Alternative eCommerce: How Far Has Europe Come?

Alternative payments are consistently expanding across online economies around the world. A recent report from WorldPay, who recently announced completion of Visa EMV acquirer testing, revealed that alternative payments account for 22 percent of all global eCommerce transactions: a value amounting to €165 billion. But how much of this growth can be attributed to European consumers? PYMNTS.com takes a look at the study, which focuses on eCommerce in Europe and the role alternative payments has played in the payments revolution.

Alternative payments can be deemed any untraditional payment that excludes cards and cash. Alternative methods can include credit transfers, mobile payments and digital wallets. Around the world, eWallets rank as the most commonly used alternative payment at 36 percent, with paper-based coming in second with 22 percent and offline credit systems at 20 percent.

WorldPay noted that the choice of alternative payment is highly dependent on consumer culture and varies greatly per region. Europe is a large region with ranging diversity, and consumers across the continent have reported a lack of alternative payment awareness. WorldPay reported that the majority of European consumers use cards to conduct online transactions. There are copious amounts of payment options available in Europe, but many Europeans still lack the knowledge and awareness to fully embrace new payments tech.

The majority of the UK, which represents one of the strongest and most mature eCommerce markets in the European economy, still opts to use card payments. Alternative payments account for just 11 percent of eCommerce sales in the UK, with PayPal owning half of the market. The UK was one of the leading countries in Europe to adopt cards when they were first introduced. The banking infrastructure was well established and consumers were provided with extensive knowledge about the new products, making the transition to plastic easy.

While UK has been slower to acclimate to new payments, other European markets, namely Germany and the Netherlands, have shown growing adoption. Germany’s eCommerce market attributes 66 percent (€45 billion) of transactions to alternative payments. Most of these payments are done through bank-managed offline credit transfers.

The Netherlands’ eCommerce market is also dominated by alternative payment methods, with many consumers using a real-time bank payment method, called iDEAL. WorldPay reported that 89 percent of Dutch consumers were aware of iDEAL and its services. WorldPay claimed the consumer awareness was a crucial part to Netherland’s high adoption rate.

The insight report concluded that 61 percent of online consumers trust websites that offer more variety for payment. As the payments industry continues to mature and offer more payments, WorldPay reported that European merchants will need to integrate consumer awareness tactics to increase adoption of alternative payments for the future.

To read the full WorldPay report click here, and for The Integrated Retailer article click here.