Unified Europe - Opportunities for Unified Commerce
Even in the paytech sector, “unified” doesn’t just refer to payment: it is about commerce itself, about business management, about new directions and setups in the payment sector, about the consolidation of platforms and providers and ultimately about the new expectations of consumers. The boundaries between the real world of shopping and services and what is bought online no longer exist today.
The level of convenience in one world also becomes an expectation in the other. Those who pay with Paypal on the Internet will also want to use this service at the bricks-and-mortar checkout. If you can't find the right colour of trainers in the shop, you might want to pay for them there but have them delivered to your home. Whoever books a service in the webshop of a specific brand also wants to use the same customer account and advantages in the app. And special services that have long existed mainly online, such as the buy-now pay-later principle, are becoming increasingly popular and thus more important, even at the shop checkout.
Across national borders
What used to be called “omnichannel” and meant at most the retrospective linking of existing sales channels, is now unified commerce in the holistic sense, and brings customers and retailers together at the most diverse points: even the basic architecture of the system is geared towards networking, towards connecting commerce as a whole - including merchandise management, marketing and customer relations.
All of this no longer takes place at the national level alone, but has to be considered at the European level across national borders. With the outbreak of the Corona pandemic digitalisation in European commerce experienced a significant boost. Shops were closed, the customary supply chains were disrupted, and familiar processes were suddenly called into question. In record time the home office, videoconferencing and virtual shopping options were created and accepted. Reservations about the technology and the new developments melted away. International collaboration, remote workplaces in other countries, cross-border trade: our world was confined to our own four walls for months, and yet the crisis and digital spaces suddenly brought us closer together both in Europe and worldwide - not least thanks to digitalisation and the partly unified systems it brings with it.
Each nation has different payment preferences
Of course, national differences still exist. How people prefer to pay, for example, differs from country to country.
In the latest representative E-Com Report 2020/2021 by Concardis in cooperation with Kantar/Sifo, half of the respondents in Germany stated that they had paid with e-wallets such as Paypal in the last month. In Switzerland the figure was only 29 percent.
Just as many Germans paid by credit card online during this period - in Switzerland and Austria, this was by far the most frequently used payment method for online shopping, with 65 percent and 47 percent respectively.
A look at the other Nets countries reveals a similarly differentiated picture when it comes to the checkout. Swedes like to pay online on account or by credit card, but also with the Swish national app solution.
Norwegians overwhelmingly prefer to pay by credit card, with just under a quarter using the Norwegian mobile payment app Vipps.
In Poland the national banking app Blik is in the lead, closely followed by bank transfer and card payment.
A broad payment mix applies in all countries
However, despite the differences in the choice of payment option, there are also many parallels: in no country is there one payment method that dominates everything, and a broad payment mix is important for e-commerce merchants in all countries.
Throughout Europe online commerce is growing steadily, especially across borders. Which brings us back to the keyword “unified”: domestic solutions are still popular when it comes to payment, but they are often only offered when we shop in a webshop from our own country. However, we all know that commerce, and online commerce in particular, no longer stops at national borders. Shoes sent from Italy to Germany, Swiss specialities shipped north, clothes from France to Austria - in theory digitalisation makes shopping across the continent easy, if it weren't for the different regulations that still exist and the different payment methods used.
EPI: a unified payment solution for Europe
As varied as payment behaviour may be in detail and as important as country-specific market knowledge and payment preferences are for successful e-commerce: once we take an overall view the various fragments become a mosaic, a coherent picture. This is because in spite of all the differences on a small scale, on a large scale the unifying factor becomes apparent: digital solutions, virtual offers, convenient, flexible and secure payment options are valued everywhere.
The fact is that if our domestic apps and options are not available in a foreign shop, US service providers such as Visa, Mastercard or Paypal will be used. And beyond that? The use of cashless payments is increasing, digitalisation is bringing us closer together, and this offers the opportunity for unified commerce in a literal sense throughout Europe.
The technical prerequisites for this already exist, or are being created. “To create a unified payment solution tailored for Europe” - that is the goal on the website of the European Payments Initiative, EPI for short, of which the Nets Group is a member. With EPI, we are developing a European answer to the international brands, as a debit and credit card as well as an e-wallet for online and offline transactions.
Why this is important and why Nets is a member of EPI is shown not least by the results of our surveys: it requires insight into national specificities, an in-depth knowledge of the individual local commerce, but also an understanding of the overall European market, completely independently of the individual sales channel.
Unified commerce eliminates discontinuities for shoppers
With solutions geared towards unified commerce, Nets as a European paytech company can bring together webshops, apps, landing pages and branches in the most diverse countries in one system. This means that across different brands, companies and nations we enable the consolidation of all cashless sales data, including automated analysis. It enables companies to strategically manage their business units and markets using real-time data.
For consumers it means they can stay loyal to an international brand much more easily: they are recognised thanks to tokenisation, have a uniform user profile and can pay in the way that is best for them, regardless of country or whether they make their purchase locally or online. Personalised offers, single data entry, easy access: unified commerce removes the disruption for shoppers and offers huge potential for customer loyalty. Whereas for a long time payment was the final step in the sales process, today it is a crucial factor for loyalty and market expansion along the customer journey, which should also lead back to the brand after the purchase has been completed.
In spite of national differences: e-commerce is becoming increasingly important
On the whole, the countries of Europe are coming closer together when it comes to payment. This does not mean reducing everything to the greatest common denominator, but instead requires an understanding of the market and expert local knowledge. After all, even if in future it will be possible to unify many aspects, there are still completely different starting situations on the markets and historically developed cultures. This is clearly shown by the absolute figures.
Online shopping is becoming more and more important in Europe as a whole, because ever higher turnover is being achieved - 162 billion euros in Germany in 2020. The trend towards more e-commerce is also evident in Sweden, Poland, Austria and Switzerland - although depending on the significantly smaller population figures in each case and the sometimes lower purchasing power - it was “only” between 21.3 billion and 27 billion euros here. At the same time, Statista forecasts significantly higher growth for Poland up to 2025, with an average of over eight percent, compared to Germany with an average increase of around five percent. If we keep special national features in mind, there is nevertheless a common trend: online sales are on the increase in Europe.
Even if this may not be surprising at first glance for 2020, because many merchants had to shift their business to the web for Corona-related reasons, on closer inspection the high revenues of the travel industry are still missing. On the other hand the significant increase in the sales of physical goods during the Corona pandemic more than compensated for this. The pandemic is still continuing. How long-term the trend towards online shopping will be remains to be seen. However, about half of the more than 7,500 respondents to our E-Com Report said they would make greater use of the advantages of internet shopping even after the pandemic. The answer is not either/or anyway: hybrid business models pick up customers and their quite diverse needs at the most varied touchpoints. They don't need to make decisions based on opening hours, payment methods or consultancy services, but can choose whatever suits the current situation and themselves best. Anyone who talks about customer-centricity needs to think about this, regardless of which European country they wish to do business in.
Parallel trends in payment create a focus for consolidation
This realisation has been true for a long time, but it is only since the Corona pandemic that the former divergences in the field of payment in the individual European countries have increasingly begun to run on parallel tracks - and it is only with this convergence that consolidations along the entire value creation chain make sense, because the trend throughout Europe is digital and unified.
In Denmark the Nets Group is testing so-called ‘face payment’, i.e. payment using biometric facial data.
In Norway only eleven per cent of all purchases are made in cash.
In recent years Poland has become the sixth strongest economy in the EU and, with massive state support and subsidies, is pushing ahead with the digitalisation of payment transactions through the government’s “Paperless & Cashless Poland” programme. The goal is to reduce the share of cash in circulation to 15 per cent within five years.
Sweden has even announced the abolition of cash by 2030, and recent studies indicate that the end of cash could come there even earlier - simply because the population is using it less and less in everyday life.
And even in the German-speaking countries, which have so far been considered fairly cautious when it comes to new payment methods, a different picture has emerged at the checkout since Corona.
We have evaluated the figures of our affiliated merchants in Germany, Austria and Switzerland before, during and after the first government-ordered shop closures in mid-March 2020. While around 55 per cent of card payments were processed contactlessly before the lockdown, in the shops that were still open during the closure this figure rose to a solid 68 per cent. After the relaxations this proportion rose again to well over 70 per cent in some cases - in Switzerland even to 80 per cent.
More contactless transactions for new solutions
A small example: those who pay cashless at the baker’s shop in Germany now almost always do so by tap and go. In this case the proportion of contactless transactions rose to 92 per cent after the easing of the lockdown restrictions. If we look at the development of contactless payments in 2020 beyond the DACH region and compare it with the Nordic countries, it becomes clear how unified the payment world in Europe already is today. The reason for this is that the share of contactless transactions increased significantly everywhere during the pandemic.
Of course, what is exciting here is not the fact that presenting a smartphone or tapping a card is faster than inserting it. The spread of NFC technology in everyday life enables the use of new solutions that are possible across the board with the new behaviour which has now been learned and accepted. Within only a few weeks people in the DACH region discarded their long-held habits at the checkout and have since been using cashless and contactless payment options as a matter of course. The use of wallets at the card terminal via smartphone and wearables has increased significantly. SoftPOS solutions will soon give a further boost to the spread of cashless payment in the DACH region. Paying without cash will really become easier in the tangible future and also as normal here at the market or in the kiosk as it has long been in the Nordic countries. A small further piece of unified Europe.
Crypto currencies and e-currencies are changing the payment market
The increasing acceptance of digital solutions is also paving the way for real innovation and a fundamentally changed payment market. The introduction of digital currencies by central and national banks is only a matter of time. The e-euro, the e-franken or the e-krona will arrive. Today every one of our merchants in Austria can already offer the acceptance of a cryptocurrency such as Bitcoin or Ethereum on a standard card terminal. We rolled out the solution there nationwide with our partner Salamantex as early as March 2021. The underlying technology is the same for cryptocurrencies as for digital currencies. Paying by cryptocurrency, including exchanging it for real money at the shop checkout, is currently still only possible in Austria. However, the insights we are gaining here will very soon become relevant for everyday commerce throughout Europe. This example shows once again that “unified” only works if you know the markets in detail and use the individual opportunities to drive forward innovations as a whole.
A network that is constantly learning
When we at Nets Group began our expansion strategy from the highly digitalised Nordic countries, we targeted regions with high growth potential such as Germany, Austria and Switzerland, which have long been stuck in rigid traditions, but also new target markets such as Poland. And there, above all, in companies that combine innovative strength with a deep understanding of the local market. With this strategy we can at the same time successively consolidate our platforms in order to offer lean and uniform processes - in the interest of the companies involved and in the interest of consumers.
If we look behind the superficial differences, we will see a functioning, learning and constantly evolving network that has long since moved away from nationally-based thinking and is focusing on a connected Europe. It is a network that promotes uniformity, because discontinuities place restrictions on consumers and companies alike. New standards will establish themselves in line with this vibrant commerce, especially where they help organisations to come closer together and make a real “unified Europe” possible.
This article was published on November 15, 2021 in the Digital Special Print of the trade magazine Karten | cards |cartes - Zeitschrift für Zahlungsverkehr und Payments and is available for download as a PDF.