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31 Oct 2024 Article

How Consumers Pay Online in 2024: Essential Information for Merchants

How-Consumers-Pay-Online-in-2024_-Essential-Information-for-Merchants

In today’s hyper-competitive e-commerce world, understanding consumers’ needs, preferences, and behaviour has become more critical than ever. This is particularly relevant to their payment preferences, which can change radically depending on their culture and geographic location. 

To help merchants overcome these issues and educate them on payment preferences, Brite wanted to determine how consumer payment preferences differed across Europe. 

With that goal in mind, Brite Payments conducted a study early this year in association with YouGov, surveying six key European payment markets to comprehensively analyse customers’ payment preferences in these regions.  Below we analyse those payment preferences as part of our recent Payment Insights 2024 webinar:

In this article, we’ll examine some of our key findings, focusing on consumer payment preferences in greater detail. We’ll also explore the opinions and views of Gen Z consumers and discuss our prediction for the payment industry in 2025. 

Online Payment Methods

Let’s first examine how customers in the UK, Germany, France, Spain, Italy, and the Netherlands felt about the various online payment options currently available to them. 

Debit cards

Based on the survey responses, debit cards are still the daily driver when paying online. They are the most-used online payment method for daily and weekly usage. Indeed, 34% of Spain and 20% of the UK use debit cards daily.

This can be attributed to their longevity. Having existed before the Internet, Debit cards have since become a habitual method of payment. Furthermore, most merchants in those European markets will accept debit card payments, which makes them even more appealing to online shoppers. 

Credit cards

Meanwhile, Brite found some consistency in credit card usage across all service markets. In France, the combined daily and weekly credit card usage was 40%, while credit cards are a prevalent payment method in the UK. 

However, the Dutch and Germans are the most credit card averse, with 44% having never used a credit card online. This suggests that merchants targeting shoppers in those nations would do well to consider adopting alternative payment methods into their systems. 

Buy Now, Pay Later

Buy Now, Pay Later is a payment that Europeans still seem sceptical about . 

For example, Brite has found that a whopping 79% of French participants have never used this payment method before, suggesting that it is of less concern to Europeans generally. 

Buy Now, Pay Later is a payment method that helps merchants improve conversion rates by attracting customers with its inherent flexibility and security. However, BNPL also has the knock-on effect of increasing the rate of refunds and conversions.

Digital Wallets

Meanwhile, digital wallets like PayPal tend to be popular in Europe, particularly in the Netherlands and Germany. For instance, Germany has the highest proportion of consumers who never use a debit or credit card to pay online. Yet, 53% of consumers use digital wallets at least once per month. 

One reason is that many German digital wallets are already attached to preexisting and long-established websites and marketplaces, such as eBay, which has made them well-established in these nations. However, in other countries where this is not the norm, the adoption of digital wallets has been lower—although they are beginning to gain some traction. 

Pay by Bank

Perhaps the biggest and most exciting of the newly emerging payment trends is the appearance of Pay by Bank as a payment category at checkouts. You can read more about what Pay by Bank is and how it relates to account-to.-account payments in our Pay by Bank explainer.  

Indeed, according to Brite’s research, Pay by Bank has emerged as the second favourite payment option in Europe. However, its usage varies by region, with 84% of the Dutch using it at least monthly, compared to a mere 28% of the French. 

Instalments

Finally, Brite’s study found that instalments were the least-used online payment method across all nations. This low rating is theorised to be due to a combination of high interest rates and usurpation from BNPL.

How payment preferences differ across four European

So, with the above in mind, what are some of the biggest differences in opinion between European customers when it comes to payment preferences?

United Kingdom

Firstly, in the UK, credit card usage was the highest of all surveyed markets, with 53% using it at least once monthly online. The biggest reason for this is purchase protection, with 45% of Brits claiming this is why they use cards. However, consumers are increasingly seeking alternative payment methods that are more convenient, safer, and less vulnerable to fraud. Merchants are struggling to keep up with technology, with Apple Pay and Google Pay contributing to the card-heavy checkout. 

France

France is the top market for credit card usage, with 62% using it at least monthly. France is dominated by its banking community, which attaches itself to payment methods like cards, credit, and debit. France has a unique footprint in card payments with Corpbanca Bleu, and consumers are generally more accustomed to card usage. 

The Netherlands

In the Netherlands, Pay By Bank has emerged as the most popular method of payment, with 60% of participants claiming to use it on a daily basis, while 90% use it bi-monthly. This widespread adoption can be attributed, in part, to government promotion — with the Dutch parliament valuing its high security. For example, the Dutch payment method iDEAL is an online allows consumers to pay via their own bank.

Germany

Meanwhile, Germany has the highest proportion of consumers who never use debit or credit cards to pay online — with 53% never using credit cards, and 33% never using debit. But Germany has a notable preference for digital wallets, with 21% using them on a weekly basis. There have been changes in card usage in Germany due to COVID-19 and the desire for control over money usage. 

Generation Z payment preferences and how to cater for changing habits

It’s easy to look at the above statistics and believe they will always remain the status quo. However, consumers are changing, and so are their preferences. The wants and needs of young people will determine the future of the payment landscape. So, what were some of their responses? 

First of all, younger people in Europe prefer digital wallets, such as  PayPal and Apple Pay, as well as Pay by Bank, to other methods of payment, as they are more open to trying new things. 

Commenting on this issue, Brite Payments Chief Commercial Officer Luke Trafford states: “The need for optionality is paramount. So, it’s finding that balance or that blend between offering enough to compensate for the different needs of those users … [But] not having too many so that it becomes overwhelming and there’s too many options.”

Furthermore, merchants should help users understand the benefits of choosing a particular method, offering discounts or loyalty programs to help them select a payment method that is beneficial to both consumer and merchant. It will be interesting to see how these preferences change over time as the Gen Z community grows.

Sustainable payments are also a matter of prime importance. The younger generation is more responsible and pro-environment, and they prefer online payment methods. Security, ease of use, and speed are the top reasons consumers choose online payment methods. 

Customer support is crucial for merchants, as it impacts operational topics later on. Pay by Bank solutions offer anonymity and don’t require sensitive data, making them popular among older demographics. 

The younger demographic desires convenience and security but still encounters issues like: 

  • Creating an account 
  • Using an app
  • Too many steps or redirects

Therefore, merchants should step up and address these issues to improve customer conversion and avoid friction. Small details like correct payment presentation, checkout naming, and testing user experience can help. 

This is why choosing a payment partner who supports and educates merchants and keeps them up-to-date on changing consumer behaviour can help ensure a stable process and smoother conversion for customers. 

Predicting the perfect payment mix for 2025

So, given the European payment landscape, what forecast can we make for the year ahead? 

Merchants are trying to find a balance between reducing costs, increasing conversion, and increasing revenue, and more payment options can seem like a quick and easy road to profits. 

Commenting on this, Luke states: “My take is that merchants are trying to reduce costs but also increase conversion and increase revenue. So, it’s trying to find that balance. And I think adding more payment methods is one way of looking at it, but also being really selective about presenting certain payment methods to certain users.”

Going into 2025, therefore, merchants should be more discerning and selective about what methods they choose to integrate and make an informed choice based on what their customers truly want. 

Next, Pay by Bank options within online checkout are expected to increase. We predict increased adoption by retailers and platforms and growth in Europe and the UK by the end of 2025. EU regulation will also force banks to enable instant payments free of charge, which will fuel the process even more.  

Finally, more and more customers are becoming more sensitive to their personal data and financials, making them happy to pay instantly or immediately without taking credit.

Conclusion

As the European payment landscape continues to shift, online merchants must adapt to suit the needs of their consumers while staying up-to-date with changing trends. 

Brite Payments constantly shares insights on the state of the European payment landscape and the global payments industry. So, if you want access to more payment insights or explore how Brite Payments can support your payment needs, visit our resources page to learn more now.

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