• Trading Name: Sofort/Sofortüberweisung
• Legal Entity: Sofort GmbH
• Activities: Online banking-based payment 
• Location: Germany
• Regulations: under the supervision of the Federal Financial Supervisory Authority (BaFin)
• Key People: Wilhelmus Geerling Klaassen/Felix Würtenberger
• Latest news: Sofort
• Latest update: July 16, 2024

Sofort/Sofortüberweisung is an online banking-based payment method from Sofort GmbH for cashless payment on the Internet.

The company was founded in 2005 and has been part of the Swedish Klarna Group since 2014.

Offering

Sofort allows consumers to use their online banking details for immediate payments, providing instant transaction confirmations to merchants.

1. Sofortüberweisung: Instant online bank transfer system allowing secure payments directly from customers’ bank accounts.
2. Real-Time Payment Confirmation: Immediate transaction confirmations for merchants, improving order processing and customer satisfaction.
3. Wide Acceptance: Accepted by thousands of merchants across Europe, integrated into various e-commerce platforms.
4. Multi-Country Availability: Service available in several European countries, supporting cross-border transactions.

Regulatory Framework

• Sofort GmbH operates under the regulatory umbrella of Klarna, a Swedish fintech giant that adheres to stringent banking regulations.
• Klarna and its subsidiaries, including Sofort, are regulated by various financial authorities across Europe, ensuring compliance with the EU Payment Services Directive (PSD2) which governs payment services and providers within the European Economic Area (EEA).
• European Central Bank (ECB):
  • As part of the Klarna Group, Sofort is indirectly overseen by the European Central Bank due to Klarna’s status as a bank. This subjects Sofort to rigorous regulatory standards and oversight regarding financial stability and integrity.
• Local Regulatory Bodies:
  • In Germany, where Sofort is headquartered, it is under the supervision of the Federal Financial Supervisory Authority (BaFin). BaFin ensures that Sofort complies with national and EU-wide regulations on payment services, anti-money laundering (AML), and customer protection.

Serving Industries

Sofortüberweisung, operated by Sofort GmbH, serves several key industries with its real-time online bank transfer system:

1. E-commerce: Widely used by online retailers to offer a quick and secure payment option for their customers.
2. Travel and Hospitality: Utilized by travel agencies, airlines, and hotels for seamless booking and payment processes.
3. Gaming and Gambling: Often used by online casinos and gaming platforms, although this has drawn significant regulatory scrutiny due to legal issues.
4. Digital Services: Popular among providers of digital content, software, and subscription services for efficient payment handling.
5. Utilities and Telecommunications: Employed by utility companies and telecom providers to facilitate bill payments and service subscriptions.
6. Marketplaces: Integrated into online marketplaces to support transactions between buyers and sellers.

Customer Reviews

• Trustpilot: 1,1 Stars with 360+ Reviews

Compliance Issues

FinTelegram has reported extensively on the activities of Sofort, highlighting its involvement in facilitating payments for unauthorized and illegal online gambling operations. According to these reports, Sofort is used by various online casinos and gambling platforms to process payments, even in jurisdictions where these activities are not legally permitted. Klarna’s subsidiary has been linked to several unlicensed offshore casino platforms, such as SpinFever and others, which continue to attract users from Europe and beyond despite the lack of proper regulatory approval.

These gambling platforms use Sofort to allow players to make bank deposits directly, often through intermediary payment domains that redirect users to Sofort’s payment interface. This has raised concerns about the compliance and regulatory oversight of Sofort, especially given Klarna’s statements about restricting its services for gambling purposes. FinTelegram’s investigations have revealed a pattern of Sofort being integrated into high-risk payment environments, often in collaboration with other Cypriot payment agents and unauthorized entities.

Critical Points

Sofortüberweisung has been criticized for requiring users to provide sensitive banking information to a third-party service, raising significant privacy and security concerns. Critics, including Frank-Christian Pauli, argue that users may not be fully aware of the implications of sharing their data. The Federal Court of Justice in Germany ruled that offering Sofortüberweisung as the only free payment option is unacceptable if it necessitates sharing PIN and TAN codes, which often violates bank terms of service.

Despite Sofort GmbH’s claims of security, including not storing or accessing user credentials, there are concerns about the potential for hacking and phishing. The PSD2 regulation, effective from January 2018, mandates banks to provide secure interfaces for third-party services like Sofortüberweisung. However, the practice of requiring users to share their banking details online increases the risk of phishing and other fraudulent activities. Critics argue that this lowers users’ resistance to sharing sensitive information, potentially leading to increased online fraud.

Conclusion Rating

Given the substantial concerns raised by FinTelegram and other sources, it is prudent to downgrade Sofort to a “Red” rating. This decision is driven by multiple factors:

1. Privacy and Security Concerns: Sofort requires users to provide sensitive banking information to a third-party service, which can access transaction histories, account balances, and other financial details. This practice has raised significant privacy and security issues, as highlighted by critics like Frank-Christian Pauli from the Consumer Protection Association.
2. Involvement with Offshore Online Casinos: Reports from FinTelegram have revealed that Sofortüberweisung is frequently used to facilitate payments for unauthorized and illegal online gambling operations. This involvement with unlicensed offshore casino platforms exacerbates regulatory and legal concerns.
3. Regulatory Challenges: Despite compliance with PSD2 regulations, the practice of requiring users to share their banking credentials online increases the risk of phishing and fraud. The Federal Court of Justice in Germany has ruled against offering Sofortüberweisung as the only free payment option if it necessitates sharing PIN and TAN codes, which may violate bank terms of service.
4. Reputational Damage: The continuous association with high-risk and potentially illegal activities has tarnished Sofortüberweisung’s reputation, leading to increased scrutiny and criticism from various stakeholders.

Based on these critical issues, the rating for Sofortüberweisung is downgraded to “Red,” reflecting the need for heightened caution and awareness when using their services. This decision is aimed at protecting consumers and ensuring compliance with legal and regulatory standards.