Examining eCommerce & Mobile Payments in Europe’s Largest Markets
Collectively, the European eCommerce market is substantially bigger than that of the US and Canada, with nearly 100 million more shoppers. However, despite their proximity to one another, there is a great range of diversity among those consumers—diversity that would be missed by a collective examination.
By comparing several of Europe’s largest eCommerce markets and their relationship to developing payment technologies, merchants and industry figures can piece together a much clearer picture.
UK eCommerce Closely Parallels US
At present, the United States is the world’s second-largest market for eCommerce, behind only China. US consumers spent roughly $595.1 billion online in 2015, and preliminary figures suggest that total grew by roughly 12% in 2016, reaching $666.5 billion.
The UK came in third, with projected eCommerce sales of $187.4 billion in 2016. Although that’s less than 1/3 of the amount generated by US consumers, the UK shows a great deal of promise as a continued global leader in eCommerce. According to data published in 2016, eCommerce represented roughly 6.12% of British GDP—the highest figure in Europe, and nearly double the US GDP share of 3.32%.
UK consumers are also very open to the prospect of FinTech adoption. Nearly 75% of UK consumers surveyed in late 2016 claimed to use mobile payment technologies and other FinTech services regularly, while 10% regularly made in-store mobile payments. Among UK consumers aged 18-35, though, one in four are regular users of in-store mobile payments. This is very comparable to US adoption rates, making the UK the clearest analogue for US merchants.
French Consumers are Reluctant to Embrace Mobile
While mobile technology adoption is growing fast in the UK, as well as in many other countries at all phases of economic development, many French consumers remain skeptical.
Nearly 50% of French consumers would consider using mobile payment technology to conduct a transaction valued at under €20. However, that number drops by nearly half for higher value transactions, and halves again for any transaction above €100. This suggests while French consumers are somewhat curious about mobile technology, the majority do not really trust payment apps and FinTech, preferring more traditional payment methods instead.
That degree of skepticism could be the result of consumers’ unfamiliarity with the technology. At present, just 6% of French buyers take advantage of in-store mobile payments. This mimics initial patterns of mobile adoption in the US, where mobile payments didn’t catch-on until consumers developed confidence in the technology’s security.
Today, 33% of US consumers define themselves as "mobile reliant,” with an equal number having made as many as four mobile purchases in the last 30 days.
Germans Shun In-Store Mobile, but Embrace it Online
In most parts of the world there is a correlation between the adoption of in-store and online use of mobile technology. As Visa UK & Ireland Managing Director Kevin Jenkins commented, “The uptake of contactless cards has made a significant impact on normalizing digital payments in the minds of British consumers, regardless of age.” The same is true of US consumers, but Germany appears to be an outlier regarding that rule.
The data suggests that German consumers are just as skeptical of in-store mobile payments as French, with just 4% of German mobile device users embracing the technology. At the same time, Germans were early adopters of several alternative online payment methods, including online bank transfers enabled by the SEPA Initiative, SOFORT, and digital debit services like Giropay.
In all, only about one-in-four online transactions made by German consumers involve traditional card-not-present transactions. This is very different from the situation in the US and Canadian markets, where roughly 99% of all transactions still involve one of the four major card networks (Visa, MasterCard, Amex or Discover) or PayPal.
Spain Projected for Rapid Growth by 2020
Although still recovering from the last decade’s financial turmoil, Spain has seen robust growth over the last few years, and is now the continent’s fourth-largest eCommerce market. Many experts see great potential for the Spanish market, with eCommerce sales in the country potentiallytripling between 2015 and 2019.
As the Spanish economy continues to recover and grow rapidly through at least 2018, merchants can anticipate seeing increasing interest from Spanish consumers. However, much of that interest will be through alternative payment methods.
Much like Germany, where only 25% of online transactions involve traditional payments, merchants can also anticipate that eCommerce in Spain will be dominated by alternative payments. Though still young, technologies enabling direct bank-to-bank transfers such as iupay, Orange Cash, BBVA Wallet, and Caixa Wallet will grow fast in this environment.
Russians eCommerce is “Mobile-Native”
Although higher than some European nations including Italy, Greece, and Portugal, internet penetration in Russia remains lower per capita than in France, Germany, Spain, and the UK at just over 71%. Still, Russia is one of the continent’s largest eCommerce markets owing to its comparatively large population.
What stands out in the case of Russia compared to most of Western Europe is the exceptionally-high rate of smartphone adoption compared to desktop users. While the groundwork for eCommerce was laid in Western Europe and the US by desktop and laptop users, smartphones were the first device for a much larger share of Russian consumers. Thus, the FinTech developments to which Western Europeans and Americans are still adopting were integrated seamlessly into the Russian market as it developed
Analyzing Trends Reveals Additional Earning Potential
The global eCommerce market is expanding rapidly, introducing immense earning potential for enterprising merchants.
Those willing to dedicate the time to analyzing trends and consulting region-specific expertise will be able to enter markets with an equitable balance of risk and reward.
Monica Eaton-Cardone is the COO of Chargebacks911, the world’s leading risk mitigation and chargeback management firm. She specializes in helping online merchants optimize profitability with risk reduction, agile process design, and revenue recovery. Eaton-Cardone, a well-known author and speaker, is also a long-time member of the ERA who plays an active role in helping advance the organization’s mission. Connect with Monica Eaton-Cardone on Twitter or LinkedIn.