Europeans like to shop, and they like to shop online. Revenue in the continent’s e-commerce market is expected to hit $707.9 billion this year, before showing an annual growth rate of 7.95% to arrive at $961.3 billion by 2029.
The way in which people choose to pay is increasingly intentional and diverse. Consumers across Europe can now choose from a host of alternative payment methods (APMs) alongside their cards, including Buy Now Pay Later (BNPL) services, digital wallets, and other local payment options that are starting to resemble the super apps seen in Asia.
However, with diversity comes questions about fragmentation, the need for a pan-European solution, and the evolving politics of payment sovereignty.
Catering to local customer tastes
“Payments are one of the key things to think about when you go into new markets and wish to offer a great customer experience,” said Matteo Gamba, Head of Product, Global Payments and Fraud, Wayfair.
“Different countries are evolving at different trajectories; in the Netherlands, iDEAL has taken hold while Germany has a strong preference for PayPal. Businesses need to keep this in mind because not offering the payment method a customer expects is a blocker to conversion.”
Recent figures from S&P Global highlight the breadth of payment methods being used across Europe. In 2024, cards were used for 63% of digital transactions, with digital wallets securing a 30% market share and BNPL making moves (3.8%). However, in five years cards are expected to drop to 59.3% as local payment methods continue to grow their footprint.
“What we’ve seen springing up over the past decade is a number of local payment methods in different countries in Europe, such as BLIK in Poland and Bizum in Spain,” explained Sophia Furber, FinTech Research Analyst EMEA, S&P Global.
“Some have been developed by consortiums of local banks to provide a payment method which is faster and cheaper than what was in the market previously and some are competing with the payment products provided by the Big Tech giants, like Google Pay and Apply Pay.”
Many of Europe’s local payment methods started life as pure peer-to-peer (P2P) plays to split a dinner bill or a shopping trip with friends, but some had e-commerce functionality baked in from the beginning and are now evolving into super apps.
“With TWINT in Switzerland, you can pay for parking, while Italy’s Satispay has introduced wealth management features,” added Furber. “Spain’s Bizum started as a P2P option to pay your mates but has now been integrated by Amazon as a payment method.”
A swing towards consolidation or a push for payment sovereignty?
With a proliferation of payment methods making their mark across Europe, thoughts have turned to consolidation.
Wero, conceived by the European Payments Initiative (EPI), is the first European-born digital wallet that aims to offer a unified solution for the whole European market. It’s an ambitious project that’s started fast. After launching its P2P solution in 2024 with a phased launch across three markets – Belgium, France, and Germany – it now has around 40 million users and is attracting both banks and fintechs keen to embrace its instant account-to-account (A2A) payments solution.
“There are many great local solutions, but they’re limited, whether that’s by market or functionality-wise,” said the EPI’s Alexander Burkhard. “Wero started with P2P functionality, but we’re now launching our e-commerce solution, and we want to play a critical role in offering consumers what they need. If you look at payment trends, wallets are on the rise because they offer something beyond payments: they provide additional value-added services like storing tickets and digital IDs.”
Wero is also seen as a response to an increasingly complex geopolitical environment in which the US dominates payments.
“There’s more politics in payments than we realise,” said Furber. “I think there’s been some anxiety in the European Union and across the industry that payments are so dependent on two large, US-led card networks, and we should perhaps be thinking about how we can come up with a more homegrown mechanism for payments.”
“There are precedents,” added Gamba. “If you look at what Russia has been doing with its MIR payments system, they’ve been developing a network internally that could withstand sanctions. That’s a very similar agenda politically that needs to exist in an increasingly complex environment where most of the big payments companies are coming out of the US.”
Considerations around consumer protection and privacy
As Europe’s APMs continue their growth story, security is paramount.
“The card networks have been offering customer protection as a functionality,” said Gamba. “If you have a problem, there’s a chargeback. Disputes have some sort of arbitration, and PayPal is doing something similar, but other solutions are not. It’s really a question of how much you’re willing to invest in your infrastructure – you may offer something that’s leaner and faster, but if you lack the protection, a consumer may not choose you because they have the added protection that comes from a card scheme.”
This point is underlined by payabl.’s recent report, which found 44% of European consumers still prefer using a credit card for high-value purchases due to the additional protection on offer.
As well as security, privacy is still important to consumers – and this is perhaps the biggest reason as to why we won’t be seeing a completely cashless society any time soon.
“Getting rid of cash would make a lot of people incredibly nervous,” said Furber. “A lot of people still value it as a payment tool and cash relates to ideas of privacy for many. I do think cash use in daily transactions is only going to trend downwards but it will be a very long time before it becomes something we see in a museum.”
Ultimately, cash is still an important backup plan and plays an important role in a digital world where outages and cyberattacks are prevalent.
“We need digital payments and we need cash,” concluded Burkhard. “This is more from a resilience perspective because, however hard we all work at it, we’ll never come close to 100% availability of digital payments.”
Check out the latest episode of Pay it forward, in partnership with The C-Suite Podcast, to learn more about the factors shaping the growth of APMs and the future of payments in Europe and beyond.