Joe Morgan is a Berlin-based financial journalist.
The reluctance of Germans to get into debt has always made the country a nation of savers rather than borrowers. German consumers’ wallets are light on plastic compared to their peers in the US or Europe.
Payango, a Berlin-based startup which has become Germany’s leading provider of pre-paid cards, sees a bright future in satisfying a pent up demand among German consumers whose banks are reluctant to lend them money on plastic.
Volker Breuer, the managing director of Payango, says: “German banks are very conservative. It is quite hard to get a credit card in Germany. Yet the increasing ubiquity of card payment systems and consumers’ increasing use of the internet to make purchases makes cards a very convenient way to pay for goods and services.”
Breuer points out that there are just 25 million credit cards in the German market, with banks declining up to half of all applications.
Payango provides pre-paid cards which enable card holders to top-up their balances in cash rather than borrowing on plastic. The cards can be instantly topped-up and used in the same way as a credit card.
“We are working on a bunch of innovations around credit card payments which include ‘e-couponing’ and the mobile space. Within the next few months we will launch some pretty interesting pilots,” adds Breuer.
Payango set up operations in Berlin in 2009, with offices in the city’s fashionable Mitte district. “Berlin is a good place for young companies like ours. The office space is quite inexpensive and there are a lot of good educated employees. Berlin is just a great city, very multicultural and international. It is very interesting to live here,” says Breuer.
Payango has partnered with Visa, the payment systems group, providing its pre-paid card customers with access to more than 32 million Visa partners and ATM cash dispensers across the globe.
Successful partnerships have also been set up with the Stuttgart-based bank Landesbank Laden-Württemberg (LBBW), as well as Bankverein Werther, a bank based in Bielefeld.
Payango specialises in producing ‘white label’ pre-paid cards which are rebranded under the name of retailers who usually market the cards to their customers. Among its leading card products are AvanCard, CristalCard, ExplorerCard and MonkeyCard.
The Berlin-based startup has developed virtual cards for the internet while its products can even be used as a payroll tool by companies.
Research by MasterCard, the other global payment scheme giant, has predicted that the value of the pre-paid card market could reach US$163 billion by 2017.