In an effort to drive online sales, Barclaycard is partnering with Amazon in Germany to offer installment loans to address the country’s low credit card ownership rates.
The partnership will offer installment financing for eligible purchases made over € 100 (approx. $ 118). Once Amazon customers select an individual financing package and complete an online credit application with Barclaycard Germany, they will receive an immediate response, enabling them to proceed to the next step in completing their purchase. The higher the value of a customer’s shopping cart, the greater the number of financing options available to them.
“We could not have expected a better partner from Amazon to initiate our purchase financing offering,” said Tobias Griess, CEO of Barclaycard Germany, in a press release. “Through this new and specialized service, we are providing Amazon customers with a fully digital, user-friendly installment payment option. With this new collaboration, Barclaycard Germany is equipping its credit card and consumer credit businesses with market financing in Germany. “
The terms of point-of-sale financing range from three and 48 months with an APR of 7.69%. Once approved, customers can add an agreed revolving line of credit to their Amazon wallet for future purchases. Customers can also choose to make a one-time payment or prepay the balance in full, all of which can be managed via the Barclaycard app.
The move by the Barclaycard and Amazon units in Germany is in response to the global trend of consumers turning to online shopping for added convenience and safety as the COVID-19 pandemic continues to limit in-store shopping.
Partnership addresses two limiting factors in growth German e-commerce: low credit card ownership and reliance on non-credit card payment options to pay for online purchases.
According to Federal Bank of Germany, general purpose credit card ownership has reached about a third of adults over the past decade. The most recent figures from 2017 put it at 36%. Meanwhile, debit card ownership is nearly universal in the country, with 98% of adults owning at least one.
Meanwhile 88% of Germans aged 15-79 shop online according to logistics companies PostNord, German Bundesbank found that the most common ways German consumers pay for goods online is to accept invoices (62%), PayPal (52%), direct debit (27%), credit cards (24%), prepayments (19%) and SOFORT bank transfers instant (18%).
Amazon’s partnership with Germany’s Barclaycard follows a similar partnership Amazon Spain took up with Madrid-based personal financial management provider Fintonic in 2018. Under the deal, Amazon and Fintonic offered Spanish customers a four-month 0% installment loan for purchases made on Amazon.es, for a minimum of € 200 (approximately $ 236 ) and a maximum of € 1,000 (approx. $ 1,180).