Europe continues to pursue the goal of a single digital market. This includes the decentralization of financial services and heightened security regulations that will come with the Revised Payment Services Directive (PSD2).

[ARTICLE]: How PSD2 will impact the payments landscape

Online retail in Europe is growing exponentially, especially in Southern Europe, where growth is fueled by mcommerce thanks to its young population. But there are still many nuances when it comes to connectivity and openness to cross-border shopping.

According to the Ecommerce Foundation 2017 European Ecommerce Report, connectivity is growing steadily, with 13% growth in the last 5 years. Northern Europe leads the way with 93% online, followed by Western Europe at 89%, Central Europe at 86%, Southern Europe at 71% and Eastern Europe at 66%.

When it comes to cross-border purchases, Luxembourg is in the lead, with 74% buying from overseas retailers. Russia is also emerging as a market open to buying from international sites. And, according to Adyen data, Swiss, Belgian, Irish, Dutch and German shoppers are open to making orders across borders. Spanish shoppers still prefer to shop domestically.

Yet despite the openness of shoppers in countries such as Germany and the Netherlands to shop from international websites, local payment methods dominate. An local entity is not required to accept local payment methods in each market, but you’ll need an entity in at least one E.U. country to accept cards across all markets.

Europe

Austria

Austria

The Austrian payments landscape is similar to the German one. Other than online banking (credit transfers), direct debits are also quite popular, and should be offered depending on the business model. Card payments are constantly increasing at a rate of close to ten percent every year, which makes it essential to offer as a payment option.

Belgium

Belgium

Belgian shoppers are relatively open to making cross-border purchases, with 25% of transactions taking place on foreign sites.

The most popular method in Belgium is Bancontact, which has more cards in circulation than there are Belgian citizens. This is a debit card that offers 100% guarantee on the payment and can be used across all channels (online/mobile/POS). It’s also possible to process recurring transactions with Bancontact via SEPA Direct Debit.

Overall, the most common payment methods mix for online payments are Bancontact, credit cards (Visa/Mastercard and Amex) and debit cards (Maestro). Paypal, SEPA and Sofort are also popular.

Inside tip

Today many shoppers attempting to buy with their smartphones are blocked because the mobile version of Bancontact isn’t supported. The traditional version of Bancontact requires a device from the bank (digipass/Card Reader) to generate a token for authentication. This can be a real conversion killer when it comes to mobile experience. The mobile version also makes it easy for shoppers purchasing on desktop since they only need to scan a QR code to authenticate themselves. Note: If you support Bancontact/Maestro make sure the CVC code isn’t mandatory because there’s no CVC on Belgian Maestro cards.

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Czech Republic

Czech Republic

Czech republic's ecommerce and internet presence has been growing rapidly over the last years. Online the most popular payment method is to pay via credit card.

Denmark

Denmark

The Danish payment mix continues to be dominated by cards, Dankort debit cards co-branded with Visa being the most popular card type.

France

France

France represents a great opportunity for expansion, with ecommerce sales expected to grow to $64 billion in 2018.

Cartes Bancaires (CB: the French local scheme) dominates the payments landscape, and most French cards are Cartes Bancaires co-branded with Visa or Mastercard. As a direct CB member, we can achieve the highest possible authorization rates for our customers.

Inside tip

No local entity is required for local acquiring in France, although (as is the case with most Eurozone countries), a E.U. entity is mandatory.

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Germany

Germany

Germans are some of the most open cross-border shoppers in the world, with over 50% of online retail purchases taking place on an international website.

Yet despite this willingness, Germany is one of the most fragmented markets when it comes to payment methods. Non-credit card payment methods such as SEPA direct debit, SOFORT, and Giropay account for the majority of online transactions. In retail (specifically fashion) another popular payment method is open invoice. This is where a third party pays out for products and services and then collects payment from the shopper after delivery.

[ARTICLE]: SEPA Direct Debit: 10 best practices

If you’re planning to enter Europe you should consider Germany as one of the first markets to enter. This is because of its size and its openness to cross-border payments.

Inside tip

Due to its openness to cross-border payments and size, we recommend businesses considering Europe, enter Germany first.

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Finland

Finland

Finland is one of the market leaders in internet and mobile banking services. As such online banking is popular.

Italy

Italy

Italy is the fourth biggest ecommerce market in Europe. More than 80% of Italians are now online, and this is expected to increase by 16% within the year. In 2016 Italy had 13 million frequent online shoppers spending about €1,400 each.

Italian shoppers are increasingly mobile, and PayPal is a popular mobile method. Pre-paid cards are also popular due to (perceived) better security and decreased costs. The most popular credit cards are Visa and Mastercard and the most popular prepaid debit card is Postepay (co-branded with Visa). The local debit scheme PagoBancomat has announced it will also soon launch a web payment method. With their brand recognition and high card penetration, we expect that method to grow quickly.

Netherlands, the

Netherlands, the

While purchasing from international websites is relatively common in the Netherlands, the most popular payment method, iDEAL, is local to the Dutch market. iDEAL is an inter-bank system covered by all major Dutch consumer banks, allowing shoppers to use their bank account for online purchases. Direct debits and open invoice payments are also popular.

Inside tip

Due to its ease of doing business, you should consider the Netherlands as one of the first European markets to enter. Offering iDEAL as a payment method is crucial.

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Norway

Norway

Norway has one of the highest rates of card use per capita in Europe, making cards the most common way to pay online. Mobile payments are also becoming increasingly popular thanks to mobile apps like VIPPS. Paying after delivery with Klarna is a also common in Norway.

Poland

Poland

Poland is the ninth largest country in Europe and with a population of over 38 million people. Online banking is by far the most preferred payment method in Poland.

Inside tip

The Polish market is easy to enter, with no local entity required and like-for-like settlement supported. However, Polish issuers require cardholders to register their card the first time they make an online purchase – if they do not, the card is systematically declined for any online purchases.

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Portugal

Portugal

Ecommerce in Portugal was estimated to increase by over 12% in 2017, making total online sales worth €4.73 billion at the end of the year.

Card penetration is quite high in Portugal, but the most popular payment method is MultiBanco, which represented almost 86% of total sales in 2016 (29% in terms of annual monetary value). This is a post-pay option where a reference is generated at the checkout and then paid via an ATM with a debit card, or online via online banking.

Inside tip

For retailers, MultiBanco can represent up to 50% of the payment mix in Portugal.

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Russia

Russia

Ecommerce in Russia was worth €7.2 billion in the first half of 2017, an increase of 22% year-on-year. It’s expected to reach €15.99 billion by the end of the year.

Russia is a prime example of a major market in which credit cards are not dominant. In fact cards represent only a small share of the online transactions. Instead, the most popular local payment methods are cash-on delivery, online banking and e-wallets, including:

Yandex.Money, the most popular e-wallet with top-up options including prepaid scratch cards, plastic cards, online banking and cash

  • Qiwi, an e-wallet that can be topped up at one of 150,000+ payment terminals, as well as with credit/debit cards, on a phone
  • Sberbank is the biggest bank with 40 millions of users. As debit cards are by far preferred, online banking is the best solution to approach these shoppers
  • Cash payments through ATMs or payment kiosks/locations; they have been very popular for long, and the increasing sophistication of the accepting terminals has resulted in a more seamless payments environment and automation for e-payments.

In Russia, payments through ATMs have been very popular for a long while, and the increasing sophistication of the terminals has resulted in a more seamless payments environment that now includes automatic top-ups and recurring payments.

Inside tip

No domestic entity is required for processing non-card payments and it’s easy to access the majority of payment options in Russia. Adyen supports the biggest wallets and online banks, as well as several cash options. In order to process cards locally, you will need a local entity and local bank account.

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Spain

Spain

In 2017, the Spanish B2C ecommerce turnover grew by 8% to €28 billion. Of the total online population, 26.1 million bought something online in 2015 and the average spend €1,089.

Cash is still the most popular method of payment in Spain, and the number of ATMs per million inhabitants is among the highest in Europe. Cards are also popular in Spain, with over 85% of the population carrying at least one debit or credit card. All cards are co-branded with Visa or Mastercard. Prepaid virtual cards for online purchases are also growing in popularity while it is still early days for alternative payment methods like paying in installments.

Although all the cards issued in Spain are compatible with 3D Secure, using it for all transactions can lower your conversion rates by up to 20%. For this reason, more businesses are using dynamic rules to trigger 3D Secure only when necessary. But the limitations of legacy processing systems can make this challenging.

Inside tip

For optimal authorization rates, we recommend processing via a local acquirer (Adyen can provide local domestic acquiring in the market). Dynamic 3D Secure (part of Adyen’s risk system RevenueProtect) will help you balance security and conversion for your Spanish shoppers.

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Sweden

Sweden

The largest country in the Nordics, ecommerce in Sweden was worth €11.5 billion in 2017, a 9% increase year on year. The total in the Nordics in 2016 was €21.9 billion.

While cards remain the most popular way to pay online, Sweden is at the forefront of open invoice payments (Klarna). This payment method is expanding internationally and is now the second most popular method after cards, and the most popular in retail. Online banking through major banks such as Handelsbanken, SEB and Nordea, is the third most popular payment method. These can be done either via online banking payment services  or via the popular direct bank transfer app Swish. Apple Pay was recently released in Sweden together with Denmark and Finland.

Some Swedish issuers demand 3D Secure for all card transactions or that the shopper makes ecommerce purchases within a limited time period.

Inside tip

Adyen offers full support for open invoice payment methods. This applies to retail, rather than digital goods. Dynamic 3D Secure (part of Adyen’s risk system RevenueProtect) lets you control when to apply 3D Secure. This is particularly useful for cards issued by banks that demand 3D Secure.

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Switzerland

Switzerland

Switzerland's ecommerce market is growing fast, up by 10% in 2017. And the average spend per shopper in 2015 was €1,815. Popular payment methods are open invoice, credit card and PayPal.

Turkey

Turkey

Ecommerce in Turkey was worth €7.95 billion euros in 2016. The fact that it’s behind other European countries indicates there’s still a lot of room for further growth. Its online population is young mobile-savvy, with around a quarter of online shoppers using mobile to make purchases.

Credit cards are popular accounting for 80% of ecommerce transactions. 65% of these are paid in installments. Prepaid cards are currently enjoying the highest growth.

Similar to MIR in Russia, the local switch BKM launched a local card scheme called TROY in 2016. And in June 2017, 400k cards were issued.

Inside tip

Turkey falls under the European interchange for Visa and cross-border interchange is thus 0.20% for debit and 0.30% for credit being way cheaper than local interchange. But there are some local specificities within the market that may require local acquiring. These include: 1. Installments on credit card payments are popular, but can only be offered by connecting to individual banks. 2. Cross-border acquiring can lead to shopper surcharges and installments are only possible if connected to a domestic acquirer. (Note: Adyen is connected to all banks via a partner and can therefore offer installments for most Turkish customers.) 3. 3D Secure is mandatory on most debit cards and recurring payments are thus not supported for most of debit cards.

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United Kingdom

United Kingdom

The U.K. is one of the leading economies in the western world. While the fallout from Brexit is still unclear, it has already had an impact on ecommerce. A weaker pound has made the U.K. attractive to international shoppers, and British shoppers are less likely to shop from overseas.

U.K. shoppers are world leaders in terms of mobile shopping and debit cards are popular, with the average shopper holding between 2-3 cards per person. Cards account for approximately 90% of all online payments, Paypal is another popular option, and online banking is virtually non-existent.

Inside tip

Currently the U.K. is the only European country where Address Verification Service (AVS) is supported. And there is strong issuer support for 3D Secure. As a result, the U.K. is one of the few countries where enabling 3D Secure actually improves overall conversion. This is thanks to Risk Based Authentication (RBA) where the issuing bank chooses to forgo the full authentication process if they deem the transaction to be low risk. Visa and Mastercard Account Updater services are also available in the U.K. - so you can be sure your cards on file are always up-to-date.

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