Sofort will no longer function as a standalone payment method on September 30, 2024 as it is being merged into Klarna’s Pay Now offering. That means higher costs for merchants and more friction at checkout for customers, who will now have to create Klarna accounts in order to keep paying by bank. 

In this post, we’ve put together all the information that merchants need to know to prepare, including key dates and action items.

What is SOFORT? 

Sofort is a popular bank payment transfer method used in Austria, Belgium, Germany, the Netherlands, and Spain. It was acquired by Klarna in 2014, following which it continued to function as a standalone payments service. Now, in a strategic move designed to unify Klarna’s payments experience, SOFORT is being integrated into the Klarna ecosystem where it will become part of Klarna’s Pay Now service. 

Key Dates 

• 1 November 2023: SOFORT stopped being available for new businesses as a standalone payments option. 

• 1 January 2024: Existing merchants were no longer able to accept payments from buyers in Poland and Italy. 

• 30 September 2024: Existing merchants are no longer able to process payments through SOFORT. 

• 1 October 2024: SOFORT is fully discontinued across all integrations.

What Merchants Need to Do

Merchants will need to take the following steps now that SOFORT is deprecated. 

• Update checkout: If you haven’t already done so, you will need to update your checkout and remove SOFORT from your front-end

• Check documentation: If you use a PSP (payment service provider), check their documentation for specifics about what you will need to update. You can find Mollie’s documentation here.

• Find alternatives: You’ll need to evaluate alternatives to SOFORT to enable your customers to keep being able to pay via their bank account.

SOFORT Alternatives

Pay by Bank via Ivy

Ivy offers an open banking solution that facilitates instant, account-to-account payments across 5,000+ European banks in 28 countries. Trusted by some of Europe’s top businesses to streamline their payments, Ivy delivers:

• Best-in-Class Connectivity: Ivy provides unrivalled coverage by integrating multiple providers into a single network. Through one API, merchants gain access to 28 countries and 5000 banks across Europe, ensuring seamless connectivity. 

• Leading Conversion: Ivy’s Smart Routing Engine enhances payment success by intelligently routing each transaction to the provider in our network with the highest conversion rates. 

• Optimised Adoption: Ivy boosts adoption by offering a white-label solution that builds trust with first-time users, while our user network is designed to enhance flows for returning customers. 

• Seamless Integration: Ivy is quick and easy to implement via API or plug-in, so merchants can continue offering their customers a seamless bank payments experience and replace legacy players like SOFORT. You can either integrate via our API or via one of our plug-in partners, enabling you to keep offering bank-based payments to your customers.

With Ivy, businesses gain a smarter, more reliable, and customer-friendly payment solution.

Giropay

Giropay is a legacy bank-based payment system that was introduced in Germany in 2006. It allows consumers to complete online transactions using their online banking environment and confirming payments using 2FA or a PIN. Although it accounts for a whopping 10% of all online transactions in Germany, Paydirekt, the owner of Giropay, announced that it was being discontinued in June 2024. German merchants looking for alternative payment methods should consider next-gen open banking providers like Ivy to continue offering bank-based payments to their customers.  

Direct Debit

Direct Debit is mainly used for recurring payments, where businesses can withdraw funds directly from customers’ accounts. While it offers lower fees than card payments and is trusted in Europe, it lacks the immediacy of open banking solutions. Payments take several days to process, which can delay cash flow, making it less suitable for merchants who need fast, guaranteed payments. Direct Debits are also cumbersome to set up, requiring customers to manually fill a Direct Debit Instruction with the merchant they’re buying goods or services from. This can be done over the phone, online or in writing, and requires that the customer provide details such as their account number and bank sort code. In contrast, open banking payments are instant and require no manual data entry at checkout, leading to a truly frictionless checkout experience. 

Request to Pay

Request to Pay allows businesses to send payment requests to customers' banking apps, giving them control over when and how to pay. While it offers flexibility and transparency, the solution is still in its infancy and lacks widespread adoption. It's slower compared to instant options like Ivy, and the setup can be more complex for merchants looking for a straightforward payment process.

Conclusion

As the SOFORT payment method is phased out, merchants must act quickly to ensure a smooth transition and avoid any disruptions to their payment processing systems. Updating your checkout and reviewing your payment service provider’s documentation are essential first steps, but selecting the right alternative is just as important.

Ivy’s Pay by Bank offers an extensive network of over 5000 banks in 28 countries in Europe, and high converting open banking-based payments, making it an excellent alternative for European merchants. If you’d like to learn more, book a meeting with one of our payment experts today. 

Sources: 

1. Trust Payments 

2. Stripe 

3. Direct Debit 

4. Mollie

Sources last checked on: 4 December 2024