Deutsche Bank has returned to merchant services although its launch proposition looks rather limited. There are also questions about how easy it will be to cross-sell payments to the bank’s large SME base in Germany.
DB has changed its merchant payment strategy more than once. The German banking giant was initially slow to enter the market before later buying and selling an acquiring business and finally announcing its latest plan – a joint venture with Fiserv.
The new deal with Fiserv represents a fresh start for DB which fully exited merchant services in 2015 after it sold both Cologne-based Deutsche Card Services and Frankfurt HQ’d POS Transact (Postbank’s acquiring business) to EVO Payments International.[1]
DB adopted a new approach in 2020. When Wirecard imploded, Santander bought its technology but Deutsche hired the product team. The German bank engaged Wirecard’s rockstar product chief, Kilian Thalhammer, and tasked him with building a new Deutsche Bank payments unit.
Two years later, we see the fruits of the strategy. Instead of buying or building the capabilities needed, the bank has chosen to partner with one of the global processing giants. Deutsche Bank and Fiserv have launched “Vert” a joint-venture aimed at the German SME market. Fiserv is already present in Germany through Telecash which offers a full range of POS and eCommerce payment acceptance.
According to Finanz-szene, Fiserv has control of Vert with 51% of the shares. Joint managing directors are Gerd Vido, former MD of Telecash and long term Fiserv exec and Thorsten Woefel, former head of payments as Adidas who has joined from Deutsche Bank.
The Vert proposition looks a little rushed. There is no eCommerce or dynamic currency conversion (DCC) although these are promised soon. It’s not clear whether the online acceptance product will be Fiserv’s or based on Better Payments, a payment gateway acquired by DB earlier this year. Vert’s terminals accept just Visa and Mastercard. There are no other international schemes offered and no Girocard, the widely used German debit scheme. If a terminal doesn’t accept Giro, the transaction is processed as Maestro which attracts higher scheme fees for merchants.
Vert is offering just three products at launch:
- PAX A50 at a very keen price of €4.99/month plus merchant fees
- Clover Flex at €19.99/month plus merchant fees
- “Go by Vert” a SoftPOS which is listed as “coming soon”
Boarding and customer service appear quite manual. Prospective customers are asked to fill out a form on the website and wait for a call-back. Vert’s address is a co-working office in Frankfurt which indicates it has not yet found permanent accommodation. 22 employees are listed on LinkedIn.
Longer term, the DB side of the venture hopes to integrate payments with banking products. “In co-operation with Vert, we can provide accounts, payment solutions and banking services to our SME customers,” says Kilian Thalhammer. DB has 800,000 SME customers; some with Fyrst, a neo-bank, but most with Postbank.
Both Postbank and Fyrst already offer Telecash products on a referral basis. Neither has updated its websites to push potential customers to Vert. One reason may be that Telecash’s standard product set (which includes Giro as standard) is considerably more extensive than Vert offers right now.
However, DB claims “some merchants already live” with Vert and there is an expectation of “rapid growth within its existing customer base”.
It’s not easy cross-selling payments to small business banking customers. Success requires strong and sustained senior management commitment, investment in staff training and incentives and, critically, seamless integration of boarding systems. A JV structure can make this harder. Business advisors in large banks have hundreds of products to talk to customers about and will sell the ones which are least hassle. Vert’s products will need to be easy to buy and easy to sell otherwise Postbank’s sales channels won’t deliver the volume of merchants needed to make Vert the success its investors are hoping for.
[1] I worked at EVO Payments 2015-2022 including on the Deutsche Bank & Postbank relationships.