German mobile payments outfit Yapital wound down

German mobile payments outfit Yapital wound down

German retail giant Otto Group is shutting down its Yapital mobile payments business, blaming a competitive market and weak consumer take up.

Launched in 2011, Yapital used QR codes to let people make instore and online payments and pay bills through their mobile phones.

However, despite claiming that the service was popular with retailers, the Otto Group has given up on attracting consumers and will shut it down on 31 January, although Yapital will remain active as an e-money institution in the business-to-business market.

Marc Berg, executive director, Yapital, says: "At the moment it is simply impossible to forecast business performance in this segment accurately - and above all, the development of the number of end-consumers. While we were already talking about the mobile-payment breakthrough three years ago, today studies indicate there are currently only 200,000 users in Germany."

In addition to blaming the slow pace of consumer adoption, Berg says that margins have been falling thanks to new interchange regulations.

The firm's Hamburg base is being shut down, with headcount "reduced significantly," says a statement. German publication Die Welt puts the number of job losses at around 100.

Says Berg: "We were optimistic to the end, but ultimately things did not work out. We always knew we had to solve the ‘chicken or egg’ issue to be successful. Unfortunately we were only able to solve one side of the equation: acquiring strong and attractive retail partners."

Comments: (6)

Denis Wicking
Denis Wicking - F C Consultants - Stowmarket 01 December, 2015, 09:29Be the first to give this comment the thumbs up 0 likes

Is this the new trend - early adopters dropping out? ee's Cash on Tap is another victim. Or is it that the offerings from bigger players are winning out, like Apple Pay with its relationship with many of the big banks?

Dean Wallace
Dean Wallace - ACI - Global 01 December, 2015, 09:50Be the first to give this comment the thumbs up 0 likes @ Denis, you could be right about the likes of Apple, but maybe too early to tell? Certainly if I was launching a mobile payments solution now I'd be very wary or or joined at the hip with the big OEM Pays of this world I do think ubiquity and habit still have probably the biggest role to play to get mobile payments adopted more fully
Matt Scott
Matt Scott - Fiserv Inc - London 01 December, 2015, 10:151 like 1 like

I think it boils down to ubiquitous acceptance - if you are offering a QR Code based approach obviously you don't have 100% Merchant Coverage - if however you use a NFC based approach (using Visa/MasterCard EMV contactless approach) you naturally have a lot wider acceptance.  I think Apple, Samsung and Google are playing the long game - seeing the bigger prize when service offerings of Wallets are expanded to cover: Hotel Room Access; Proper (Secure) Ticketing; e-Couponing/Tender Steering; P2P Payments; and Customer Service Enquiries in a consistent cross platform User Experience.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 01 December, 2015, 15:012 likes 2 likes

It's not an effect of the big players. According to this Bloomberg article, Apple Pay itself is struggling to gain momentum. End of the day, it's not about QR code or NFC. It's about paying the price of solving a non-existent problem.

Mobile Wallets: Fix What's Broken - And It Ain't Payments

Like the Bloomberg anchorperson says on the video, it's so easy to swipe a card.

A Finextra member
A Finextra member 02 December, 2015, 07:58Be the first to give this comment the thumbs up 0 likes

The mobile phone as the payment initiator in the F2F environment does not resolve any problems or improve customer experiences for consumers or merchants. Be it contactless or over the air solutions, other payment carriers have already resolved the acceptance and the customer convenience issue. A Visa or MasterCard plastic card with a chip for contact/contactless + mag stripe for the third world countries and even the embossing (invented in the 1500-hundreds) as a last resort, is widespread for both merchants and cardholders and has a struture with a business model, rule book, many to many processing networks and standardisation on top of the 38 million merchants and 4 billion consumers. Applepay, Samsungpay and others are mere form factor developers for the F2F usage and will find a hard time to get up the usage in the F2F arena. Mobile payment system developers should focus on e commerce / card not present customer convenience and security enhancements for card payments and not try to remake the entire value chain.  Nobody will pay the price for a copy cat Visa on the mobile phone.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 02 December, 2015, 08:353 likes 3 likes

This just out: 

http://www.bloomberg.com/news/articles/2015-12-01/why-apple-wants-to-get-into-the-unprofitable-world-of-payments-between-friends

"Owners of newer iPhone models used Apple Pay in 2.7 percent of Black Friday transactions at stores that support the feature, compared with 4.9 percent on the same day last year, according to data from tracking firm InfoScout."

That's a massive drop in usage of Apple Pay y-o-y.

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