Payments Cards & Mobile’s exclusive annual review of payments data from the Digital & Card Payments Yearbooks, covering the 33 European Economic Area (EEA) countries (27 member states plus UK, Iceland, Norway, Switzerland, Serbia, Turkey) reveals fierce competition in online payments.
Many factors influence and affect the payments and banking system, and increasingly so as the world becomes more and more a global village. In Europe, as open banking continues to play out and payments businesses continue to proliferate, new types of payment are flourishing and creating competition for cards in new ways.
Further to this, the digital economy, fuelled largely by mobile devices, has been a fertile breeding ground for merchants and the payments industry that underpins their enterprises.
Furthermore, The European Digital & Card Payments Yearbook estimated that the number of devices connected to the internet would grow from 10 billion (in 2015) to 29 billion by 2030, which the Covid pandemic will have only served to accelerate.
And if the latest figures from 2022 are anything to go by, things are well on track.
The so-called permanently connected consumer has new ways of interacting with brands and merchants via social channels and increased touchpoints, be that looking up additional information or products in-store; remote e-commerce or using QR codes to bridge from merchant posters to online shops or even to check-out in store.
Merchants in all countries now offer more payment methods and services in their online shops than their retail branches and in Europe, some acquirers have started to offer bundled “all-in-one” acceptance agreements including cardless online payment services.
This means merchants can choose any mix of online payment services as per their individual needs and customer preference. In 2023 European online merchants offered on average 9-12 different online payment services in their online shops.
A note on myriad payment types. Remote payment services on the internet are indispensable parts of online sales in the European digital economy.
Thanks to new technologies (contactless cards, tablets, smartphones, QR-codes, 1D-barcodes, Bluetooth BLE, mobile services, HCE NFC and Tokenisation Security both digital commerce on the internet and the so-called “real world” in outlets with EFTPOS terminals are going to converge.
Most mobile devices such as smartphones and tablets are now online capable, and e-commerce and its subset mobile commerce have become combined e-/m-commerce renamed as digital commerce.
The impact of the Covid pandemic proved a huge catalyst for the shift to digital commerce (both mobile and e-commerce) and most estimates suggest a CAGR of around 20% in B2C e-commerce from 2021 onwards.
PCM’s report shows in 2022 the global B2C e-commerce revenue totalled €4,833.9 billion. This constituted a growth of 9.71% from 2021. In parallel, the total European B2C e-commerce revenue, including goods and services, grew by 5.89% from 2021, hitting €899 billion- equivalent to a 16.3% market share in the total global B2C e-commerce value.
It is also worthy of note that the eGDP market share in the UK amounted to 9.89% of the total GDP in the country, pitching the UK as the European leader.
Regulatory backdrop- welcome levelling-up
In 2022 revisions of PSD2 were proposed by the European Commission, alongside proposals of an ‘open finance/open data’ framework, which would be known as PSD3 and FIDA respectively.
PSD3 would address discrepancies in approach to implementing the regulation, and seek to equalise the obligations across Payment Institutions (PIs) and Electronic Money Institutions (EMIs) to ensure a level playing field.
FIDA will establish clear rights and obligations in managing customer data within financial services outside of payment accounts.
There are also further amendments and iterations to the E-Money Directive (EMD2), merging with PSD3 and accompanying regulation through the UK-based Payments Services Regulator (PSR).
All in all, the changes aim to democratise access, rights and duties to enhance business, competition and ultimately innovation in favour of the consumer for all payments businesses while simultaneously implementing measures to mitigate against and deal with threats such as APP fraud.
Cards on a roll
From the number of cards in circulation to the volume of payments In 2022, card payments accounted for 59.90% of all cashless payments in the EU33, compared to 55.85% across the EU27 in 2022. This showed a 9.60% compound annual growth rate (CAGR) in the last five years.
In 2022, there were 306.73 cashless payments per capita, up by 3.98% from 2021. These were composed of 185.10 card payments per capita, 84.44 credit transfers per capita, 34.98 direct debits per capita, and 2.21 cheque payments per capita.
Across the 33 European countries covered by the Yearbook, there were 1,320.4 million cards in circulation at the end of 2022, up 8.51% from 2021. Of these, 71.4% were debit cards and 28.6% were credit cards and delayed debit cards. On average, there were 1.85 payment cards per capita in the EU27+UK countries.
As for card payments in the E33 countries, there were 131.83 billion of them, an increase of 18.16% compared to 2021. There was an average of 212.3 card payments per capita.
The value of card payments across the E33 countries rose by 15.10% to €4,627.8 billion by the end of 2022, up by 7.03% over the five years since 2018.
The calculated Average Transaction Value (ATV) per card payment declined to €35.10, down by 2.58% from 2021, reflecting more lower-value payments with contactless cards.
Dramatic sweeps as online payments jostle for position online
It would seem cards are preferred when paying for higher value items online, and the figures here also reflect the diversity that merchants now offer in terms of payment method.
We can derive an indication of online payments with cards by subtracting POS payments from the total of card payments (Calculated Indication). While different cross-border payments may have an impact on the calculated indication, it provides a basic snapshot of online card payments.
In 2022, there were 8.94 billion online payments with cards in the E33 countries, a decline of 25.09% from 2021 (CAGR: 11.00%). There was an average of 14.4 online card payments per capita.
In terms of the value, this declined also in 2022, by 12.48% to €475.1 billion. The calculated ATV, however, increased in 2022, to €53.10- up by 16.83% from 2021.
We can put this down to an increased uptake of other payment methods- wallets and suchlike, as per online merchants’ increased acceptance of such preferences. And we can infer that for higher value purchases online, cards are preferred over other methods.
More interesting to note is that the market share of online card payments by number and by value accounted for 6.8% and 10.3% of the total card payments in the 33 countries covered in the Yearbook, respectively.
Interestingly, there has been a decline of 25.09% in online payments, to 8.94 billion online payments in 2022 YOY.
In terms of the value, this declined also in 2022, by 12.48% to €475.1 billion. The calculated ATV, however, increased in 2022, to €53.10- up by 16.83% from 2021.
POS Terminals and POS Payments Boom
The POS terminal base across the E33 countries grew in 2022 by 23.59% to 26.4 million, which contributed to stronger growth since 2015.
The total number of POS payments was 122.88 billion, which constituted an increase of 23.34% compared to 2021, and compared to the CAGR of 12.01% seen over the last five years. On average, there were 197.4 POS payments per capita each year, with a statistical POS ATV of €33.79 across the E33 countries.
The POS ATV varies by country and reflects national payment habits. The fact it has declined YOY and over a five-year period is indicative of increasing contactless payments, which are offline payments and hence, limited in value.
ATMs and Cash – bedfellows in decline yet far from extinct
In Europe, there is a medium-term trend of declining ATM installations due to bank mergers, branch closures, more shared ATM networks in countries where there weren’t before and the higher use of cards. In 2022, ATM density was 638.8 ATMs per million inhabitants of the E33.
Consumers are paying less and less with cash at the Point-of-Sale, and the figures of decline can be correlated with the increase in low value POS payments to conclude that cash payments have been subsumed by contactless ones.
The number of ATMs continued to decline, with 397,700 ATMs across the E33 countries covered in the Yearbook. This decline of -4.61% from 2021 compares with a CAGR decline of -2.83% in ATM numbers over the last five years. The number of cash withdrawals per ATM each month amounted to an average of 2,115.3 withdrawals.
Total number of cash withdrawals across all E33 countries covered in the Yearbook showed an overall increase of +3.64% from 2021 and a CAGR decline of -5.99% over the last five years.
There were 10.09 billion cash withdrawals performed across the E33 countries. In 2022, there were 16.2 withdrawals on cards per capita.
The total value of cash withdrawals on cards increased overall by 4.45% from 2021, representing a low CAGR of -2.66% between 2018 and 2022. A total of €1,628.2 billion was withdrawn from ATMs across in the region in 2022, with the ATV per withdrawal being €161.29.
In December 2022, a European Central Bank study found that cash was used for 59% of POS transactions in 2022, down from 72% in 2019.
Cryptocurrency appetite spikes
A final word on crypto. These digital assets, as sceptical as many are about their propensity to replace cash are very much on merchants’ radars in Europe. Bitcoin and Ethereum are the most popular forms of cryptocurrencies worldwide used by consumers and businesses.
As of 2022, over 400 million people worldwide used cryptocurrencies, with merchants and businesses in more sectors accepting it as a form of payment. The major payment schemes VISA and Mastercard, PayPal and along with a growing number of financial institutions, have launched services allowing consumers to purchase or use cryptocurrencies for a range of applications.
According to a 2022 Deloitte survey, around two-thirds (64%) of surveyed merchants indicated that their customers have significant interest in using digital currencies for payments, and 83% expect consumer interest in digital currencies for payments to increase or significantly increase over the next 12 months.
In addition, merchants are motivated by the prospect of enabling immediate access to funds (40% of respondents), taking advantage of blockchain-based innovations in decentralised digital finance (39%), and allowing in-house management of the revenue cycle/treasury/finance department (39%).
The Digital & Card Payment Yearbooks provide the latest European payments statistics and data on the European and Eurasian digital payment and card payment markets at granular country and regional level.
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