On 25 November 2016, the (the "FCO") announced that it raised no objection to the new payment function known as "Kwitt," with which savings bank customers can send money from one mobile phone to another. Since there were concerns that the project, which was founded by otherwise independent savings banks, could lead to the limitation of competition, the FCO felt duty bound to investigate the function under its competition powers.
The new system works as the German joint banking computing centres' agreed to implement the function into the savings banks' mobile applications, allowing the participating banks and their customers to make mobile-to-mobile payments within their circle of contacts. The savings banks announced that their apps will be equipped with this new function after a short update. Provided that every savings bank uses this function, around 4.5 million app users could send money to other mobile devices.
It will also be possible to reach payment recipients outside of the savings bank group; however, this procedure would be more complex. In contrast, the request for payment will only be possible among customers, who are respectively registered with Kwitt.
With the new Kwitt function, the savings banks come into competition with third party payment vendors, who (independent of any affiliation to a banking group) are offering similar applications on the market and licenses to financial institutions. Adding to the convenience for consumers, savings banks that want to offer their customers this payment method receive the product from their computing centers and do not have to develop it themselves or purchase it from third-party vendors. The FCO assumes that most savings banks will make this function available to their customers.
Even though the Kwitt function clearly involved a level of horizontal co-ordination between the savings banks, and provided a coordinated product on the market to the detriment of independent third party application providers, the FCO did not have any competition concerns regarding this project. This was because (as stated by the FCO in its press announcement) "any such restriction is outweighed by considerable efficiencies because with this easy form of money transfer the individual savings bank customer is not limited to transferring money only to customers of his or her own bank."
Meanwhile, there have been plans between the savings and cooperative banks to introduce a joint payment function under the name of "cash carrier". Due to the inter-bank cooperation, questions regarding competition must be continually raised since the cooperation partners would have privileged access to a considerable portion of the customer basis in Germany. The FCO has not made a final decision on this matter since the project has not been continually pursued.