germany. American Express does not reveal how much of that is profit.

Market researchers at TNS Emnid say Payback is the most popular bonus program in Germany. More than half of households have a card, which is perceived as more trustworthy than the customer-loyalty offers of its rivals. Payback hopes to piggyback on this trust and goodwill with its payment app.

But the Munich-based company is not the only one jumping on the bandwagon. The Otto Group in Hamburg is present at many cash registers with its Yapital payment system. The Otto Group says the system is not yet widespread enough to justify much advertising and, according to media reports, Otto is considering selling it and several mid-sized companies may be interested.

A recent study from consulting firm PwC says a breakthrough in this field can only be made by providers who can successfully combine mobile payment with other services — gift coupons, for instance.

“Only offering a solution for mobile payment is not a business model that promises success,” the PwC survey noted. Up to now, however, the new technology is lagging far behind expectations. Nonetheless, they see a great potential: They believe the number of mobile payment users in Germany could go from 176,000 last year,  to 11 million by 2020.

New online providers are threatened with serious U.S. competition, from the likes of Apple and Google. The Silicon Valley giants have the advantage of being able to offer their own payment functions while combining the systems of the customer- and rebate-cards of highly diverse providers. Payback would then become just one partner among many.


Joachim Hofer reports from Munich for Handelsblatt. Christoph Kapalschinski works on the companies and markets desk in Handelsblatt's Düsseldorf bureau. To contact the author: [email protected]