Preferred Payment methods by region
North America (the U.S., Canada and Bermuda) is home to over 357 million people with a total GDP of 19.6 trillion USD. There are currently 223 million people shopping online, with 30 million more new users expected by 2021.
As the largest and best developed ecommerce market in the world, the U.S. represents a huge opportunity.
It has a relatively straightforward payments environment, dominated by cards. It’s home to many major international card schemes (Visa, Mastercard, American Express, Discover, and Diners) and so full market penetration can be realized through card acquiring alone. Adyen offers local acquiring in the U.S.
Apple Pay, Android Pay and Samsung Pay have been generating a lot of attention, particularly around mobile payments at the point of sale. Adyen offers a full service Apple Pay and Android Pay solution, including reconciliation, reporting and settlement services.
Canada is the global leader in cross-border ecommerce for retail, with cross-border purchases accounting for 75% of all online transactions. Not surprisingly, most of these purchases are made from businesses located in the U.S.
Credit cards still remain the preferred payment method, followed by Interac. Whilst Interac is a local direct debit scheme, it also supports online banking, which can also be used for online purchases.
Not only are Canadian shoppers exceptionally open to cross- border ecommerce, particularly with U.S. businesses, no local entity is required, even when using Interac, which makes it an exceptionally easy market to enter. Adyen covers all payment methods and has a direct connection to a local acquirer.
Not only are Canadian shoppers open to cross-border ecommerce, but no local entity is required, even when using Interac. This makes it an exceptionally easy market to enter. Adyen covers all payment methods and has a direct connection to a local acquirer.
Europe continues to pursue the goal of a single digital market. This includes the decentralization of financial services and heightened security regulations that will come with the Revised Payment Services Directive (PSD2).
Online retail in Europe is growing exponentially, especially in Southern Europe, where growth is fueled by mcommerce thanks to its young population. But there are still many nuances when it comes to connectivity and openness to cross-border shopping.
According to the Ecommerce Foundation 2017 European Ecommerce Report, connectivity is growing steadily, with 13% growth in the last 5 years. Northern Europe leads the way with 93% online, followed by Western Europe at 89%, Central Europe at 86%, Southern Europe at 71% and Eastern Europe at 66%.
When it comes to cross-border purchases, Luxembourg is in the lead, with 74% buying from overseas retailers. Russia is also emerging as a market open to buying from international sites. And, according to Adyen data, Swiss, Belgian, Irish, Dutch and German shoppers are open to making orders across borders. Spanish shoppers still prefer to shop domestically.
Yet despite the openness of shoppers in countries such as Germany and the Netherlands to shop from international websites, local payment methods dominate. An local entity is not required to accept local payment methods in each market, but you’ll need an entity in at least one E.U. country to accept cards across all markets.
The Austrian payments landscape is similar to the German one. Other than online banking (credit transfers), direct debits are also quite popular, and should be offered depending on the business model. Card payments are constantly increasing at a rate of close to ten percent every year, which makes it essential to offer as a payment option.
Belgian shoppers are relatively open to making cross-border purchases, with 25% of transactions taking place on foreign sites.
The most popular method in Belgium is Bancontact, which has more cards in circulation than there are Belgian citizens. This is a debit card that offers 100% guarantee on the payment and can be used across all channels (online/mobile/POS). It’s also possible to process recurring transactions with Bancontact via SEPA Direct Debit.
Overall, the most common payment methods mix for online payments are Bancontact, credit cards (Visa/Mastercard and Amex) and debit cards (Maestro). Paypal, SEPA and Sofort are also popular.
Today many shoppers attempting to buy with their smartphones are blocked because the mobile version of Bancontact isn’t supported. The traditional version of Bancontact requires a device from the bank (digipass/Card Reader) to generate a token for authentication. This can be a real conversion killer when it comes to mobile experience. The mobile version also makes it easy for shoppers purchasing on desktop since they only need to scan a QR code to authenticate themselves. Note: If you support Bancontact/Maestro make sure the CVC code isn’t mandatory because there’s no CVC on Belgian Maestro cards.
Czech republic’s ecommerce and internet presence has been growing rapidly over the last years. Online the most popular payment method is to pay via credit card.
The Danish payment mix continues to be dominated by cards, Dankort debit cards co-branded with Visa being the most popular card type.
France represents a great opportunity for expansion, with ecommerce sales expected to grow to $64 billion in 2018.
Cartes Bancaires (CB: the French local scheme) dominates the payments landscape, and most French cards are Cartes Bancaires co-branded with Visa or Mastercard. As a direct CB member, we can achieve the highest possible authorization rates for our customers.
No local entity is required for local acquiring in France, although (as is the case with most Eurozone countries), a E.U. entity is mandatory.
Germans are some of the most open cross-border shoppers in the world, with over 50% of online retail purchases taking place on an international website.
Yet despite this willingness, Germany is one of the most fragmented markets when it comes to payment methods. Non-credit card payment methods such as SEPA direct debit, SOFORT, and Giropay account for the majority of online transactions. In retail (specifically fashion) another popular payment method is open invoice. This is where a third party pays out for products and services and then collects payment from the shopper after delivery.
If you’re planning to enter Europe you should consider Germany as one of the first markets to enter. This is because of its size and its openness to cross-border payments.
Due to its openness to cross-border payments and size, we recommend businesses considering Europe, enter Germany first.
Finland is one of the market leaders in internet and mobile banking services. As such online banking is popular.
Italy is the fourth biggest ecommerce market in Europe. More than 80% of Italians are now online, and this is expected to increase by 16% within the year. In 2016 Italy had 13 million frequent online shoppers spending about €1,400 each.
Italian shoppers are increasingly mobile, and PayPal is a popular mobile method. Pre-paid cards are also popular due to (perceived) better security and decreased costs. The most popular credit cards are Visa and Mastercard and the most popular prepaid debit card is Postepay (co-branded with Visa). The local debit scheme PagoBancomat has announced it will also soon launch a web payment method. With their brand recognition and high card penetration, we expect that method to grow quickly.
While purchasing from international websites is relatively common in the Netherlands, the most popular payment method, iDEAL, is local to the Dutch market. iDEAL is an inter-bank system covered by all major Dutch consumer banks, allowing shoppers to use their bank account for online purchases. Direct debits and open invoice payments are also popular.
Due to its ease of doing business, you should consider the Netherlands as one of the first European markets to enter. Offering iDEAL as a payment method is crucial.
Norway has one of the highest rates of card use per capita in Europe, making cards the most common way to pay online. Mobile payments are also becoming increasingly popular thanks to mobile apps like VIPPS. Paying after delivery with Klarna is a also common in Norway.
Poland is the ninth largest country in Europe and with a population of over 38 million people. Online banking is by far the most preferred payment method in Poland.
The Polish market is easy to enter, with no local entity required and like-for-like settlement supported. However, Polish issuers require cardholders to register their card the first time they make an online purchase – if they do not, the card is systematically declined for any online purchases.
Ecommerce in Portugal was estimated to increase by over 12% in 2017, making total online sales worth €4.73 billion at the end of the year.
Card penetration is quite high in Portugal, but the most popular payment method is MultiBanco, which represented almost 86% of total sales in 2016 (29% in terms of annual monetary value). This is a post-pay option where a reference is generated at the checkout and then paid via an ATM with a debit card, or online via online banking.
For retailers, MultiBanco can represent up to 50% of the payment mix in Portugal.
Ecommerce in Russia was worth €7.2 billion in the first half of 2017, an increase of 22% year-on-year. It’s expected to reach €15.99 billion by the end of the year.
Russia is a prime example of a major market in which credit cards are not dominant. In fact cards represent only a small share of the online transactions. Instead, the most popular local payment methods are cash-on delivery, online banking and e-wallets, including:
Yandex.Money, the most popular e-wallet with top-up options including prepaid scratch cards, plastic cards, online banking and cash
- Qiwi, an e-wallet that can be topped up at one of 150,000+ payment terminals, as well as with credit/debit cards, on a phone
- Sberbank is the biggest bank with 40 millions of users. As debit cards are by far preferred, online banking is the best solution to approach these shoppers
- Cash payments through ATMs or payment kiosks/locations; they have been very popular for long, and the increasing sophistication of the accepting terminals has resulted in a more seamless payments environment and automation for e-payments.
In Russia, payments through ATMs have been very popular for a long while, and the increasing sophistication of the terminals has resulted in a more seamless payments environment that now includes automatic top-ups and recurring payments.
No domestic entity is required for processing non-card payments and it’s easy to access the majority of payment options in Russia. Adyen supports the biggest wallets and online banks, as well as several cash options. In order to process cards locally, you will need a local entity and local bank account.
In 2017, the Spanish B2C ecommerce turnover grew by 8% to €28 billion. Of the total online population, 26.1 million bought something online in 2015 and the average spend €1,089.
Cash is still the most popular method of payment in Spain, and the number of ATMs per million inhabitants is among the highest in Europe. Cards are also popular in Spain, with over 85% of the population carrying at least one debit or credit card. All cards are co-branded with Visa or Mastercard. Prepaid virtual cards for online purchases are also growing in popularity while it is still early days for alternative payment methods like paying in installments.
Although all the cards issued in Spain are compatible with 3D Secure, using it for all transactions can lower your conversion rates by up to 20%. For this reason, more businesses are using dynamic rules to trigger 3D Secure only when necessary. But the limitations of legacy processing systems can make this challenging.
The largest country in the Nordics, ecommerce in Sweden was worth €11.5 billion in 2017, a 9% increase year on year. The total in the Nordics in 2016 was €21.9 billion.
While cards remain the most popular way to pay online, Sweden is at the forefront of open invoice payments (Klarna). This payment method is expanding internationally and is now the second most popular method after cards, and the most popular in retail. Online banking through major banks such as Handelsbanken, SEB and Nordea, is the third most popular payment method. These can be done either via online banking payment services or via the popular direct bank transfer app Swish. Apple Pay was recently released in Sweden together with Denmark and Finland.
Some Swedish issuers demand 3D Secure for all card transactions or that the shopper makes ecommerce purchases within a limited time period.
Switzerland’s ecommerce market is growing fast, up by 10% in 2017. And the average spend per shopper in 2015 was €1,815. Popular payment methods are open invoice, credit card and PayPal.
Ecommerce in Turkey was worth €7.95 billion euros in 2016. The fact that it’s behind other European countries indicates there’s still a lot of room for further growth. Its online population is young mobile-savvy, with around a quarter of online shoppers using mobile to make purchases.
Credit cards are popular accounting for 80% of ecommerce transactions. 65% of these are paid in installments. Prepaid cards are currently enjoying the highest growth.
Similar to MIR in Russia, the local switch BKM launched a local card scheme called TROY in 2016. And in June 2017, 400k cards were issued.
The U.K. is one of the leading economies in the western world. While the fallout from Brexit is still unclear, it has already had an impact on ecommerce. A weaker pound has made the U.K. attractive to international shoppers, and British shoppers are less likely to shop from overseas.
U.K. shoppers are world leaders in terms of mobile shopping and debit cards are popular, with the average shopper holding between 2-3 cards per person. Cards account for approximately 90% of all online payments, Paypal is another popular option, and online banking is virtually non-existent.
Currently the U.K. is the only European country where Address Verification Service (AVS) is supported. And there is strong issuer support for 3D Secure. As a result, the U.K. is one of the few countries where enabling 3D Secure actually improves overall conversion. This is thanks to Risk Based Authentication (RBA) where the issuing bank chooses to forgo the full authentication process if they deem the transaction to be low risk. Visa and Mastercard Account Updater services are also available in the U.K. – so you can be sure your cards on file are always up-to-date.
Despite the economic downturn, LATAM is one of the top regions in the world for growth. So building out your operations now will put you in a good position to grab market share when the economy rebounds. LATAM is economically dominated by Brazil and Mexico.
Critical to success across LATAM is localization of both marketing and payment methods in some key markets in order to improve auth rates and customer experience.
Brazil is the largest online market in Latin America, representing over 40% of the region’s ecommerce sales. In 2015 online retail sales reached $19 billion and Bain and Company expects the Brazilian ecommerce market to maintain a healthy annual growth of 11% right up until 2019.
Internet penetration has been growing steadily in recent years. 66% of the population is now online, up 5% from 2015. Brazil is also catching up in terms of smartphone adoption and now has an average of almost two devices per person.
There are more than 200 million active cards issued in Brazil, with Credit Cards representing around 45% of the total. It is important to mention that Debit cards have a quite low penetration in the Brazilian online sales as 3DS is mandated for this type of transactions. Adyen is pioneering in the market by processing Debit without 3DS for selected merchants previously approved by the Schemes and the Issuers. Besides that it is important to note that many of these cards are not enabled for cross-border payments (even though they are Visa or Mastercard branded). Boleto Bancário, a cash- based payment method, is also popular, especially with customers who do not have a bank account.
Finally, another key fact of the Brazilian payment landscape is that up to 80% of all ecommerce payments are made in installments.
Over the recent years, Mexico has attracted increased interest from global brands looking to expand in a country where online shopping is growing at an exponential rate. The country’s online retail revenues are forecasted to grow to $6.7 billion in 2019, with online buyers increasing from 10.1 million to 21.1 million.
In terms of mobile, a recent study shows that Mexico is one of 22 countries leading the trend toward mobile commerce. And young adults made 88% of smartphone purchases. The country has one of the largest mobile markets in Latin America, with one-third of all residents using smartphones.
Installments (for cards) are also popular, and a domestic entity is required to support this type of payment.
Asia Pacific is home to over 4.5 billion people (60% of the world’s population). It’s a diverse region with seven of the world’s ten most populous countries. It’s also one of the most fragmented regions when it comes to payments.
Yet despite its outward complexity, the region offers a number of opportunities for businesses that want to tap its enormous market potential with relatively high speed and little investment.
Markets such as China, Japan, Indonesia, and the Philippines don’t require businesses to set up a local entity to start connecting with local shoppers. From a payments perspective, this means that with the right payments partner, connecting with shoppers in these markets is pretty straightforward.
As an economic powerhouse in Asia Pacific, and one of world’s top 10 ecommerce giants, Australia is enjoying its 26th recession-free year in 2017. Its booming retail and tourism sectors have attracted worldwide attention, making Australia a great option as a base in APAC for global companies.
According to DHL ecommerce, Australian shoppers are the second-most likely in the world to buy online from overseas businesses and cross-border ecommerce is expected to grow at an average of 29% per year until 2020.
With no requirements to set up a local entity, a card-dominated payment culture, and a population already used to buying from international sites, Australia is a relatively easy market to enter. We recommend setting up a local entity (which is easy to do) to avoid shopper cross-border fees. Processing domestically also means you’ll benefit from the Australian Interchange fees cap.
China is the biggest retail ecommerce market in the world, expected to reach $1.7 trillion by 2020. The country is a driving force behind mcommerce. Forbes reported that, according to data from Euromonitor International, mcommerce out-ranked desktop purchases back in 2015. And, as of 2016, 66% of digital purchases were made on a mobile device. That’s $450.3 billion in mobile purchases. The top 3 payment methods are Alipay, UnionPay and WeChat Pay.
The three major payment methods are Alipay, UnionPay, and WeChat Pay.
- With around 50% payments market share, Alipay is the largest alternative payment method in China. It’s owned by ecommerce conglomerate Alibaba and provides payment services for major Alibaba ecommerce platforms such as Taobao and Tmall, as well as over 400,000 Chinese businesses. It’s simple to set up Alipay, and your shoppers can enjoy a frictionless experience whether they’re shopping online, on mobile or in store.
- UnionPay is the largest card scheme in the world by number of cards issued. It’s also the only interbank network in the market (excluding Hong Kong and Macau) linking ATMs of 14 major banks and many smaller banks throughout Mainland China. Owned by the central bank, it has a monopoly on processing CNY-denominated transactions in China. This makes UnionPay is a vital part of the payments mix for Chinese shoppers.
- WeChat Pay is China’s fastest growing payment method. It forms part of the WeChat ecosystem, which is a social network, work collaboration tool and commerce platform rolled into one. WeChat Pay is supported online, on mobile and in-store. Transactions take place in the app, either via the retailer’s official WeChat account or via the in-app web browser. This makes it easy for you to provide a seamless shopping and payment experience for WeChat users.
Credit cards are expected to remain the most popular payment method, although mobile wallets are gaining traction among Hong Kong consumers. Alipay has launched its domestic wallet in Hong Kong, and we expect both Alipay and WeChat Pay to dominant the market in the near future. Apple Pay can be used by holders of Visa, Mastercard and American Express cards issued by participating banks.
It’s easy to accept payments in the domestic currency and settle in the same currency with no impact of currency conversion.
India has traditionally been a cash-dominated economy, with cash and cheque accounting for 85% of payments. And, while we expect strong electronic payments growth in India over the next three to five years, cash on delivery (COD) still accounts for 60% of ecommerce payments.
The growth of electronic payment is very much facilitated by the Indian government, from its demonetization announcement in November 2016, to initiatives such as Rupay and UPI. Investments by global companies such as Alibaba, Softbank, Amazon and Google in mobile wallets solutions in the country will also help to push the needle.
3D Secure is mandatory on all domestic debit card transactions in India, where second-factor authentication actually has a positive impact on authorization rates. We recommend applying 3D Secure to all transactions for the Indian market.
With a 200 million population Indonesia is one of the largest, undeveloped market opportunities in Asia. It’s poised for enormous growth, with market size expected to rise to $11 billion in 2019.
The bright outlook is driven by demographic trends. Less than 40% of the population is online, bank penetration is under a quarter, and the number of debit and credit cards issued is at only 15%. Like many developing economies, the shift online is happening through mobile, with over 90% of online users in Indonesia going online via their phone. But bear in mind: Cash on delivery is still the most popular payment method for retail goods.
Japan is the world’s fourth-biggest ecommerce market. It’s a cash-dominated market where cash on delivery is popular. This is possible with Konbini, which allows customers to pay for online purchases in 24/7 convenience stores. Local credit card JCB is also popular, as are international credit cards.
Like-for-like cross-border settlement is possible in Japan, so shoppers aren’t impacted by cross border fees, which makes it a smooth experience. With Adyen you can support Konbini without a local entity.
Like Indonesia, Malaysia is enjoying rapid ecommerce growth, driven largely by mobile. Yet there are some significant differences between the two markets. Malaysian shoppers are comparatively open to cross-border shopping, with 40% of online transactions cross-border. And, among Southeast Asian markets, Malaysia is second only to Singapore in terms of credit card penetration and usage.
The growing use of mobile devices may speed Malaysia’s ecommerce growth, as mobile payments can be made from a prepaid wallet instead of a bank account. This is particularly interesting when you consider that 8% of the population doesn’t have a bank account.
Online shopping is very much the mainstream in New Zealand. In 2015, Neilsen Research reveals that almost 2 million shoppers purchased online, spending about $3 billion in total. Travel is the most popular online purchase, followed by clothes and entertainment.
The Philippines is probably one of the most underestimated ecommerce markets in Southeast Asia. As the second most populous country after Indonesia, its ecommerce market can expect an annual growth rate of 101.4% until 2018. This is driven mainly by high mobile penetration. Filipinos are among the most prolific mobile users in the world, and smartphone penetration is now 30% of the population.
Despite being the smallest country in both size and population, Singapore is considered to be the financial hub of Southeast Asia.
South Korea is the third-largest retail ecommerce market in Asia Pacific (after China and Japan). The average South Korean shopper holds an average of four credit cards, and around 80% of online transactions are card-based.
Thailand has huge ecommerce growth potential. Online retail transactions currently account for as little as 0.5% of the industry, but it’s growing by an estimated 30-35% annually. With internet penetration estimated at 60% and mobile the primary access device for most new shoppers, mcommerce is key.
*The information on this page has been compiled by Adyen based on actual transaction data, market knowledge and customer payment preferences. The numbers as presented per country will give you an indication of the payment method mix you can expect when selling online in that country. The actual mix will depend on other factors such as type of business, goods or services sold, average transaction value, your customer demographics, and others.
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