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The payments industry is always moving forward, and because of covid businesses had to adapt and move online when the lockdowns hit across nations in 2020. The pandemic itself boosted payments trends. 

Customers enjoy greater choice than ever before, and are more likely to convert on ecommerce and retail sites if their preferred payment method is supported. 

Financial services turn more digital day-by-day, allowing for quicker, more user-friendly features for customers and new players to arise. In Europe, the Payment Services Directive Two (PSD2) implementation contributed to this significantly. The Directive prompted the adoption of Online Banking tools and strengthened online shopping security. With these, clients can now utilize third-party providers for more convenient and safe banking services.

The types of payment methods

There are a few different types of payment methods that merchants should be aware of in 2022: 

• Card payments 

• Account-to-account bank transfers 

• Buy Now Pay Later (BNPL) 

• Direct debit 

• eWallets. 

Each of the payment methods we’ll discuss later offers a variation on the systems listed above. 

Do payment methods really matter?

In short, yes. Choosing the right payment methods for your checkout can have a massive impact on conversion rates. Despite higher transaction fees, retailers that offered BNPL payment options reported increases of up to 200% in units per transaction. 

The increasing popularity of open banking also signals the strong appeal of alternative payment methods. With 4.5 million open banking users as of early 2022, account-to-account transfers will only increase.

Critically, payment method preferences are significantly impacted by geography. In some EU regions, card ownership can vary by as much as 99% of the population to just 27%. Even if customers have cards, there is no guarantee that accepting card payments alone will be sufficient to drive conversions on your site due to local cultural preferences. 

Let’s explore the most popular payment methods in Europe in 2022. 

Payment methods in Europe

1) Visa and Mastercard Card Payments

Visa and Mastercard are both international financial services companies specializing in facilitating credit and debit card payments that are connected to bank accounts. With billions of users across the world, their global presence makes them a strong choice for merchants looking to offer popular payment methods to their customers.  

Strongest geographies: United Kingdom, Spain, Poland 

Weakest geographies: Italy, Germany, Norway 

2) PayPal

Launched in 1998, PayPal was the first financial technology company to allow customers to pay with an email address. The company achieved global fame when it was purchased by eBay in 2002. PayPal users create an account (eWallet) where they can hold funds and use them to make transfers to other customers and retailers. 

PayPal’s average number of active daily users can vary considerably depending on location. 

Strongest geographies: Germany, United Kingdom, France 

Weakest geographies: Finland, Turkey, Czechia 

3) iDeal

The iDeal platform is a Dutch payment method that avoids the need for credit and debit cards. At the online checkout, the iDeal platform transfers you to your bank account so that you can make a direct transfer to the intended recipient. Over 53% of Dutch customers prefer to use iDeal at checkout. 

Main geography: The Netherlands. 

4) Giropay

Giropay works in a similar way to iDeal, in that it facilitates bank to bank transfers. Also like iDeal, Giropay specialises in one target market: Germany. Giropay boasts connectivity to over 1,500 German banks across the country, all but guaranteeing German customers can execute a direct bank transfer to another German customer. Giropay accounts for 51% of all online purchases made in the country. 

Main geography: Germany.

5) Sofort

Recently purchased by BNPL company Klarna, Sofort has rebranded to PayNow in most of its target jurisdictions. It’s similar to both Giropay and iDeal, but is used more widely in a few countries in Europe. 

Strongest geographies: Austria, Germany, Switzerland, Belgium. 

Weakest geographies: Poland, Italy, Spain. 

6) Bancontact

Popular in Belgium, the Bancontact payment method relies on a single authentication to process payments. As with other payment methods in this list, users are transferred to a Bancontact window to authenticate before being redirected back to the original website for payment confirmation. 

Main geography: Belgium. 

7) EPS

Austrian banks allow their customers to use EPS, a bank-to-bank transfer payment method. 80% of Austrian merchants allow their customers to pay via EPS, so it’s worth considering if you do a lot of business in the country. 

Main geography: Austria. 

8) Multibanco

Customers can pay merchants with their bank details or via ATMs with the Multibanco payment method. Most popular in Portugal, the service is supported by all of the country’s banks.

Main geography: Portugal. 

9) SEPA Direct Debit 

SEPA stands for the Single Euro Payments Area. Using this payment method, the merchant initiates the payment or a series of payments after receiving a customer mandate. The advantage of using SEPA Direct Debit is the seamless experience for both the customer and merchant, particularly when used for recurring payments.  

Main geography: Europe. 

10) Klarna

BNPL (Buy Now Pay Later) payment methods are on the rise. Klarna is by far the most famous example, with a recent valuation of $45.5 billion USD. BNPL payment methods are likely to face regulatory challenges that could impact the growth of their services. For now though, their popularity is impossible to deny. 

From a customer perspective, BNPL systems work by charging installments until the full amount is paid. 

Strongest geographies: United Kingdom, Sweden, Germany. 

Weakest geographies: Spain. 

What it all means for the ecommerce industry

Providing access to the right range of payment methods is essential for modern merchants. By using an omnichannel payment gateway, merchants can extend the list of payment methods at checkout to drive maximum conversions. 

As current statistics show, credit and debit cards are still kings among payment methods in multiple European countries. But what is also clear is that there’s a shift in the payment methods landscape, driven by multiple factors. The demographic for alternative payment methods in Europe increases and it is important for online sellers to use them.