Leverage European Consumer Shopping Payment Preferences

By Carl-Olav Scheible

Unlike the United States--one economy with one language, one currency and similar shopping habits--the "United Europe" remains far from homogeneous. Language and cultural differences remain, and despite the introduction of the Euro, multiple currencies exist, and shopping and payment habits differ.

Online payment preferences aren't much different from those in the physical world. Online consumers want to choose between familiar payment methods, including bank funding (transfer or debit) or card-based payments (credit or debit). They also want to use their chosen payment method in a safe and convenient manner everywhere they shop.

COMPARING COUNTRIES
Across Europe, local consumer and retailer habits have emerged partly because of the distinct set of payment instruments preferred in each country. In the UK and France, cards dominate both online and offline, although UK cards are credit based, while France's are predominantly debit cards. The French consumer is also a heavy check user. In Germany, there is a distinct preference for bank-based payment instruments such as direct debit and credit transfers. In Southern European countries including Spain and Italy, a significant portion of e-commerce transactions get settled by cash-on-delivery.

If payment preference is one of the biggest challenges facing European e-commerce, security and convenience are two others. Many consumers understand the need to provide credit card and personal details online. Yet, the process is cumbersome and many are concerned about fraud and misuse of personal information. Bank transfers and checks may be convenient to some, but there can be significant delays before funds are cleared or confirmed. In Germany, direct debits expose the retailer to a high level of risk and while the debit card is a popular electronic payment instrument in Europe, outside of the UK it is not broadly enabled for online usage.

Only by integrating popular and familiar payment methods from the various European countries into one account-based payment system is it possible to overcome this patchwork of European payment preferences. In an account-based e-mail transaction, consumer and retailer choice and preference, both domestic and cross-border, are respected, while at the same time consumer security concerns are addressed since personal and financial information are not shared. Besides security and convenience, the popular two-click payment process of an account-based system also drives higher incremental sales for merchants by reducing the hassle for consumers and speeding them through the purchase. Account-based payments are the only way that a UK website can efficiently and instantly receive a German-initiated bank transfer or a payment from a French debit card holder. It is also the only way for that German or French consumer to buy from that UK website, using their preferred local payment method.

Lastly, an account-based payment provider enables consumers to pay by their preferred payment method without sharing their financial information.

Carl-Olav Scheible is managing director of PayPal UK Ltd. He can be reached at +44 208 605 3190, or via e-mail at cscheible@paypal.com.