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Payment Guides

Local payment guide
Europe

Part 1 of 4 from our local payment guide

Europe's current payment landscape

Stay updated on your customers' spending behavior and preferred payment channels, wherever they choose to shop from. Support local payment methods where they matter, retain happy customers, and improve conversion rates.

Austria

Austria is a small e-commerce player but one that is poised to grow considerably in the coming years. This market expansion will be driven by increasingly ambitious local merchants, rising smartphone use leading to double-digit mobile commerce growth, and the arrival of international digital wallet players seeking to make their mark.

Consumer spending rose by 2.8 percent in 2018, while the labor market has been characterized by falling unemployment and increasing wages.

These two trends are very positive for the e-commerce sector, which is forecast to rise at a rate of eight percent in the period up to 2021. But mobile commerce is the stand-out performer. With growing smartphone usage, mobile shopping is expected to grow at a compound annual growth rate of 16 percent up to 2021.

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Belgium

Belgium is a small market but one that is outward looking when it comes to online shopping. Retailers and payment providers that can provide a wide range of goods, secure payment options and can navigate the country’s sometimes disparate regulations regarding trading, should find success.

The outlook is positive for Belgian e-commerce: disposable income is set to increase in the country in 2020, which should help support expansion in the e-commerce sector in the mid term. This is being driven by employment growth, which is causing competition for labor and is subsequently pushing wages up. In 2018 unemployment fell to 6.3 percent from 7.1 percent in 2017, while consumer spending is also ticking upwards. As a result, the Belgian e-commerce market is predicted to grow strongly, at 8.5 percent per year to 2021.

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Denmark

Denmark’s innovative approach to online payment security, high use of digital payments and an increasingly outward-looking consumer base make it a highly-developed e-commerce nation and certainly one to consider for overseas e-commerce merchants.

Economic growth in Denmark is being driven by private consumption, while rising employment rates are boosting disposable income. This bodes well for the e-commerce sector, which is forecast to grow at double-digit rates over the next three years, driven by mobile commerce and Denmark’s position as one of the leading users of smartphones in Europe.

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France

France is one of Europe’s larger e-commerce markets, marked by a love of discounting and price comparison. Despite this appetite for a bargain, the country is nevertheless still tipped for double-digit growth. Companies with smartphone-friendly shopping experiences and payment options are well-positioned to capitalize on this healthy and mature market, as the mobile commerce boom continues.

The French e-commerce market is expanding at double-digit rates, supported by the strong pace of economic growth in recent years. In 2019, it is expected that an increased adoption of the e-commerce market will continue, boosted by a lower French unemployment rate, now close to nine percent.

However, improvements in employment have not contributed to lift household spending as swiftly as online merchants might hope. In fact, household spending has only increased at a moderate pace in recent quarters, as household confidence declined from a high level. President Macron’s economic measures are business friendly but are yet to show in the World Bank’s Ease of Doing Business Index, where France does not rank among the world’s top 30 most business-friendly countries.

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Germany

With online shopping characterized by bank transfers, high return rates, a love of catalogs and a conservative approach to spending, Germany’s e-commerce sector is undoubtedly influenced by habits formed in the pre-internet era. Merchants that can integrate and adapt to these local idiosyncrasies should find themselves poised to win future business in this major European e-commerce hub.

E-commerce growth is set to expand at a rate of 7.3 percent per year up until 2021, supported by the large size of the German online sector and solid economic growth in the country.

The German economy grew at an above-trend pace in 2018, although quarterly events have been very volatile, for example, unusually cold weather was credited with having a negative impact on economic activity in the first quarter of 2018.

The German labor market continues to improve, with record low levels of unemployment, and wage growth has stepped up strongly, which is supporting domestic demand (and consumer spending in particular). In turn, this is helping to support online sales, which account for around 14 percent of the total European market.

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Ireland

Cards dominate e-commerce payment methods in Ireland, a market boosted by young people’s consumer spending and a willingness for cross-border spending that will attract international merchants;

Gross domestic product growth in Ireland was strong in 2018, assisted by the impact of multinational companies relocating intellectual property assets or patents to the country. The underlying economic indicators remain positive: full-time employment increased in 2018, as did household earnings, both of which will be positive for disposable income and should support the expansion of the e-commerce sector going forward.

Meanwhile, increased consumer spending, particularly among young people, is helping to drive online sales.

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Italy

Italy’s e-commerce activity may be dwarfed by other European countries in our research, but this e-commerce market should not be overlooked. Ready acceptance of emerging payment methods and an outward-looking consumer base willing to spend overseas, are helping to make Italy a dynamic and fast-growing sector.

The Italian e-commerce market is looking to make up for lost time, with the fastest growth forecast out to 2021 of the countries in J.P. Morgan’s Global Payment Insights series.

Politically, however, Italy has experienced a period of uncertainty since the 2018 general election, which has presented consequences for the country’s economy. Ongoing risks stem from credit tightening and lower business confidence as a result of financial markets pressure.

The unemployment rate has fallen to below 10 percent for the first time since early 2012, and inflation is rising at a rate of 1.3 percent year-on-year. Government debt (around 130 percent of gross domestic product) is a major cause of fragility for the Italian economy. Despite some of these opposing factors, e-commerce sales are showing strong growth. This rapid expansion may be due, however, to the sector being noticeably small for the size of the overall economy.

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Netherlands

The Netherlands has made the most of its geographical location and skilled workforce to become a major logistics hub. To compete here, e-commerce players must rival, or better, the high levels of prompt delivery and tailored mobile commerce payment options that are already on offer. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

Despite its modest population size, the Netherlands boasts an e-commerce market that has expanded rapidly in recent years. The economy in the Netherlands is going from strength to strength, driven by private consumption and investment. Gross domestic product increased by 2.9 percent in 2017 and 2.8 percent in 2018, and is forecast to grow by 2.5 percent in 2019.

Employment growth has been solid in 2018, while a tightening labor supply is having a positive impact on wages. These developments are contributing towards an increase in disposable incomes and supporting private consumption growth. In turn, the prospects for e-commerce spending are also positive, with double-digit growth expected up to 2021. The Netherlands has embraced online retail with 84 percent of shoppers using this channel, and smartphones proving a key driver in this buoyant market.

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Poland

The Polish e-commerce market is showing impressive growth, which is unsurprising considering the overall performance of the economy. Gross domestic product growth was 5.1 percent in 2018. The main driver has been private consumption and strong consumer confidence, driven by high wage growth. Slowing employment levels in the economy is reducing this positive growth, however. In this environment, it is no surprise that Poland is forecast to have double-digit growth for e-commerce up to 2021, making it one of the most dynamic European markets covered in our study.

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Portugal

Portugal is a small market, but it is expanding rapidly as the country improves its internet connectivity and smartphone penetration continues to increase. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

Unemployment in Portugal in 2018 fell to 7.1 percent, from nine percent in 2017, while consumer spending has also been increasing. These factors have been supporting e-commerce growth, and the sector is set to expand at a double-digit growth rate up to 2021, making it one of the more dynamic markets in Europe. However, gross domestic product growth is expected to slow in 2019 and 2020, which might have an impact on the retail sector. Despite this, Portugal is on track to be one of the faster-growing European e-commerce markets in 2019, perhaps also as a result of its historical underdevelopment.

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Spain

Although Spain lags some way behind the leading European e-commerce markets of the UK, Germany and France, positive signs do exist. As payment options increase and products arrive faster than before, this highly mobile commerce-enabled market looks set to evolve to become a serious rival to Europe’s top three. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

The Spanish e-commerce market is one of the fastest-growing countries in our series*, driven by the rapid acceptance of mobile commerce. The wider Spanish economy has been growing at an average pace of three percent since mid 2014, supported by strong domestic demand and the impact of reforms to the labor market enacted in the post-crisis years. Despite solid growth in 2018 however, there should be a slight slowdown in growth to 2.3 percent in 2019.

On the back of an overall positive economic performance, the unemployment rate has fallen sharply to 15.2 percent. Inflation is also recovering quickly, standing at 1.9 percent in 2018. These positive indicators are partly why Spain has been one of the fastest-growing e-commerce markets in recent years. Spain has also made tremendous progress in the ranking tables, which reflect the considered ease of doing business there, elevating Spain as the best ranked southern European country, which should bode well for new e-commerce merchants looking to expand into the market.

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United Kingdom

With its advanced infrastructure and dynamic payments market, the UK is without a doubt an e-commerce market that cannot be ignored, and one that continues to set trends for others to follow. Despite the uncertain political environment, the UK remains the most important e-commerce market in Europe – accounting for a third of sales in the region – with growth being driven by its thriving mobile commerce sector. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

The UK e-commerce story continues to be one characterized by high growth, innovation and dynamism. However, an uncertain economic environment is undoubtedly holding back the sector from even greater success. UK economic growth resumed a two percent pace during the second half of 2018, following a slowdown in the first half of 2018, driven by household spending and exports. Brexit will undoubtedly have a major impact on UK consumer confidence throughout 2019 and the following years thereafter. Beyond Brexit, there are some positive indicators that will support consumer spending going forward. Job growth has slowed but vacancies remain high with limited staff availability to meet the demand for the existing workforce. Wage growth should sustain its shift upwards. The subsequent rise in real income is set to help consumption growth sustain a near two percent pace.

In 2018, UK e-commerce was especially sensitive to seasons, major public events and holidays. In the second half of 2018, consumers had a lower desire to shop following a high-spending period due to the positive sentiment during the UK’s prolonged heatwave, a royal wedding and the World Cup. Despite a brief uplift around the August bank holiday, September sales experienced their lowest growth since 2014, and Christmas was marked by e-commerce merchants attempting to entice shoppers by starting their discounting well before the traditional Boxing Day sales.

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