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  • Jozef Gajdoš

Choosing the Right Alternative Payment Methods for eCommerce Expansion in Europe


Expanding your eCommerce business to new countries entails more than just understanding cultural and market dynamics. A significant part of your success will hinge on how well you adapt to local payment methods. Each country has its preferred systems, which may differ from what you’re used to in your home market. In this article, I’ll explain the alternative payment methods in five key European markets: Germany, the United Kingdom, France, Italy, and Spain.

Germany

Germany is the fifth largest market for eCommerce worldwide. According to predictions, the market’s revenue will expand at a compound annual growth rate (CAGR) of 8.1% from 2023 to 2027.


When it comes to online payments, German consumers prefer APMs. According to a survey conducted by Statista in 2022, around 91% of respondents use PayPal. Klarna ranked second with 50%, followed by Amazon Pay with 28%. Interestingly, Apple Pay (15%) and Google Pay (14%) are not so popular in the country.


Klarna seems to be the right choice especially if the target group of your products or services includes the younger generation. 45% of Gen Z (born between 1995 and 2012) and 43% of Millennials (born between 1980 and 1994) use the BNPL (Buy Now, Pay Later) function of Klarna.


Read my article to find out more about the types, benefits, and reasons for the adoption of alternative payment methods.

United Kingdom

Revenue of the 4th largest market for eCommerce is expected to grow at a CAGR of 7.8% in 2023–2027, reaching a predicted market volume of US$190,274.5 million by 2027.


In the UK, 66% of online shoppers pay with a debit card. Online payment services such as PayPal and Amazon Pay ranked second with 58% and the third place went to direct debit (57%).


Approximately one in eight people in the United Kingdom (12% of adults) used BNPL services to make a purchase in 2021. This number tripled by 2023, when one-third of Brits (36%) used this type of service. Klarna downloads were lower than those of PayPal in 2022, but the gap between the two apps was narrowing.


Choosing the right alternative payment method on tablet.

Spain

Revenue is estimated to rise at a CAGR of 9.9% between 2023 and 2027, resulting in a market volume of US$47,486.6 million by 2027. The country is also the 16th largest eCommerce market.


A 2022 study by Rapyd revealed that 67% of respondents use PayPal for online checkouts, making it the most popular online payment option in Spain. This APM is followed by bank cards, with 51% using credit and 40% using debit for online transactions. eWallets, Apple Pay, and Google Pay are also becoming more popular, with 15% and 14% of people in Spain using them recently.


Buy Now Pay Later services are becoming an increasingly popular ecommerce payment method in the country. With 14 million users and almost 320 million payments processed, BIZUM is a local payment method gaining traction. We just implemented BIZUM in the Mobile Payment SDK for PagoNxt (Santander) as well as Zinia, which is another BNPL method from Santander.

France

Its predicted revenue of US$78,221.7 million by 2023 makes France the 7th largest eCommerce market in the world. By 2027, its revenue is estimated to rise at a CAGR of 7.9%.


According to a report by ACI and The Paypers, bank cards (80.1%) were the most used payment method in 2021, followed by eWallets (11.5%). The eWallet landscape includes local providers such as PayLib, Lydia, and Lyf, as well as global players, e.g. PayPal, Apple Pay, Google Pay, and Amazon Pay.


BNPL services were also growing in importance. 19% of French paid in monthly instalments at least once a month in 2019. By 2021, 32% said they would want to be able to pay in instalments more frequently in the future. Significant services are solutions by:

  • local banks – 3x 4x Oney, Floa

  • local startups – Alma, Pledg

  • multinational payers – Klarna, Scalapay

Italy

Italy is the 10th largest market for eCommerce in 2023. It is anticipated to reach US$72,753.2 million in market volume. The compound annual growth rate in the forecast period will be 11.6%.


Following the implementation of the ‘Italia Cashless’ plan and the lockdowns, online payments have been growing in popularity since 2020. Online payment services and credit cards are the two top online payment methods in Italy in 2023.


Alternative payment methods that have grown in popularity in recent years include:

  • e-wallets (such as Satispay, Stocard, PayPal, Amazon Pay, Apple Pay, and Google Pay),

  • bank transfers (BancomatPay, MyBank, Nexi, Trustly)

  • BNPL (Soisy, Scalapay, Clearpay, Klarna)

Summary

Alternative payment methods vary significantly, reflecting the unique consumer preferences and market dynamics in each country.


For instance, in Germany, digital wallets like PayPal and Klarna are prevalent, while in the UK, debit card usage is high along with digital wallets. In France, bank cards are preferred, yet the usage of eWallets is growing. Italy has seen a surge in online payments following the 'Italia Cashless' plan, and Spain has a high adoption rate for PayPal.


Expanding your eCommerce business into the European market may seem challenging, but with the right partner who understands local payment preferences, the process can be a lot smoother and more rewarding. Our senior-level team has been developing mobile payment solutions for our European clients for over a decade. Do you think we can help? Let’s talk.

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