Barclaycard, Amazon to boost access to credit in Germany

In a bid to fuel online sales, Barclaycard is partnering with Amazon in Germany to offer installment lending to overcome the country’s low credit card ownership rates.

The partnership will offer installment financing for eligible purchases made over €100 (about $118). Once an Amazon customer chooses the individual financing plan and completes an online credit application with Barclaycard Germany, they will receive an immediate response, allowing them to move to the next step in finalizing the purchase. The higher the value of a customer’s shopping cart, the greater the number of financing options made available to them.

“We could not have wished for a better partner than Amazon for the start of our purchase finance offering,” said Tobias Griess, CEO of Barclaycard Germany, in a press release. “Through this new and customized service, we provide Amazon customers with a fully digital and user-friendly payment-by-installments option. With this new collaboration, Barclaycard Germany complements its credit card and consumer credit businesses with market financing in Germany.”

The point-of-sale financing terms range between three and 48 months with an APR of 7.69%. Once approved, a customer can add the agreed upon rolling credit line to their Amazon wallet for future purchases. Customers can also choose to make one-off repayments or pay the balance early in full, all of which can be managed through the Barclaycard app.

The move by the German units of Barclaycard and Amazon is in response to the growing global trend of consumers turning to online shopping for added convenience as well as safety as the COVID-19 pandemic continues to place restrictions on in-store shopping.

The partnership addresses two limiting factors in the growth of German e-commerce: low credit card ownership rates and a reliance on non-credit card payment options to pay for online purchases.

According to the Deutsche Bundesbank (German Federal Bank), general purpose credit card ownership has hovered around one third of adults for the last decade. The most recent figure from 2017 places it at 36%. Meanwhile, debit card ownership is nearly universal in the country, with 98% of adults owning at least one.

While 88% of Germans ages 15-79 shop online according to logistics firm PostNord, Deutsche Bundesbank found that the most common ways German consumers pay for goods online is receiving an invoice (62%), PayPal (52%), direct debit (27%), credit card (24%), pay in advance (19%) and SOFORT instant bank transfer (18%).

Amazon’s partnership with Barclaycard Germany follows a similar partnership Amazon Spain took with Madrid-based personal financial management provider Fintonic in 2018. In that deal, Amazon and Fintonic offered Spanish customers a four month long 0% installment loan for purchases made on Amazon.es, with a minimum of €200 (about $236) and a maximum of €1,000 (about $1,180).