A glance ahead: the European payments landscape in 2024
In 2023, we’ve witnessed some significant developments for the UK and broader European payments landscape.
2024 is set to be a year of innovation and change for the European payments landscape
Social commerce has taken off with strong Gen Z adoption and an expected 34% annual growth rate in Western Europe looking towards 2025, according to figures from Deloitte.
What’s more, as e-commerce becomes ever-more prolific globally, tailored digital marketing strategies have become crucial to ensuring that retailers’ and merchants’ cross-border payments propositions adapt to a more diverse array of international markets.
As we look ahead to 2024, specific trends around e-wallets, our evolution towards a cashless society and cross-border payments are crucial for businesses to take advantage of. In this piece, I’ll dive into why these elements are key for the payments industry.
Europe’s great push for digital wallets
E-wallets have already gathered significant traction elsewhere globally, particularly in China and Southeast Asia. Indeed, according to a survey by GlobalData, 84% of Chinese consumers hold and use e-wallets. The rise of e-wallets has been fundamental to the decrease in the use of cash in these areas and has changed the way almost all generations of people make payments in their daily lives.
Now, mobile wallets are set to become just as popular in Europe, with transaction values increasing by over 30% over the last three years according to data from eClear, and the European Payments Initiative (EPI) set to launch an EU-wide digital wallet, beginning in France, Germany and Belgium next year.
So, in 2024, we can expect to see a rise in the adoption rate of digital wallets in Europe.
How will this impact the European payments landscape? We can’t treat Europe the same as other use cases, such as China, when it comes to e-wallets because the continent faces its own unique challenges. Chief among them is the diversity of the area’s payments space within its separate countries and the disparity of payments technology throughout the region.
For example, France is a heavy user of card payments and has a higher affinity for new payments technology than somewhere like Greece, where cash payments are more widespread. Bridging the gaps between all EU member states will be challenging and we’re likely to see elements of local payment preference remain within each specific area.
The road to a cashless society
The benefits of moving towards a cashless payments system for businesses are well-documented. Cashless payment options offer bolstered convenience and security for consumers and increased customer loyalty for merchants, while also increasing the efficiency with which they’re able to receive payments.
Many European countries are well on their way towards a cashless society, with cash payments in the UK dropping from 54% in 2012 to 14% in 2022, according to data from UK Finance. This trend is set to continue in 2024.
Despite this, cash remains a key payment method for many demographics across Europe, particularly areas of Eastern Europe where it still constitutes the primary payment preference. The concerns about a cashless society include that people without access to technology or internet, or people who simply aren’t tech savvy, will be left unable to navigate the modern world.
However, moving towards cashless payment models doesn’t have to mean isolation of these communities. Rather than focusing on removing cash as an option, in the coming year, Europe must focus on expanding payment options with a consumer-focused mindset to offer people more choice in payment methods.
By providing consumers with payment options that are far more convenient and safer than cash, the region will naturally follow its trajectory towards a cashless society in an inclusive manner that lets consumers choose the way forward.
Thinking internationally – cross-border payments
According to a recent study by Juniper Research, a third of all e-commerce spending is predicted to be international and cross-border by 2028, exceeding $3 trillion in value. As the world continues to globalise, 2024 will see businesses taking more of an international focus and targeting opportunities to grow and develop more revenue streams abroad.
Crucially for Europe, certain regions including China and Southeast Asia have a particularly high demand for European goods. For this reason, as we move into the new year, businesses must take advantage of international demand and look to diversify their offerings to suit these global markets.
However, merchants and retailers’ businesses will find themselves unable to build out international revenue streams if their cross-border payment functionalities are slow and outdated. Consumers now expect to pay for goods quickly and conveniently, even if they’re coming from abroad. A key element of this convenience factor is the ability to pay using familiar local payment methods.
So, in 2024, we’re likely to see more businesses tailoring their payment methods to be able to do business abroad. What’s more, as merchants increasingly seek to internationalise their offerings, in the coming year, we’ll witness further uptake and innovation in cross-border payments technology.
All in all, 2024 is set to be a year of innovation and change for the European payments landscape. For this reason, it’s crucial that merchants and retailers can harness the opportunities presented through cross-border commerce and cashless payment alternatives like e-wallets.
Europe is keen to shake off its reliance on financial technology from global superpowers, such as the US, through initiatives such as the EPI, and I believe we’ll see Europe make moves to become a tech superpower in its own right within the payments space.
