Jordan Owen, UK Country Manager at Mollie, details why local payment methods remain at the heart of global growth for firms.
We live in a highly globalised and interconnected world with the rise of cross-border trade in goods and services. This increases the interdependent nature of the world’s economies, cultures and populations. However, language and culture are still unique across nations. And when ecommerce businesses are selling to foreign markets, they need to localise their offerings to the markets they plan to sell into.
However, a major factor that is often overlooked by ecommerce businesses is the variety of local payment methods that exist. In Europe, knowing the key local payment methods used in different markets, and being able to accept them, can make or break a small-to-medium-sized ecommerce merchant. If you want to expand to another European country, the payment method used in one country may not be used in neighbouring countries, and what customers expect from an online shop differs across the continent.
So, what are the top payment methods used across Europe? Which are the ‘local heroes’ that ecommerce businesses need to offer when selling cross-border and optimising growth and sales revenues?
Belgium and the Netherlands: Bancontact and iDEAL
Despite Belgium and the Netherlands being neighbours, they both have very distinct payment preferences. In Belgium, Bancontact is the #1 choice for paying online, and therefore absolutely necessary to win in this market. At Mollie for example, we see roughly 65-70% of all transactions in Belgium made via Bancontact. Digital wallets such as PayPal and Apple Pay are also popular, and are one of the fastest-growing payment methods in the country. This may be because a quarter of purchases are made using smartphone apps.
iDEAL is by far the most popular payment method in the Netherlands. It’s a bank transfer system that’s covered by all Dutch banks. Trailing behind are direct debit, credit and debit cards, and PayPal. As one of the most dynamic ecommerce markets in Europe, the nation is home to several market-leading local ecommerce retailers. As a result, the Dutch love to shop online and expect fast delivery times, thanks to the nation’s relatively small and excellent infrastructure. If you’re expanding your business into the Netherlands, it’s an absolute must to offer and accept iDEAL payments.
DACH: BNPL, eWallets and TWINT
DACH consists of Germany, Austria and Switzerland.
Germany is predicted to become Europe’s ecommerce leader by 2025, knocking the UK off the top spot. German consumers enjoy cross-border shopping. This was even before the rise of ecommerce, with mail order companies such as DHL being enormously popular in the region. The continued popularity of this has left a legacy in the nation and any retailer entering the German market must be aware of this. That’s also why many Germans prefer to use Buy Now, Pay Later (BNPL) and also pay by invoice. Consumers are used to not transferring the funds of their order until they receive the merchandise. BNPL payments in Germany are expected to grow by 59.9% on annual basis to reach US$ 62 million in 2022. In addition to BNPL’s popularity, the most preferred payment method in Germany is PayPal when it comes to buying from domestic and international retailers.
In Austria, over a third of online purchases are made using a mobile device and this number is expected to steadily rise. This leaves plenty of room for growth. And like many other European countries, eWallets are quickly growing in popularity here too. Yet BNPL and PayPal are both very popular in Austria, similar to neighbouring Germany. This makes them essential payment options for online merchants. And as many Austrians shop on international shops online, credit card payments are another must-have.
And finally, the last of the DACH nations – Switzerland. TWINT is one of the most popular payment methods, which is Switzerland’s very own digital cash service. Consumers can issue payments using their smartphones. Swiss banks are also slowly opening up to Apple Pay, Google Pay and Samsung Pay, but for years TWINT was the only digital payment option accepted.
France: Cartes bancaires
France is home to one of Europe’s largest ecommerce markets, which is both mature and has healthy projections for growth. For payments, cartes bancaires (bank cards, including credit and debit) are the #1 choice. Meanwhile, eWallets such as PayPal are increasing in popularity. This is mainly thanks to its strong security credentials. For more expensive purchases, French consumers prefer to use bank transfers. To do business in France, make sure to offer local payment options such as cartes bancaires, and you’ll be all set for your shop’s French debut.
UK: Digital wallets
Finally, we come to the UK. When it comes to online shopping, the UK is one of Europe’s undisputed champions. The nation alone accounted for nearly a third of total European ecommerce sales in the last year.
For years, card payments (AmEx, Mastercard, Visa) topped the charts as the most popular payment method to purchase goods in the UK. But today, mobile commerce, particularly in-app shopping, is rapidly becoming the norm. Shoppers prefer this method to place their orders easily, securely, and conveniently. Additionally, secure and seamless payment options on social media channels such as Instagram and Facebook can help boost sales too. With in-app shopping becoming so popular, this has resulted in the growth and increasing usage of digital wallets – largely thanks to its convenience. Popular digital wallets in the UK include Apple Pay, PayPal and Google Pay.
Local payment options: A myriad of options, but a simple solution
It’s clear there’s a huge assortment of popular local online payment methods in each European country. Online retailers looking to expand outside of their own domestic market should be conscious to offer the relevant payment method in the market they want to launch in. This can not only grow revenues and sales, but it can also create customer loyalty and retention. While it may seem daunting, you can also use a fast, seamless and flexible payment service provider. A payment service provider can help you offer the most popular payments, a custom-branded checkout that is optimised for conversion, saving you lots of work and giving you time back to focus on growing your business.