A new study from the Merchant Payments Ecosystem (MPE) organisation and Arkwright Consulting reveals European consumers and merchants in downbeat mood after the pandemic.
With almost all European consumers surveyed saying their standard of living had either declined or stayed the same – merchants themselves are yet to see a meaningful recovery in real sales value, and facing complexity and rising cost in payments.
Payments from a Merchant’s Perspective, launched at MPE 2024, surveys more than 1,700 merchants across Europe, and draws on pan-European consumer studies for relevant perspectives.
Contrary to much recent hype, this important study shows a continent mired in economic stagnation – and merchants who continue to rely on tried and trusted payment methods, despite looking for change.
Consumers not confident
According to European Parliament data referenced in this study, fully 98 percent of European consumers either expected their situation to worsen, not improve or continue to decline in late 2023.
Mirroring this sentiment, the consumer confidence index across the EU likewise remains negative and 5 percent below levels seen in 2019. As MPE/Arkwright point out, there’s a strong correlation between these negative sentiments and disappointing retail performance. Predictably, then, inflation-adjusted retail sales across Europe have hardly shifted in real terms over the last five years.
Merchants prefer cash and cards, want A2A
Other than cash, merchants are overwhelmingly most likely to accept cards, with mobile wallets second most-accepted at two-thirds of merchants.
Bank transfers, currently sitting just behind mobile wallets, are preferred over digital wallets by merchants for their lower fees and perceived lower complexity.
Indeed, when asked about the simplicity and perceived cost of acceptance, merchants strongly prefer cash, cards and bank transfers over digital wallets.
“The study reveals a continent mired in economic stagnation, and merchants reliant on the tried and trusted.”
Fewer than half (41 percent) of merchants perceive mobile apps to be fairly priced when it comes to payment acceptance, whereas just one in five (21 percent) said cash acceptance was too expensive, and card payments are considered fairly priced by 62 percent of respondents.
When asked why they found various payment methods too expensive, merchants complained of a lack of transparency regarding card fees on the part of schemes.
Regarding mobile wallets, merchants said that not enough competition to solutions such as Apple Pay and Google Pay was the main reason for their concerns, alongside high fees for low-volume transactions and additional charges for cross-border payments.
PAYMENTS CARDS & MOBILE OPINION:
This report adds further weight to the growing consensus that cards will continue to flourish over the next five to ten years.
While this study considers the merchant perspective, consumers themselves continue to prefer to pay by card, despite what big tech players and indeed governments might want.
The findings of this study also highlight just how many difficulties any government might face when seeking to introduce a CBDC-based system based on wallet payments.
The example of China is an outlier both because of the high degree of control the government exerts over human behaviour – and because of the lack of any previous banking and payments infrastructure before Super-App wallets were introduced in that market.
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