All posts

A guide to alternative payment methods in Europe

James Hayward
Content Marketing Lead

Europe is home to a vibrant and contrasting payment landscape. While the use of cards is pervasive across the continent, that's where the similarities end. Consumer payment habits and preferences are highly localized, with consumers using a vast array of online payment methods in Europe.

Let's dive into the popular payment methods in Europe. We'll also explore how merchants can use alternative payment methods in Europe to enhance the customer experience and boost sales.

What are alternative payment methods?

Alternative payment methods are means of paying for goods or services other than a traditional credit or debit card or cash payment. Here are a few of the most common forms of alternative payment methods used in Europe:

  • Mobile wallets such as Apple Pay and Google Pay.
  • Digital wallets like PayPal.
  • Direct bank transfers such as Giropay and iDEAL
  • Buy Now Pay Later services like Klarna and Clearpay
  • Local card schemes like Cartes Bancaires and Bancontact

The evolution of payment methods in Europe

The payment landscape in Europe has undergone significant transformations since the start of the century. We've witnessed the fintech sector's explosive growth, giving birth to many new payment methods, such as Klarna. Additionally, substantial regulatory changes, including the introduction of PSD2, have set the stage for Open Banking payments throughout the continent.

The surge in ecommerce runs parallel to these shifts, establishing Europe as a thriving hub for the digital economy. Today, consumers in Europe have a diverse array of payment methods at their fingertips, including digital wallets, payment cards, mobile wallets, and Buy Now, Pay Later (BNPL) options.

According to a 2021 survey of European consumers, digital wallets are among the most preferred online payment methods (44%). Cards closely follow (42%).

However, adopting a one-size-fits-all approach to payments across Europe would be unwise. As we'll explore in the following section, Europe's payment landscape is highly fragmented, requiring merchants to take a localized approach to cater to differing consumer payment preferences.

Online payment methods across Europe

Europe boasts a rich tapestry of payment methods, each influenced by localized preferences that hold sway in the region. Even though the Euro ties many countries together, distinct differences emerge in each nation's most favored online payment methods.

Let’s take a closer look at some of the countries in Europe and their payment landscapes.

Payment methods in France

France is the home of an enormous ecommerce market. It's also home to one of Europe’s most popular local card schemes, Cartes Bancaires (CB). These cards often sport co-branding with Visa and Mastercard. Studies indicate that nearly 60% of shoppers in France favor paying with credit or debit cards.

Beyond card payments, the same survey highlights the growing prominence of digital wallets like PayPal, accounting for 32% of online purchases. Mobile wallet usage is on the rise. Experts project that BNPL payments will experience substantial growth, with an annual increase of 57% in the coming years. These stats underscore how France's payment landscape is evolving to accommodate a broader spectrum of preferences and methods.

Payment methods in Germany

Just a short trip across the border to Germany, we encounter one of Europe's most diverse payment landscapes. Here, the use of cards is relatively sparing. German consumers lean towards SEPA direct debit, SOFORT, and Giropay, which collectively dominate the online payment scene.

Germany's consumer preference to pay using open invoices is also unique, closely mirroring how many B2B payments are conducted. In essence, consumers settle their payment after receiving the goods they've ordered online. This payment method is particularly popular in the online fashion sector.

Meanwhile, PayPal and BNPL serve as other popular payment options. BNPL’s rapid growth is unsurprising, considering it essentially offers an alternative to the open invoice payment method. In summary, the German payment landscape reflects a diverse mix of choices and preferences and is one of the most tricky for merchants to navigate.  

Payment methods in the Netherlands

The undisputed leader in ecommerce payments in the Netherlands is iDEAL, a domestic bank transfer system. Consumers made 83% of ecommerce transactions using iDEAL in 2021, demonstrating high consumer trust in this alternative payment method.

Digital wallets also hold a significant share in the Dutch payment landscape, constituting 28% of online purchases. Among these, Apple Pay and PayPal stand out as the most common.

Payment methods in Italy

In Italy, credit cards are consumers' preferred online payment method, making up 41% of transactions. Following closely behind are digital wallets, accounting for 25% of online purchases. Cash on delivery is popular in Italy, representing 12% of transactions.

Buy Now, Pay Later (BNPL) services had a slow start in garnering interest among Italian shoppers, with only 2% of online transactions utilizing this method in 2020. However, the landscape is changing. Research indicates a substantial increase in the BNPL gross merchandise value in Italy, projected to surge from $4,094 million in 2021 to $25,988 million by 2028.

Payment methods in Spain

A 2022 survey found consumers used debit cards for almost two-thirds of ecommerce transactions in Spain. In the same year, 55% of consumers used PayPal at the checkout, and 25% used credit cards. Regarding mobile wallets, Spanish consumers favor Bizum, an instant mobile payment solution developed by the national banks.

Payment methods in the United Kingdom

Debit card usage in the United Kingdom surpasses that of other European regions, with approximately 90% of the population being Visa or Mastercard cardholders. These cards play a significant role in facilitating digital payments.

Alternative payment methods have a significant role to play as well. Merchants in the UK must offer mobile wallets, notably Apple Pay and Google Pay, as they are ubiquitous. BNPL is also popular, with 36% of Brits having used BNPL at least once. Open banking payments are also gaining popularity, although they account for a small fraction of payment volumes overall.

Interested in learning about alternative payment methods in other regions?

Why should businesses offer alternative payment methods in Europe?

Providing a range of payment options has become a strategic decision laden with many advantages.

  • Enhance the customer experience: Meeting local payment preferences improves customer satisfaction and checkout conversion rates.
  • Streamline the checkout process: Offering alternative payment methods reduces friction, decreasing cart abandonment.
  • Entice new customers: The ability to pay with preferred methods impacts consumers' choice of online businesses.

Learn more about why multiple payment methods are a game-changer for your business.

How Primer helps businesses unlock new payment methods in Europe

With a new understanding of the benefits of offering alternative payment methods in Europe, you’re probably thinking about how you can implement this for your online business.

At Primer, we've developed a low-code solution that enables the addition of new payment methods in just a few clicks. Our Universal Checkout allows easy customization based on local consumer payment preferences, helping businesses expand their customer base.

Final thoughts

European consumers' payment habits and preferences vary significantly. Market research and adaptation of payment options to specific needs and preferences are essential for businesses operating in European countries and regions.

Discover how Primer enables new payment methods in under one week. Allowing your business to scale fast.

The smartest payment decision you’ve ever made

Connect your favorite payment and commerce services, create beautiful customer journeys and expand into new markets fast.

Head of Payments