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Report: The European payments landscape for 2023

Payments Cards & Mobile’s exclusive annual review of European payments data from 33 European countries confirms the growth of online payments versus in-person, as well as the dominance of debit cards – and a surprising return to popularity for cash.

Payments Cards & Mobile Managing Editor James Wood parses the data…

In many ways, we’re only now coming to see what the world looks like after COVID. There’s an appreciable return to normality, whether in sports, theatres, restaurants or working life.

Likewise in payments, our annual survey of data from 33 countries in the Payments Cards & Mobile Yearbooks shows sharp reversals in certain areas – while the impact of other long-standing trends has been redoubled by the pandemic.

Cards continue to dominate: debit rules

At a time of massive change, it can be easy to lose sight of the fundamentals.

While there’s no doubt new payment types such as instant account-to-account payments, request to pay and others are making huge inroads into traditional methods such as cards and cash, this year’s data confirms the primacy of cards – and specifically debit cards – as Europe’s leading way to pay.

Cards make up 57.3 percent of all cashless payments, with credit transfers and direct debit payments responsible for more than 40 percent of the remainder.

The number of cards in circulation last year grew by 20 percent more than the long term average, at 5.18 percent, while spending on cards shot up by 16.35 percent – more than three times the long-term average.

While some of this growth can be explained by the pandemic and consumers shopping more online (see more on e-commerce below), cards are still preferred to – for instance – digital wallets.

Further underlining the preference for cards is the fact that card use continues to grow faster than the number of cards – not only are there more cards, but they are being more widely used.

“Despite inroads from so-called alt-pays, this year’s data confirms the primacy of cards as Europe’s favourite way to pay.”

For some years now, debit cards have pulled away from credit as a payment method. Payments Cards & Mobile’s Yearbooks confirm this trend as accelerating.

Debit card payments shot up by 19.3 percent, more than double their long-term average and almost twice the rate of credit card payments. Average transaction value per transaction dropped less quickly in the past, confirming the universality of debit card use.

Seen in conjunction with what’s happening with cash use (see below), these statistics perhaps point to a shift away from credit as economic circumstances tighten.

The popularity of Buy-Now-Pay-Later (BNPL) products will also be a factor. By number, there are 2.39 times more debit cards than credit: debit cards now account for 70.5 percent of all cards in Europe.

POSitive outlook ATMs fade – but cash returns

Reflecting the increased use of cards across the thirty-three countries examined by Payments Cards & Mobile, the number of point of sale (POS) devices across Europe grew by 8.97 percent, higher than the five-year average of 7.45 percent.

Underlining the growing internationalisation of Europe’s economy, cross-border transactions grew by almost ten percent last year, more than ten times faster than their five-year average growth rate.

Average value per transaction on POS devices also declined a little as consumers used POS more frequently.

The shift to contactless transactions, which now account for nine in ten of all card POS transactions in some European markets, has doubtless encouraged merchants to invest in devices, as has the advent of cheaper and easier to update “soft” POS terminal apps that can be downloaded to any digital device.

At time of writing, 85 percent of POS devices in Europe are contactless-enabled. As a whole, this year’s data supports our thesis that we’ll see a 30 percent expansion in the number of merchants using POS devices of some kind over the next five years.

“This year’s data supports our view that POS installations will grow by a third to 2028.”

On the ATM front, numbers continue to decline.

Here, though, a much reduced rate of decline (-1.2 percent of the total estate last year compared to a long-term average of – 5.4 percent) suggests that we are seeing a “bottoming out” of the decline in ATMs.

What’s more, there’s been a dramatic increase in the value of ATM withdrawals, up by 7.1 percent across the continent, and a huge 34.6 percent in the UK alone. As discussed in our “Market Analysis” section there are a range of theories as to why this is happening, from cash being easier to use for budgeting purposes through to concerns about privacy in the digital environment.

“ATM withdrawals saw a huge rise: theories diverge as to why.”

Separately, this year’s study reveals that cash remains the most popular payment method in 12 out of 19 Eurozone countries. France, the Netherlands, Belgium, Luxembourg, Finland, Estonia and Ireland are the countries that prefer electronic payment.

E-commerce: on course for the stars

Across Europe, e-commerce shows no sign of slowing its relentless rise as an overall proportion of economic activity.

The UK is Europe’s e-commerce leader, and digital transactions now account for more than six percent of all economic activity in Britain.

While this is impressive, it pales beside global leaders such as China, the US and India, where latest figures suggest digital now totals more than ten percent of all spending in the economy.

Across the continent, growth in e-commerce last year was almost double the long term average at eight percent – though Europe’s share of overall B2C e-business dropped faster than in previous years, reflecting stronger economic growth and a more pronounced use of digital channels in Asia and elsewhere.

The number of online payments grew by more than 50 percent last year, while value grew by 62.5 percent – twelve times faster than the five-year average.

On average, Europeans undertook nearly 21 online transactions per capita last year, up by half over the year before. Some 97.5 percent of online card transactions in Europe last year used EMV-compliant cards.

Cross-border e-commerce is an increasingly important part of the overall payments mix for European countries.

In smaller markets such as Austria and Belgium, cross-border transactions can make up more than 90 percent of the total, while even markets with larger domestic providers such as Germany and the UK find between 30 and 70 percent of online shopping happens outside the domestic sphere.

The UK retains its crown as the biggest online market in Europe, with 22.6 percent of all European online spending, followed by France (17.9 percent) and Germany (16.7 percent).

Battle of the brands

Given the primacy of cards to the payments business, this year we have looked at the competitive positions of major international card brands.

The figures in our table below are for card numbers, and should carry with them the caveat that significant numbers of cards in some European markets such as Spain, Denmark and Belgium are either national brand such as Dankort and Bancort, or co-branded products.

“While Visa leads in Europe, Mastercard is making up ground.”

That said, our analysis shows a slight shift from Visa to Mastercard, whether in terms of card numbers (12.5 percent growth to Mastercard; 7.1 percent for Visa), number of payments (5.25 percent growth for Mastercard, 3.27 decline for Visa) or value (6.6 percent growth versus a 3.88 percent decline for Visa).

Overall, however, Visa retains its leadership across all three categories, responsible for 57.9 percent of all spending by value, 56.6 percent of transaction volume and 51.9 percent of all cards across the continent.

Fraud: Little but often…

While many measures have been brought in to defend payments against fraud – most notably in the online environment – it remains fraud remains a constant threat to the industry.

The prevalence of “card not present” (CNP) fraud among fraud types shows the intransigence of online fraud as a problem.

Last year, eight in ten successful fraud attempts were flagged as CNP – meaning they related to online or telephone transactions, chiefly the former. According to FICO, many European countries had lower fraud losses in 2020 than in 2019.

Following a frustrating increase in 2018 — caused primarily by an explosion of data compromise ‘bust out’ events — much of Europe has once again turned the tide on fraudsters, achieving a combined 2 percent overall reduction.

At the forefront of this performance is the United Kingdom, which posted the largest single reduction, reducing card fraud losses by £46.4 million from 2019. France saw a reduction in fraud of 5.69 percent to €525.3 million, and Italy’s card fraud losses declined by 1.1 percent to €54.9 million.

They travel fastest who travel alone?

One interesting correlation which emerges from this data as the debate about regulatory standards continues in the years to come is the relationship between European Union membership and the payments business.

The impact of the EU’s PSD2 regulation has been seminal for the security of online payments, although some questions remain about the implementation of Strong Customer Authentication (SCA) – a situation the European Commission has pledged to address in future regulations such as PSD3.

Other mooted regulatory changes, such as the mandate for SCT-Inst transactions in cross-border bank-to-bank environments, have been less well received.

In that regard, it’s interesting to note that half of the top ten markets in Europe when ranked by electronic payments per capita are outside the EU, in the form of Turkey, Iceland, the UK, Norway and Switzerland.

These markets collectively account for a third of all spending on cards in Europe, suggesting that regulatory alignment between markets and a dynamic payments sector are perhaps greater enablers of success than membership of the EU.


Commenting on this year’s research output, PCM’s Research Director Horst Forster said: “Card payment volumes have been strong as we recover from the pandemic , with contactless transactions performing especially well. Looking forward, we should expect to see strong growth in digital instant payment schemes operating between accounts as Open Banking takes hold.

We’ll also see early trials of CDBCs, initially between banks. China has already trialled a digital Yuan during the most recent Olympic Games.”

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