Understanding Europe's Payment Culture

Ines Petersen

Online transactions are now an integral part of everyday European life. But while a few years ago everybody reasonably expected the rise of the Internet to bring European payment behavior closer in line with the U.S. or at least align across Europe, it remains as diverse as it ever was across the continent.

And while from the perspective of the Northern American merchant, all E.U. payment methods fall into the range of “Alternative Payment Methods”, each and every country has its own primary payment method which in most cases is not credit card.

To be successful in Europe it is important to understand that for decades payment culture in each country has developed independently — and despite the fairly recent roll out of SEPA, the Single Euro Payment Area — continues to do so.

Considering that Europe consists of approximately 50 countries and more than 25 different languages it is no surprise that each and every single country has its own payment culture as well as alternative payment methods, of which many of them unfortunately do not accept adult industry merchants.

Card payments continue to lead in those countries that either have a very similar credit card culture to the U.S. or where, like in France, debit cards were integrated with MasterCard or Visa early on. To unlock the full potential of the European market, just looking at the U.K., Ireland and France and say, “Well, everyone has and loves using credit cards” will only get you so far.

Some countries, most noticeably Germany, maintain cash cultures and translate this to the online world by preferring direct debit (SEPA — Single Euro Payments Area) or electronic fund transfer. Others have developed highly localized payment systems, like iDEAL in the Netherlands, Przelewy24 in Poland and SO-FORT. These are the closest methods to what most of the European Consumers know best: Their banks!

Most of the alternative methods across Europe have been developed using the bank account as the core of their systems and bank accounts do not expire, which adds another advantage to alternative methods. Especially if you are offering recurring memberships. It is no “miracle” to see some memberships recur over years, just because someone forgot about it.

There is a recent trend for prepaid cards, which are seen as a great alternative for micro transactions. Prepaid cards of course remove the low key age verification offered by traditional cards. Sometimes, not even registering your details is required.

An additional key to unlocking the hearts of European consumers is localization: While most people across Europe are fluent in English, even in countries where that fluency is at a near-native level and credit card penetration is high, international companies are shunned just because people are fed up with the expectation they will understand English and don’t need to be addressed in their native language.

Consumers have so many options that sometimes a “Välkomna!” (Swedish for welcome) can make all the difference in convincing them your site is where they should spend their hard earned and highly taxed income on.

While payment providers like PayPal are successful in Europe, it is becoming obvious that an established name is not all you need. Apple Pay was only recently launched in the U.K. and even there wasn’t met with nearly the same enthusiasm by banks (and consumers) as it was when it premiered in the US. It is largely concerns about privacy, where their data is stored and who can access it that drives people away from these services.

To be successful in Europe it is important to understand that for decades payment culture in each country has developed independently — and despite the fairly recent roll out of SEPA, the Single Euro Payment Area — continues to do so.

Just offering credit cards is simply not enough. Even as more and more people across Europe actually have credit cards, there is still reluctance using them, especially for recurring payments. And keep in mind — to the European consumer, they are primary methods and not alternatives.

The market is there, you just need to educate yourself about how to tap into it.

Overall, the usage of alternative payments is rapidly increasing in Europe. According to the World Pay report, 61 percent of online shoppers have greater confidence in a website that offers them a choice of payment methods.

This is why it is crucial for you as a merchant to understand regional payment behaviors and add an intelligent mix of alternative payment options to your join pages.

Ines Petersen has worked in every aspect of online e-commerce for more than 15 years, with her main focus on program/billing development and management and traffic generation. For more than 10 years she has specialized in international billing and traffic conversion, specifically focused on targeted conversion of European consumers and alternative billing options.