Prague, Czech Republic – The way in which we pay for goods changes around the world. Europe very much still uses physical coins and bills in day-to-day life, but what about online payments?
Whilst it depends on the sector, with payment options at casinos sometimes differing from an online supermarket, we can generalize as to what the most popular methods are and the emerging trends across Central Europe
Digital wallets have grown in popularity since the internet birthed the infrastructure that was necessary, and it’s becoming increasingly efficient. PayPal is the largest digital wallet in Europe, which had a first-mover advantage in the market ever since Elon Musk helped grow the company in the late 1990s.
PayPal is evolving with the times, having recently announced its cryptocurrency integration, in which users can pay with crypto and the seller can automatically receive fiat currency (the exchange takes place automatically by PayPal). However, the poor exchange rates and fees offered by PayPal, particularly between fiat currency pairs, has driven customers to competitors over the past decade.
In much of Europe (particularly Central and Eastern countries), Revolut is very popular due to its free debit card, near-perfect exchange rate, and wide range of features. Whilst it’s made a huge impact in the UK, Romania, and Poland, it’s yet to make much of an impact elsewhere in the region.
Visa / Mastercard
Visa and Mastercard are somewhat the gold standard. They’re widely accepted and therefore widely used (the second most common payment method in Europe). However, there is still some skepticism over the fees charged, even when payments are domestic.
Furthermore, customers were shown Visa and Mastercard’s influence when OnlyFans blanket banned adult content on their platform due to the demands of these payment processing companies – further pushing the case forward for decentralized finance.
Mobile banking, in particular domestic debit cards, is provided by companies such as N26 and Starling Bank. Of course, there are online digital wallets that work similarly but are not regulated and licensed as banks, which means less protection is offered to customers.
Mobile banking is bridging the gap between outdated high street banks and digital wallets like Revolut, offering great interest rates, free banking, and accessibility. Paying online with these, however, can still be a Visa/Mastercard experience.
The most common payment method in the Czech Republic, Estonia, and Poland remains the bank transfer. Bank transfers allow people to receive large amounts of money without incurring fees whilst remaining a safe method. They avoid the pitfalls of accepting checks and are generally used for B2B purchases.
However, the experience isn’t ideal for customers, as a recipient has to be set up, and in some instances, customers may not be covered unlike paying with a credit card.
Emerging payment methods
Starting off in 2022, we’re beginning to see how most of Europe, including Central and Eastern European nations, could become relatively cashless within a decade. Digital currencies are being proposed by central banks, whilst almost everyone now owns a smartphone that can produce and scan QR codes, increasingly being used for payments.
Of course, Google and Apple Pay are increasing their market share year on year when it comes to in-store purchases, as NFC is now in most mobile phones, and biometric security can be stronger than physical bank cards.
The future of online payments will likely come down to government behavior – whether or not they decide to legitimize and regulate emerging methods like cryptocurrency, and how they view a push towards a cashless society.