by Julian Bruyère
- Senior Consultant
The world of payment is constantly evolving, especially towards more digital options. This obviously has its impact on the fintech landscape, which is also evolving very fast. But how about the consumers? Can they also keep up with all the new digital payment trends and technologies?
To find out, Galitt once again conducted its annual survey into consumer behaviours around payment innovations in Europe. This fifth edition of the Galitt PayObserver focuses on the new uses and expectations of consumers in five European countries: Belgium, France, Germany, Italy, and the United Kingdom. Galitt, a European leader in payments, has been part of our Sopra Steria Group since 2017.
Shedding light on consumer behaviours, Galitt’s annual payment barometer covers what consumers think and do around an array of topics such as payment players and methods, online payment, and payment innovations. In the process, the survey reviews and analyses the major payment trends in 2022. Here are some of its key findings for the whole of Europe.
Payment players: banks still in the lead despite rise of new players
In all the surveyed countries, traditional banks are the first players where consumers hold and use a payment account. Not only do they still top the list for customer service, but traditional banks also own the biggest competitive advantages in terms of trust. Other players still have work to do to build that trust, notably on security issues. For example, one in two European consumers (49%) feels protected in the event of a cyber attack, compared to only one in five (19%) for neobanks.
Nevertheless, the rise of neoplayers is real as they manage to create the ultimate link between great technology and customer service. Cashless, transparent, timeless, and above all free, these new payment players are becoming increasingly attractive to Europeans today. Especially in Italy where one in two consumers (54%) has already opened an account with a neobank or a fintech company. Even if their usage in other countries is still lower for the time being and even if some of these companies end up disappearing, they will have contributed to redefining the services of all market players.
Payment methods: plastic card remains primary payment method
Today, all players must imperatively adapt their customer interface to mobile, as the cell phone remains, with the exception of Germany, the preferred communication tool for consumers to interact with their payment service provider. However, while cell phones are today’s preferred means of communication, the physical card remains the most widely used and popular means of payment at the point of sale.
Needless to say, in this context, alternative payment methods are struggling to take off. In France, for example, only one in three people say they use and enjoy using their cell phones to pay. Thanks to Generation Z, however, this trend is bound to be reversed. By increasingly abandoning the physical card or cash in favour of mobile or store credit cards, the uses and taste for innovation of the younger generation are set to change the payment landscape in the coming years.
Online payment: overall improvement of customer journey required
With the exception of Germany, where the digital wallet is the most popular online payment method, debit or credit cards are the preferred method of payment for online purchases. Interestingly, two-thirds of the Europeans surveyed will abandon their online shopping journey if they are not offered the payment method of their choice. This finding proves that in order to convert shopping carts, online shopping platforms should offer an array of payment options.
It also proves that online payment must be fast as well as secure. Although consumers tend to value security in principle, in practice ease of payment and a fast, frictionless payment experience appear to take precedence over security concerns. Our analysis is that customers could either feel overconfident regarding threats or not educated enough towards risks.
Payment innovations: slowly but surely taking hold
Buy Now Pay Later (BNPL), a service that literally allows you to buy something now and pay for it later, or in installments over a longer period of time, is a solution for solving cash flow problems. Consumers with higher incomes show more interest in that payment option, especially for the purchase of higher-value items. Nevertheless, for more than one in three Europeans surveyed (30%), it is more of a debt than a payment method. One in two consumers (50%) is also reluctant to accept the costs involved.
Instant payment has actually become the new norm for consumers, who see no reason to pay for it. Request to Pay (RTP), where you can send someone a payment request with all relevant details via a secure channel and often a direct payment link, is new to the market for many. When explained, this service has a very positive reaction among consumers, especially among young Europeans.
Finally, consumers are also aware of cryptocurrencies, especially in Italy. Overall, the craze is especially significant among Generation Z, who see them as future wealth generators. Surprisingly, the partner perceived as the most reliable to manage the cryptocurrency portfolio remains the bank, traditional or digital. With regard to these final findings, however, it is important to keep in mind that Galitt’s survey was carried out in April before the value of cryptocurrencies dropped significantly.
For a more detailed insight into European consumer behaviours around these new payment trends, download our full report on the Galitt PayObserver 2022.
To find out more about the Belgian market trends in the field of payments, please read my next blog post.