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Payment in European e-commerce: Flexibility pays off

by Editorial Office

The Corona pandemic has significantly changed the payment behavior of Europeans – not only in stationary retail, but also in e-commerce. The payment methods used by online shoppers vary according to target group, shopping habits and country. Using specific examples, we reveal which local trends and current payment preferences dominate in Germany, the UK, and France. Further, we explain how you can avoid purchase cancellations with the right choice of payment options.

Avoiding purchase cancellations by offering a broad payment portfolio

Not surprisingly, customers prefer to order where they can pay for their goods the way it suits them. According to the conclusion of the study “Success Factor Payment – The Influence of Payment Methods on Sales” conducted by Ibi Research, consumers that do not find their preferred payment method in the checkout often abandon their purchase. In the worst scenario, the customer then turns to the competition, which is always just a few clicks away. To avoid these purchase cancellations, internationally operating companies should offer as many different payment methods as possible. They can thus virtually eliminate purchase cancellation rates which are due to a lack of payment methods, summarizes Ibi Research in its study.

Find out here which specific payment methods should not be missing from your country-specific portfolio in the e-commerce nations of Great Britain, Germany and France:

Payment in Great Britain

PayPal leading the way

Worldpay’s “Global Payments Report” for the year 2021 shows how fast digitization has progressed in the UK market as a result of the COVID 19 pandemic and how rapidly payment behavior has changed, as well. Industry experts predict that by 2024, more than 20 percent of all purchases in the UK will be made over the Internet.

A look at payment methods shows that most Britons prefer to pay for their online purchases using PayPal, according to Worldpay. The advantages are clear: increased security, low fees and high convenience.

Debit and credit cards still very popular

Although alternative payment methods are on the rise, debit and credit cards are not likely to disappear anytime soon. According to the “Global Payments Report,” they rank closely behind PayPal – as the second and third most popular payment methods for online shopping in the UK.

Buy Now, Pay Later – the fastest growing payment method

However, a new payment option is on the rise: the study found that BNPL (Buy Now, Pay Later) is currently the fastest growing payment method in the UK. This trend is expected to continue in the near future. Estimates suggest that BNPL services will see annual growth of around one-third (29 percent) and double their market share by 2024. Internationally operating merchants looking to gain a foothold in the UK would be well advised to offer a mix of PayPal, BNPL and debit cards to meet current UK payment preferences.

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Payment in Germany

Mobile payment on the rise

Since the start of the pandemic, cashless payment has become more than ever a part of everyday life for Germans. Although paying bills via smartphone is still in its infancy in Germany, 16 percent of Germans already use mobile payment, according to the online survey “Visa Mobile Payment Monitor 2021”.

In view of the convenience and fast handling, mobile purchases are increasing not only in stationary retail, but also in e-commerce. In the meantime, 62 percent of respondents have purchased goods or services on the Internet at least once using a mobile device, according to the results of the current Visa study. In the previous year, the figure only amounted to 55 percent. However, there are differences between the age groups: While 85 percent of 18- to 35-year-olds have already paid using a smartphone, only 33 percent of those over 60 have done so.

Purchasing on account is most popular

Offering just one payment method in the checkout is no longer sufficient in order to remain competitive. Internationally active retailers should therefore include a wide range of payment methods in their portfolio for German consumers.

Most popular with German online shoppers are the following types of payment: Purchase on account, PayPal, direct debit and credit card, as the EHI study “Online Payment 2021” revealed. Purchase on account is particularly in demand, leading the ranking. In 2020, 30.4 percent of e-commerce sales were generated by this payment method, according to the EHI institute. One possible explanation for the popularity of purchase on account is the increased number of new customers who have migrated from stationary retail to e-commerce due to the Corona pandemic. In addition, with this payment option, the company gives its customers the benefit of the doubt – whereas every other payment method requires the buyer to make an advance payment. After all, German customers want to try on or test the goods first before paying the bill. This payment option is particularly useful for retailers in the fashion industry.

PayPal and direct debit in Germany

Because of its fast and uncomplicated payment process, PayPal ranks second among the payment methods with the highest sales in Germany, according to the EHI study. Based on the findings, this online payment service was among the most frequently offered payment methods in the check-out in 2020 and was offered by almost 96 percent of the top 1,000 online stores as part of the payment mix.

Even though direct debit’s share of sales declined from 17.9 percent in the previous year (18.3 percent), it is still one of the most popular payment options among Germans. A decisive reason for the high direct debit share of the overall market is the e-commerce marketplace Amazon, according to the Cologne-based research and education institute EHI. The online platform generates one-fifth of e-commerce sales, says the study, and it relies primarily on direct debit and credit card payments in the payment mix. For this reason, Amazon’s figures are particularly significant.

Payment in France

Mobile payment share is growing

For a long time, the French mainly shopped on French websites and paid with cash cards. But according to “France 2021: Ecommerce Region Report,” their habits are now changing. Electronic and mobile payment methods are gradually gaining ground against traditional cards. Mobile payments have tripled during the pandemic, according to the report.

Card payments remain favorite payment method

Still, cards top the list of payment methods offered at France’s 500 largest online stores, followed by e-wallets such as PayPal and bank wires. Industry experts believe that alternative payment methods such as PayPal will displace traditional card payments. However, the report also shows that Visa and Mastercard still account for the majority of payments. Internationally active companies must continue to keep a close eye on the French market in order to be able to respond to the individual requirements of French customers.

Payment in Europe

In order to generate more growth and sales on the European market and to offer potential customers the most flexible and smoothest possible shopping experience, retailers should offer a broad portfolio of different payment methods – and customized ones at that.

This is because, despite many commonalities, the European market is very heterogeneous. Internationally active retailers are therefore well advised to take a close look at their respective target markets and adapt their payment options to suit the target country, the products offered, and the target group.

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