GIROCARD

Michael Salmony 0:12

Hello, my name is Michael Salmony and Javier and Ralf and I would like to welcome you to another episode of the Payments Trilogue. And this time we have as guest Matthias Hönisch, because we wanted to explore local schemes. It's one of the surprising things in increasing globalization that actually a lot of local schemes are doing very well. Some people find that rather surprising. And one of the most successful local schemes is the Girocard in Germany.

So that is again surprising as the Germans typically like cash. So, Matthias, over to you. Explain to us why local scheme is doing so well and how you managed to wean the Germans off cash.

Matthias Hönisch 0:56

Well, first of all, thank you for for having me and and your wonderful show. So the the explanation for the is is quite easy because business is still local. So when when you ask a normal customer, be it in in Paris, in in Berlin or in Madrid, he will of course say that more than ninety, ninety nine percent of of his business is is done locally. So in in in the neighborhood.

Javier 1:21

.

Matthias Hönisch 1:24

So that's why you need local schemes. It's good that you didn't did not say it's a national scheme, because there are no national schemes at all, because by definition every European scheme is a European scheme. And of course you can ⁓ accept or you could accept or you can offer as an as an as an acquirer our scheme in Portugal, in Spain, in Italy or wherever you like. So

The second exp explanation is of course that we have s really strong domestic rails, low fees, and of course ubiqu ubi ubiquity wins. And we have a strong as a scheme, a strong relation with with the merchants. So probably it's good to to talk about about the construction principles of of Girocard. Girocard is a let's say a kind of a non profit scheme held by the four

big banking associations here in Germany, namely the ⁓ Deutsche Sparkasse and Giroverband, the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken, the Bundesverband Deutscher Banken, and the der Bundesverband der öffentlichen Banken. Those four associations again it's the savings banks, the private banks, the the cooperative banks and and the public banks. Exactly, exactly. And they have no real business interest for themselves

Michael Salmony 2:41

So that's the savings banks, the cooperative banks, and the public sector.

Matthias Hönisch 2:54

⁓ but they have business interest for their associated ⁓ banks and members. That's a little bit different from for MasterCard and Visa, because they have a very, very specific interest in making business for their own, and not so much for for the merchants and for for the banks, etcetera, etcetera. And in addition to this, we have for instance in our organization, in the association of of the the cooperative banking networks,

We have some very strong retailer organizations like Edeka. For instance, the Edeka bank is quite often sitting next next to me and telling me what what is good about Girocard and what's bad about Girocard. And so I have I have to listen very carefully to what what Edeka is telling me because it's it's a very interesting and and and nice and good member bank. Yeah. That's a little bit a part of of an of of an explanation. And there's of course

Javier 3:39

you

Matthias Hönisch 3:53

there was this ruling of of Bundeskartellamt in the year 2014 first of all, Girocard is is regulated by the multilateral interchange fee, I think it was from 2014. In in addition to this, ⁓ the Girocard system or to be precise, that the banks were forced ⁓ to have a bilaterally negotiated fees with the merchants, which is quite inter interesting when you

Think about the network with thousand five hundred banks or so and trzillions of of of merchants, how can it be? Is it German engineering or is it magic or what is it? And the answer is ⁓ that we have ⁓ we call it concentrators for on the issuing side and on the acceptance side, and there no g there are no negotiating prices. And to be honest, the prices went down a little bit, and with a lower price comes more acceptance. And f for this purpose and for this reason.

no no not for this pure purpose, but for this reason, of course, Girocard is is very interesting for for merchants and still very, very interesting for for for banks. I come to this later.

Michael Salmony 5:05

That's

super good, Matthias. think you've made some really strong points why you're so successful. Well, one thing still puzzles me. I must admit, I don't use your Girocard. I only use credit cards because I want miles. I want chargeback. don't want every single transaction on my account. I want it to pay only in 30 days. I've had credit cards so much better for the consumer. Why don't Germans use credit cards?

Matthias Hönisch 5:16

⁓ yeah.

well there's a kind of an aversion of of of revolving credit ⁓ of of of using credit cards. ⁓ because the Germans said like to have control about their funds. ⁓ so I think w we we four on the call are not not the average European because our I would guess that our income is a little bit higher than than normal. So the normal normal income in in Germany is I would guess two thousand five hundred euro.

And when you do your your grocery shopping, etcetera etcetera, ⁓ you have you have to have control. ⁓

That's that's why the Germans loved to ⁓ love to pay well with cash or with debit card and not so much with with revolving a credit card, ⁓ because they like to have control.

Michael Salmony 6:23

Whereas Brits like to overspend and go to the pub and not worry about things.

Matthias Hönisch 6:25

Exactly.

And

and and in addition to this, ⁓ in ⁓ accompanied in in in every checking account in Germany, there's a credit ⁓ line. ⁓ whereas in in the US it's it's it's quite ⁓ quite often not, because there's the credit on on the credit card side, but not so much on the on the checking checking account.

Ralf Ohlhausen 6:48

Okay, could we Okay. No, go ahead, Javier.

Javier 6:48

Matthias, sorry. Okay,

I think it is related to the previous issue. In your opinion, how far is your local market, not your scheme, your whole local market from being hit, impacted, damaged by the lack of European sovereignty in payments?

Matthias Hönisch 7:13

Good question. So I I would I would answer in this way. ⁓ so ⁓ I'm not a founder of Girocard. So I I came to the the cooperative banking sector in 2009 and and at that time Girocard was still running for more than 10 years. But ⁓ the the existing or the the pillars of of Girocard were always European or local. with one exception it's EMVCo. That's that's all. But everything else

I I would say still today is is European or or local. Give an example. Our security evaluation is is based on common criteria and not on PCI for various reasons. And our kernels are self developed and we are not relying on MasterCard Visa, Discover the Pure kernel, etc. etcetera. Everything is more or less i is European and it's our own ⁓ PI.

So that's why we're

⁓ we are that are so so important and that's why we are so co cost efficient. ⁓ and this is something of course ⁓ some forget. Sovereignty is not a not only a a good warm feeling in the in the gut region, saying, ⁓ that's it's European and that's fine. It's a very strong business, of course. So because using infrastructure for MasterCard or Visa.

I had some some experiences when I worked for for EPI or for for other organizations comes with a huge cost ⁓ with with a huge price tag. The the funny thing is that most of the banks they have they do not know how big the price tag really is. Because it's it's quite quite a secret how much MasterCard or Visa are really charging you. That's why you have to

Know your your your numbers and do the do the math to know what what really a MasterCard, Visa, Girocard or whatever transaction costs you.

Javier 9:27

I fully agree with you. I call that cost of ignorance, if not cost of stupidity.

Matthias Hönisch 9:34

Exactly, exactly. So that that's ⁓ interesting enough. ⁓ so the the acceptance price or the the the interchange, so we call it in the Girocard system, it's not an interchange. ⁓ it's it's we call it Händlerentgeld, which is quite the same but not the same. They are lower than the interchange for the for for an MasterCard debit or Visa debit or Vpay transactions. But the cost associated ⁓

are w are much much much lower. Because Girocard is built ⁓ in a way that it's very very strong integrated in into our banking systems. And that's why we do not have so much transmission cost, etc. etc. So it it goes STP right into into the into into into into the process center of ⁓ the savings banks, the cooperative banks, etc etc.

Ralf Ohlhausen 10:27

could I put my finger into I guess one of the weaker points of Girocard? So I think it was ⁓ two years ago you told the EHI Congress that the banks missed ⁓ e-commerce already 20 years ago. And you actually personally you unveiled Girocard Online back in 2016 as a new chapter. So it's twenty twenty.

Matthias Hönisch 10:32

Go ahead.

Correct. Yeah.

Ralf Ohlhausen 10:54

six now and ⁓ Girocard still has no native online capability. I mean the in-app pilot only to start it, but is it really worthwhile starting this now while the market has already routed around it for thirty years?

Matthias Hönisch 11:11

Good point, good question. So as you know, ⁓ I founded 2006 with some other colleagues, Giropay, not Girocard, 2006, and ⁓ and I worked for for PayPal, so I have some yeah, some knowledge about about e commerce. But it's true that more than ten years ago, fifteen years ago, so there were there were some plans to start business Giro to to start e commerce business with Girocard.

⁓ but ⁓ I'm not the the the big ruler here in in in in German banking industry committee. And my banks decided wisely to to go ⁓ with with PayDirekt and they decided to to to to to create and to to establish PayDirekt as an other way of of doing e-commerce business, but unfortunately we failed or they failed, or whatever. So that's the first part of of the answer. The second part of the answer is

Michael Salmony 12:04

I'm gonna go right on in.

Matthias Hönisch 12:10

⁓ to you to to your surprise probably Girocard is already in the e commerce because when you when you see ⁓ the the Girocards on on the savings bank side, you can do business in the e commerce with Apple Pay.

So that's so Girocard is already in in the in the e commerce, but only on the savings bank size because they have a contract with ⁓ with Apple.

Michael Salmony 12:34

But I think even if you're not a savings bank customer, ⁓ because Apple was forced to open up the NFC interface, you can put the Girocards into the NFC in the iPhone, right? And I've actually tried that and I think it's awful. mean, sorry to rain on the parade of all those who've put so much effort in opening up, forcing Apple to open up the NFC.

But the end effect, ⁓ at least the way I'm experiencing it is you have to go through all sorts of contortions to put it into the iPhone and then it ends up in a different place. It doesn't end up in the Apple wallet. And then you have to find the configuration option in your wallet to turn off the Apple wallet. All your flights and all your Bahncards and all your loyalty cards and all your credit cards disappear. And you only see the one electronic Girocard.

And that to me is an experience that really wasn't worth the effort. Or am I missing something?

Matthias Hönisch 13:36

Yeah, you do.

You do. So ⁓ so what what we are what hear what what what we are hearing from from the customers and my my numbers are telling me a little bit of a kind of a different story because when when ⁓ Apple opened up with some kind of pressure from some companies and ⁓ we had in six six weeks more more cards

in in in in in the iPhones than in six years within the with ⁓ in in the in the Android world. So the so what tells me that? Tells me that the the our customers waited for for the solution and they're quite happy. So ⁓ what I see and and th that's the the feedback of my banks, they are very happy with the s solution. But it's it's of course not enough.

Javier 14:25

Okay.

Matthias Hönisch 14:33

Because we have now only our Girocard, our debit card ⁓ in the wallet, and by beginning of of the summer we will ⁓ see our credit cards in our in our banking wallet. And from a bank perspective, so I'm talking only about a bank perspective, and from a bank perspective, ⁓ it it's a good decision. Because th the the the rational behind behind of not do not making Apple payment was not

The that ⁓ we were not able to pay the trillions of euro banks have to pay for for Apple Pay. ⁓ it w we we we did it from from a position of of strength. ⁓ because we said it w is not quite clever that we pay lots of money to a potential opponent, to a competitor, and which will make us life hard and on our interface.

And that's why we we had some very interesting conversation with DG Competition. And after five or six years, we had the DMA. Which is which is quite nice. So and in f I'm talking only about the bank bank bank perspective. From the customer perspective I deal with later And from an IT perspective is it's quite interesting that the other banks they have at least two infrastructures. One infrastructure, HCE for from the Android world, and the other one

Javier 15:45

Thank

Matthias Hönisch 16:02

the the SE s the the secure element infrastructure for for the for for the Apple world. And that costs an awful lot of money. And we have now the chance to get rid of one one kind of structure and only make ⁓ processing ab over one infrastructure about the HCE ⁓ infrastructure. From a from a consumer perspective, and you Michael, you are not a normal c a normal customer of course.

Javier 16:29

Yeah.

Michael Salmony 16:29

That's it.

Matthias Hönisch 16:30

But but ⁓ many many

but of course they are this not the customer. ⁓ but ⁓ we have thirty million customers and every everybody is different. But what what we see is of course that the customers they like to have the financial control within their banking app and not within Apple. They they like to to have to the the things sorted out. ⁓ tickets

Michael Salmony 16:53

Okay.

Matthias Hönisch 16:58

flights whatever Apple wallet and everything what's about financial like c credit cards, debit cards or whatever, ⁓ in the in the banking in the banking app. So and and that's what what our customers mostly, of course, mostly, not all of them, but mostly are are are are are reflecting and telling us that this was a good decision.

Michael Salmony 17:23

Okay, well refuted. Where is my

Javier 17:24

And, but yes.

Michael Salmony 17:26

Apple wallet? I don't want all that to disappear just to be replaced by one ⁓ Girocard, right? But I realize I'm not. That's your wallet.

Matthias Hönisch 17:33

And this is this is and this th th this is this is my solution within the

⁓ banking app. And of course I have the the the Apple wallet as well, but ⁓ because I have the this I think it's quite d the latest iPhone and of course I ca I have here in my wallet I have my other cards.

Michael Salmony 17:54

Okay, and you managed to switch over in reasonable time. ⁓

Matthias Hönisch 17:55

No worries. Right. Because because

Javier 17:57

Yeah, exactly. I think that's the

Matthias Hönisch 17:59

because

Javier 17:59

issue too.

Matthias Hönisch 17:59

you have because you have two two action buttons and you can with one action button you can start the banking app with your card and with the other one you can start the Apple.

Javier 18:08

So, Matthias, what do you tell those crazy Germans that like or love to travel abroad and would like to use Girocard, say, when they come to the Balearic Islands, but they cannot use it? What are your plans for the future not to lose those customers?

Matthias Hönisch 18:28

First of all, I'm not mm we say in German I'm not married to with this Girocard. Because my banking a association we have around twenty six or so, twenty seven million Girocards. We have around seven million d credit cards and it's wonderful. So I'm within the MasterCard Association and I love my MasterCard organisation and probably a little bit more than Visa, but Visa is nice nice as well. And those cards are issued by our banks. So

And the customer is ⁓ is of course very, very important. When the customer likes to pay with MasterCard or Visa, he can do this. Fine. Everything is fine. But honestly, most of the customers they do not care ⁓ with with ⁓ w which with with w with which brand they are paying, because they like to have ⁓ the the cocktail or the in the the salad in the grocery store, etcetera, etcetera. It's not so of of so much importance ⁓

that they pay with MasterCard Visa, Discover, AMEX, etcetera, etc. They they like to to pay something, yeah. And honestly, they don't like to pay. They like to have this cocktail in in this wonderful bar in La Palma. Yeah, that's it. And on the other side, there are a couple of dozens of of terminals. I'm not sure about the number, it could be hundreds. In in Mallorca for instance for instance, where you can pay with with Girocard, for sure.

Javier 19:38

You

Matthias Hönisch 19:53

Yes, for instance we have many, many thousands terminals around Germany, ⁓ or in Europe, or and not only in Europe, but outside of Europe, ⁓ where where Girocard is accepted, which is fine. And what we do is of course, ⁓ we make it more easy than than in the past. ⁓ as we are all payment veterans, I I might say this, we know quite well the history of MONEI and

EAPS. Those were quite good ideas, but those ideas came much too early. For for the examples EAPS, that was the European Alliance of Payment Schemes, ⁓ the idea was good, but it was too early because the technical differences between between ⁓ Pago Bancomat in Italy, for instance, and and Germany and the German Girocard scheme, they were so big.

We had the different payment formats, etc. It w everything was a little bit different. And there was a lot of d disruption b betwe between the transactions. But now as we are within the SEPA area, the payment is not not a big big deal anymore. And the technical standards are more or less the same. So that's why ⁓ I'm very much engaged in standardization, for instance. And when you standardize all the the payment flows from

Javier 21:15

Okay.

Matthias Hönisch 21:19

from cards to terminal, from terminal to acquirer to issuer, etcetera, etc. Then it's more or less easy. It's not so easy, but it's it's easier than then before, ⁓ then to have an accept a Girocard acceptance in in La Palma, in Mallorca. Why not?

Javier 21:41

Mm-hmm.

Michael Salmony 21:41

There's actually

the EuroPA, which has this lovely term of sort of roaming, right? Sort of like we use phone roaming, they talk about payment roaming. And I'm hearing about the CPACE standard, right? Which the ECB is now forcing into all the merchant terminals, which will be an open kernel. Is that an opportunity for you to then sort of put in Girocard acceptance across Europe into all these merchant terminals?

Matthias Hönisch 22:07

Yeah, so I think there there are two approaches. I will tell you about about the CPACE. We call it we pronounce it CPACE because CPACE stands for common payment application contactless extension. And it's a in in the former times it it's now a European standard. ⁓ formerly it was a a German standard because it's it's used within the Girocard world, because all ⁓ of our

Michael Salmony 22:13

see you

Matthias Hönisch 22:35

cards they have this CPACE standards to be honest. ⁓ most of the physical cards they have a we call it CPACE plus because we have some German over engineered pluses in there. But basically it's it's it's it's it's CPACE standard. And we kind of let's say to be generous we donated the this kind of the standard to Europe. So we we founded a consortium and within the this this consortium there are Carte Bancaire.

French colleagues, the Belgian colleagues, the colleagues from from Portugal, from Spain, from Bulgaria, and now from the ECB. And the good news is that our French colleagues and the Belgian colleagues, they are almost through the migration. I would guess that at least two-thirds of their cards and terminal are already equipped with with CPACE. Two-thirds. And ⁓

Javier 23:21

Mm-hmm.

Matthias Hönisch 23:31

what we see right now, because it w ⁓ it it it it happened in I think in April, end of April. my organisation and Nexo and Berlin Group, we ⁓ signed a declaration ⁓ with the ECB for the usage of those three three standards CPACE, Nexo and Berlin Group. And with that kind of standards, ⁓ you have more or less the the the the payment chain or the the chain for for cards transactions.

That means ⁓ and that means that the the the technical standards are more or less harmonised, which is great news because an if ⁓ all of because the rest you have to to take care about is the acceptance side. The technical differences are almost gone. To be very, very general, huh? So there's always some some bits and bytes you have to have to change, of course, security, blah blah blah. But generally speaking it's it's more much more easy than than than than in the past.

Michael Salmony 24:02

That's very impressive.

Javier 24:09

and

you

Michael Salmony 24:32

mean, that's very impressive. Of course, they have to do this, right? You've set the basis from the technical and the standardization that has been rolled out in some countries, but then they actually have to do it and sort of enable the Girocard facility and all those things. that sounds, I mean, you've done a trick which the Dutch didn't manage. We used to have Gijs here who always used to say the Dutch invented everything in payments. so he offered iDEAL to the rest of Europe.

Matthias Hönisch 24:32

And I won't

Michael Salmony 25:01

when the rest of Europe can take it. Whereas the CPACE thing seems to really conquer Europe. So congratulations on that. ⁓

Ralf Ohlhausen 25:10

But

could I ask ⁓ could I ask there? Because well you mentioned that the French and was it the Spanish or some have already two thirds of the terminals working? But what's the situation in Germany there? ⁓ because I mean as far as I understand it, CPACE is is is the best possible alternative, but it is not there. So it will need a lot of work and implementation, isn't it?

Matthias Hönisch 25:37

No, that's not not hundred percent true. Because ⁓ we in Germany we have on the terminal side we have CPACE plus. And ⁓ on on the on the on the card side, the physical cards are s CPACE plus, meaning ⁓ then we have some some additional feat features like ⁓ issuer update update processing, ⁓ which we will get rid of. ⁓ so for new terminals it's not necessary anymore to have the CPACE plus kernel.

It's it's it's sufficient to have CPACE plain vanilla terminals. And on on the card side, I would g I'm not sure about the numbers. Let's say let's say we have ten million virtual cards out there. All of the virtual cards are running on CPACE plain vanilla. No pluses anymore. So from from from issue perspective, it it may be worthwhile to have this kind of pluses to have more control, may may security, blah blah blah, etcetera, etcetera. Yeah.

But we in a way convinced our our member banks to get rid of the pluses. In exchange, ⁓ that that's why what we see within within the the the the ECPC board, which ⁓ is responsible for for CPACE, we see that lots of terminal vendors and vendors are coming from from the Far East to to to Europe and they like to offer.

And they like to offer their their products for for the European market because CPACE is not only seen as a German ⁓ is for for German market because it's we are opening up the market and it's not only about hundred million cards, it's about ⁓ hundreds of million cards right now, which is great. So we have more competition, more service, which is which is great news.

Michael Salmony 27:24

That's terrific. Maybe going slightly up again in the sort of more on the strategic side. How do you see the future with Wero and with digital euro? Is a Girocard going to be in end up in the Wero wallet or how do you see the world evolving?

Javier 27:37

you

Matthias Hönisch 27:45

It's ⁓ a tricky question.

Michael Salmony 27:48

That's what we're here for.

Matthias Hönisch 27:52

So a as I said, I'm I'm I'm not the owner of of Girocard, but I work for for for this association. And my association and some of my member banks, or especially DZ Bank, is very much engaged within Wero. And ⁓ I like the pioneers, I like those guys who try to do something something new. So I we we we really support ⁓ DZ Bank and and our member banks in in establishing ⁓ Wero. No irony, ⁓ we fully support.

Javier 28:20

and

Matthias Hönisch 28:21

But what what sometimes is underestimated is is you need lot of lots of time because most of the problems for for for for pay f for for for for for the payment industry is is solved. It was different as as we started Giropay in 2006, ⁓ because the the c capability of of paying online was very limited. Because in Germany there were basically no no credit cards and you couldn't pay

basically with credit card online. ⁓ th that was quite easy ⁓ twenty years ago. But now the the market is almost it's it's it's gone. It's is is is distributed right now and it's very hard right now to to gain market share. So it's it's a really a tough ⁓ really a tough tough business. And of course you can you can insert the the the the Wero sorry the the digital Girocard

into an Wero wallet. But it stays on a transaction base a Girocard a Girocard transaction, huh? Because we have to distinguish between a Wero wallet and a Wero payment. So when you do this, you have a a Girocard in your wallet and when you pay some somewhere, you pay with your wallet but with Girocard. In the end it's a Girocard transaction. That's it.

Javier 29:33

Mm.

Michael Salmony 29:48

Okay, and digital euro.

Javier 29:51

you

Michael Salmony 29:53

Let

you off the hook.

Matthias Hönisch 29:55

Th there's a reason why I was not on this wonderful photos with Mr. Cipollone. So we we are not the biggest fan. So but ⁓ b we have to face the reality the digital euro will come. That that that that that's for sure. And I cannot tell you so much, but I'm a fan of of of of private business.

Michael Salmony 29:59

You

Matthias Hönisch 30:20

So I'm a fan of of MasterCard, Visa, Wero, Girocard, because it's it's it's it's private property and it's driven privately. And I like this idea. I don't like this idea that that that a state ⁓ is doing business in in the payment industry. I don't like the idea. And that's what what what we will see quite likely. because I see ⁓ at least two

to to to points of influence or two two big problems. The one is is the price setting for for the digital euro. And I think Mr. Cipollone told us ⁓ that the price will be a little bit higher than for the usual local schemes like Carte Bancaire, Girocard, Bancontact, etc. Which is fine. ⁓ But it will be l higher than the the local schemes, but lower than the

the MasterCard and Visa and the international scheme, which which is fine. But we will see when we get there. So what what I've learned in doing this business for 30 years or so, that the position of of of the merchants is very strong and the voice is very much heard in in Brussels. So and I don't like the idea that ⁓ the the local European schemes will disappear

Javier 31:20

.

you

Matthias Hönisch 31:45

because of of a wrong price setting. And in the end, only we have only the digital euro and MasterCard and Visa. And I don't I don't like the idea. And the second and and the and and and the second problem we see is ⁓ it's it's not in the payment area, it's more in the banking area. Because

Javier 31:51

you

Ralf Ohlhausen 31:56

Yeah, I sorry. Yeah, go ahead.

Matthias Hönisch 32:09

We are discussing about holding limits around three thousand euro or so. And we don't like as as a bank, we d ⁓ I'm changing my hat right now, so I'm a banker right now. As a banker, I don't like the idea that that that that the money will flow from from our bal balance sheets into the ⁓ balance sheet of the of the EC ECB. This will I would say in a way harm our our possibility and our

Javier 32:17

Okay.

Matthias Hönisch 32:37

capability to g to give loans and I don't like the idea. So, Ralf.

Ralf Ohlhausen 32:42

Yeah, and and actually I mean I guess you're in you're in very good company here with ⁓ say digital euro skeptics and ⁓ generally skeptical of ⁓ public payment solutions. But ⁓ you're getting pushed ⁓

Matthias Hönisch 32:48

Yeah.

Ralf Ohlhausen 32:57

Between a rock and a hard place, because yes, you have ⁓ well the digital euro on one coming on one side, you have Wero coming on the other side. And Wero isn't just coming as a wallet where you can put the Girocard in. It is coming mainly, I guess, as an account-to-account payment solution. And this whole account-to-account principle is what is sort of being seen as the foundation of European payment sovereignty and has the future, it has the lower cost, it has the

bigger potential going forward. So everyone expects cards sort of ⁓ becoming legacy and overtaken by account to account slowly but surely. And ⁓ so what's your view on that?

Matthias Hönisch 33:43

I have a little bit diff a different approach. ⁓ when when when Brussels is talking about cards and the merchants, they talk about MasterCard and Visa. They do not talk so much about Girocard or Carte Bancaire or whatever because the costs are associated with Girocard are very, very low. And Girocard itself it's it's basically to be very simple, it's an authorization system, full stop. Nothing else. So w we can we can decide

as a as a scheme to do ⁓ the the payment flow as an SCT Inst. We can do this. So right now we do an SCT, so it's a der the derivate of of SEPA Direct Debit. But we we can decide ⁓ to use the card only as an authentication tool. That that's what it is today. And do the payment via via an SCT Inst. So that that's my my my my my idea

Or our idea to do business in future with with Girocard.

Michael Salmony 34:47

And that's account to account then basically. Yeah, super.

Javier 34:48

Yeah.

Matthias Hönisch 34:48

And that's account to account then. Yeah. So

but but honestly, I think I like the idea of a ⁓ account to account, but it it has to come with a with a real advantage for for for for the merchants. So we made in the time when there was a WGZ Bank, a WGZ Bank, I think it was seven or eight years ago, we had a we had a a dra a draft we we drafted a sketch how to transform Girocard into into an A2A system. So

Javier 34:56

.

Matthias Hönisch 35:19

The the ideas are right on the desk there. We have to do it. But but the problem is of course we we we we we talk to to the big merchants, ⁓ even merchants within our organisation, and they saw no real advantage in in in this. When the merchants are talking in in Brussels about the advantages of a account to account, they're talking not because they do not like so much Girocard, because they like to get rid of MasterCard and Visa or or or schemes who have high fees.

So and that's their their remedy to to get rid of the the high cost ⁓ card s card system.

Michael Salmony 35:58

Very good. Matthias, I think we've really used your time very well. Thank you very much for giving us such robust responses to all our questions. You, it's always a joy to have a true expert like you on, on on our podcast. Thank you so much. And thank you to Javier and to Ralf and to everybody watching. Hope everybody enjoyed it and look forward to seeing you next time.

Matthias Hönisch 36:15

My pleasure.

Cool, thank you so much, guys. Bye.

Michael Salmony 36:25

Thank