Cashless Society in Europe 2019

CASHLESS SOCIETY IN EUROPE: A WINDING ROAD A STATISTA DOSSIERPLUS ON EUROPE’S TRANSITION FROM CASH MONEY TO CARDS AND MOBILE PAYMENTS We can expect many economies to become much less „ dependent on cash in the coming years, but that doesn’t mean that cash will disappear. “ – Henk Esselink European Central Bank

2 Table of contents

01 Europe market overview 03 Debit and credit cards 05 Mobile payments

▪ E-commerce market size ▪ Number of cards ▪ Smartphone apps

▪ Domestic and cross-border e-commerce ▪ Most popular brands ▪ In-store and online

▪ POS transactions ▪ Country spotlights: Belgium, France, ▪ Country spotlights: Finland, Norway, Iceland, Portugal, Turkey Switzerland, Sweden, UK

02 Cash money 04 Card-based contactless payments 06 COVID-19

▪ Cash in circulation/ATM withdrawals ▪ Penetration rate ▪ Effects on payment behavior

▪ Share of cash ▪ Card limits ▪ Country spotlights: Netherlands, Russia, Romania ▪ Country spotlights: Cyprus, ▪ Country spotlights: Czechia, Germany, Greece, Italy, Latvia Denmark, Poland, Hungary, Spain

3 Europe’s journey to becoming cashless Executive summary

“Money, money, money”, ABBA sang in 1976 about all the things you Which countries prefer to shop online, rather than offline? And has could do with a little money. Industry experts believe that today, ABBA’s COVID-19 impacted any potential developments? home country of Sweden is set to become the world’s first “cashless There are large differences in Europe regarding payments: Austrians, society”, a place where digital financial transactions, either through for example, withdrew nearly 140 euros per capita per week at an ATM cards or mobile devices, completely replace cash money. This model is in 2019, whereas Czechia boasted Europe’s highest penetration rate of expected to take shape by March 2023, but consumers are already contactless payments, at 93 percent. Nearly three out of four increasingly paying less with cash, and banks and retailers are handling transactions in Turkey were paid for with credit cards, whilst in the less banknotes and coins. Netherlands, credit cards were rarely used at all. There are several advantages to a cashless society: For some, non-cash One thing is clear: Overall, consumers prefer to pay digitally. However, is said to be a cheaper way of paying for goods by way of suitable due to differences in laws and regulations between individual countries, merchant fees. Another argument is that less cash would lead to less the European road towards the cashless society is a winding one. crime and tax evasion. Whatever the reason, Sweden quickly developed MasterCard, for example, had a market share 95 percent and 66 into a potential test case for Europe – and even the rest of the world – percent respectively in the Netherlands and Sweden as of 2018, but had for when it does become a cashless country. significantly lower market shares in many other European countries. This DossierPlus will explore the journey towards a cashless society by PSD2, a Europe-wide regulation that is meant to harmonize compliance looking at various payment methods used within Europe. Where do standards for payment providers across the continent, was only rolled Europe’s largest economies, such as the United Kingdom (UK) or out gradually in 2018 and 2019, and the speed of this change varies Germany, stand on this? Is Europe as a whole getting closer to greatly per country. becoming a cashless society? Are consumers moving away from physical money towards digital options, like cards or mobile solutions?

4 01 Europe market overview ▪ E-commerce market size ▪ Domestic and cross-border e-commerce

▪ POS transactions Europe: a continent in digital transition Background information on the offline and online markets of different European countries

Before looking at payment methods in Europe in detail, it makes sense in a country's GDP. Denmark and the Netherlands, among others, join to take a step back. B2C (business-to-consumer) and P2P (peer-to-peer) the UK and France as countries where online shopping made up over payments, regardless whether it concerns old-fashioned banknotes or a three percent of GDP. newly-released payment smartphone app, are all influenced by the Some of the continent’s smaller countries, such as Malta, Cyprus, state of online and offline retail in a country. Therefore, this chapter Montenegro, and Iceland, heavily rely on online purchases from outside provides an overview of both, POS (point-of-sales, referring to offline their country, so-called cross-border purchases. Other countries also transactions in, for example, a supermarket) as well as e-commerce. shop abroad, but usually from countries that are close-by. Ireland shops POS transactions are difficult to measure, for reasons we will go into in in the UK, whereas Austrians visit German web shops. Belgium is a the next chapter. Estimates seem to indicate, however, that offline special case, as they visit online stores in the Netherlands, France, payment figures seemed relatively low in Switzerland and Norway Germany, and the UK. Consumers from Turkey, Poland, and Sweden, on compared to other countries as of 2019. Consumer expenses in brick- the other hand, preferred to buy online from domestic sellers. and-mortar shops made up less than 25 percent of GDP in these two Overall, then, Europe’s society and economy seem to be in countries. The opposite was true for Croatia, Russia, and Portugal, transformation; Europe is moving more towards a digital environment, where POS payments made up over 65 percent of GDP. driven especially by the rise of e-commerce. However, if digitalization in Online shopping penetration, on the other hand, is high in most Europe was a race, many countries would start on different starting countries. In terms of absolute numbers, consumers from the UK spent positions from each other. 200 billion euros on online purchases in 2019 – roughly twice as much as their French counterparts. Germany was Europe's third-biggest online market, with a revenue of roughly 60 million euros. This picture changes somewhat, however, when looking at the share of e-commerce

Source(s): CRR, PostNord 6 E-commerce penetration is high in Northwestern Europe … Finland 73% Norway 82% Sweden UK 82% EU-27 (as of 2020) 87% 63% Latvia EU-28 Denmark 47% 1 Netherlands 81% 60% 84% Lithuania 48% 2 Belgium 66% Ireland 3 Luxembourg 72% 67% Poland 1 Germany 54% 79% 4 Switzerland 80% Iceland 2 80% Czechia 5 Austria 62% 64% 3 6 Malta 58% France 5 Hungary 70% 4 Cyprus 39% 49% Romania 7 Croatia 23% 45% Italy Bulgaria 38% 22% Portugal Spain 39% 58% Turkey 30%

Greece 39% 6 Note(s): Europe; 2019; 16-75 years; consumers who used online shopping. 7 7 Source(s): Eurostat. ID 915310 ... but large differences in online shopping behavior remain ...

Bulgaria Italy 1.7% | €0.9bn Spain 2.0% | €35.65bn Portugal 2.7% 2.8% | €5.60 €33.56 Turkey 2.1% | €12.57bn

Greece 3.0% | €5.8bn

Note(s): Europe; 2019; all figures provided are estimates; colors concern the “share of GDP”: the darker the color, the higher the share. 8 Source(s): Ecommerce Foundation. ID 1113005 ... with smaller countries more likely to buy from foreign stores ...

Greece 40% | 87% Note(s): Europe; 2019; 16-74 years; individuals who ordered goods or services over the internet, for private use; 6 colors concern the “purchases from abroad”: the darker the color, the higher the purchases. 7 9 Source(s): Eurostat. ID 1114584 … with POS transactions being high in Russia and Croatia

Note(s): Europe; 2019; all numbers shown are estimates. 6 colors concern the “share of GDP”: the darker the color, the higher the share of GDP. 7 10 Source(s): ECB; BIS; Eurostat; Norges Bank; Central Bank of Iceland; The Riksbank. ID 1114533 02 Cash money ▪ Cash in circulation/ATM withdrawals ▪ Share of cash

▪ Country spotlights: Cyprus, Germany, Greece, Italy, Latvia Cash in Europe: a hard-to-grasp topic The difficulties of measuring the use of cash money in Europe

The first step in investigating the road towards a cashless society is to To have some credible and consistent indication of how often cash look at the use of cash itself. After all, high use of banknotes and coins money is used within multiple countries, Statista gathered information in a country likely means a marginal role of cashless options. Being the from different statistics and data sources. In this chapter, we will look at oldest way to pay for goods or services, cash money could be seen as a the use of cash money in terms of the three following methodologies: relic from the past, about to make way for a next generation of the value of currency in circulation (or CIC), total value of ATM payments. For many, Sweden is the prime example of this, being the withdrawals, and the value of ATM plus over-the-counter (OTC) first country, or closest, in Europe and the world to become a “cashless withdrawals versus the value of all known transactions. These society”. Surely, the rest of Europe is to follow this development? One indicators together can give insights into the status quo of cash money only needs to track how often consumers use coins and banknotes for within Europe and help analyze whether it is really an outdated relic or their purchases to get a first glimpse of this? still has a fighting chance.

Unfortunately, it is not that easy; these payment figures are difficult to identify for the European continent. There are two reasons for this: First, there is no active tracking of cash money transactions, making it hard to identify the exact market size. Figures on how many European consumers use notes or coins, therefore, require extensive and in- depth research. Second, Europe does not have a unified approach for reporting payments. The 19 countries in the eurozone have standardized numbers, but non-euro countries each have their own methodologies, styles of reporting, and data quality.

Source(s): IMF 12 Overall cash is highest in Greece, Latvia, and Albania Cash in circulation compared to GDP – but is this representative?

A first indicator UK cash handler, G4S, claims the data needed for this ratio is relatively easy to find. The IMF, however, believes it to be too unspecific when How much cash money is generally circulating in an economy and not studying consumer behavior. CIC policy, for example, can be different lying in a bank vault? CIC, or cash in circulation, provides this among countries, and GDP includes more than just a consumption information and could thus roughly reflect general cash use in a component. country.

Countries in Southern Europe and the Balkans generally have more bank notes and coins within their domestic economies. Cash money not held by banks in Greece, for example, was worth 18.1 percent of GDP in the country in 2018.

16.2% 16.1% 16% 14.5% 13.9% 13.9% 13.5% 11.5% 11.8% 11.5% 11.2%10.4% 10% 10.0% 9.7% 9.2% 9.1% 9% 9% 8.9% 8.7% 8.4% 8.4% 6% 5.9% 3.6% 3.5% 3.2% 2.6% 1.3%

Note(s): Europe; 2019; the numbers for Switzerland and the UK concern 2018 13 Source(s): Eurostat; BIS; IMF; G4S; IMF. ID 1113174 Germans and Austrians withdraw more money from ATMs ATM withdrawals per capita and week change the picture

Austria 140.33€ Money for nothing? Switzerland 117.77€ A second way of looking at cash popularity in a country is Ireland 110.86€ Germany 109.41€ analyzing cash withdrawals from ATM machines or cash Malta 103.42€ dispensers. This method assumes consumers withdraw Greece 92.93€ money to spend it in a shop or another point of sale. Cyprus 86.75€ Belgium 79.61€ The European ATM Security Team claimed that ATM Italy 74.51€ figures declined around three percent between 2019 and Portugal 73.29€ 2020. The number of cash dispensers increased in Croatia 72.03€ Austria, Denmark, and Croatia, but went down in United Kingdom 70.0€ Germany and Italy. Despite that, the value of ATM Netherlands 68.68€ withdrawals in Austria, Germany, and, to a lesser extent, Russia 67.29€ Italy was higher than that of other countries in Western Czechia 65.62€ Spain 61.23€ Europe. Hungary 55.62€ N26 notes that in Germany and Italy, consumers only France 54.65€ Poland 49.14€ take cash out from ATMs run by their own bank, as they Finland 46.02€ may have to pay additional fees if they withdraw money Denmark 43.83€ from a different bank’s ATM. This might mean that if Turkey 42.27€ consumers withdraw money, they withdraw a larger Sweden 35.9€ amount. Norway 34.65€

Note(s): Europe; 2019; 15 years and older; country population Source(s): European ATM Security Team; N26 14 Source(s): ECB; Norges Bank; Central Bank of Iceland; World Bank; BIS. ID 1113964 Market share of cash is lowest in the Nordics and the UK Combining ATM and OTC withdrawals for a more comprehensive picture

Hungary 0.673€ Wind of change? Cyprus 0.65€ The third and final method presented looks at coins and Germany 0.628€ Czechia 0.613€ notes that were either withdrawn from an ATM or via Italy 0.565€ over-the-counter (OTC) withdrawals. Some countries in Austria 0.543€ Europe are more accustomed to withdraw money in the Latvia 0.531€ form of cash-back in a shop. Adding these two values Spain 0.53€ together should give more of an indication of potential Turkey 0.487€ cash use. Poland 0.49€ Portugal 0.37€ The two numbers, as far as they were available, were then Switzerland 0.32€ added to the most likely substitutes of cash money: Ireland 0.3€ payments with cards and e-money. From this total, a share Russia 0.31€ was calculated. Numbers on checks, ACH (Automated Luxembourg 0.30€ Belgium 0.28€ Clearing House), or instant payments have not been used. Netherlands 0.26€ The result shows large differences within Europe. Overall, France 0.24€ Finland 0.17€ cash saw the least use in the five Nordics countries and in UK 0.15€ parts of Western Europe, such as the UK, France, and the Denmark 0.14€ Netherlands. Countries where cash use was lower than in Sweden 0.13€ their neighboring countries included Switzerland, Norway 0.11€ Portugal, and Russia. Iceland 0.08€

Note(s): Europe; 2019; estimates based of data from domestic sources and concerns transaction values 15 Source(s): IMF; PYMNTS; ECB; BIS; Norges Bank; Central Bank of Iceland; The Riksbank. ID 1112656 How does this compare to other research? Results from the ECB’s 2016 survey on cash money use in different eurozone countries

Average amount of cash in a person’s Share of cash in total number of POS The diary of Europe wallet (2016) transactions (2016) A fourth method that has not been not mentioned so Germany 103€ Malta 92% far is that of survey diaries. Some countries, like the Luxembourg 102€ Greece 88% Netherlands or Germany, have their own survey to Austria 89€ Cyprus 88% keep track of the kinds of payment methods Cyprus 81€ Spain 87% consumers use in shops every day. Greece 80€ Italy 86% Ireland 69€ Austria 85% Such a survey was held only once for the eurozone Italy 69€ Portugal 81% countries, with the aim to provide comparative data. Malta 59€ Slovenia 80% This study was released in 2017, with data covering Belgium 58€ Germany 80% 2016, and has often been cited in many payment Lithuania 57€ Ireland 79% reports since. This study was never repeated. Slovenia 57€ Slovakia 78% Finland 56€ Lithuania 75% The ECB concluded that cash was used most in Slovakia 53€ Latvia 71% southern Europe, as well as in Slovenia, Austria, Spain 50€ France 68% Germany, and Slovenia. The number of cash Netherlands 44€ Luxembourg 64% payments made up over 80 percent of POS in all Estonia 43€ Belgium 63% these countries. Only in the Netherlands and Estonia, Latvia Finland 41€ 54% cash’s market share was less than half of all payments France 32€ Estonia 48% at shops, restaurants, petrol stations, and street Portugal 29€ Netherlands 46% merchants.

Note(s): Europe; October 2015 to July 2016 16 Source(s): ECB; Deutsche Bundesbank; DNB. ID 787626 (left), ID 786680 (right) Cash in Europe: somewhat down, not out What are the main conclusions so far?

With these three indicators in mind, we can establish that coins and Cash does seem on the way out in Europe, however, at least in paper money are not yet on their way out within Europe as a whole. Northern and Western Europe. The Nordics especially, not just Sweden, Several countries in or around the Mediterranean Sea or in Eastern show the least cash-related numbers in all three of the methodologies. Europe reached relatively high numbers regarding cash transactions. Other countries with lower-than-average figures are the UK, the Netherlands, France, and Switzerland. One country with high numbers in all three of the mentioned methodologies is Greece. It reached 18 percent of CIC to GDP, had the Exceptions in Western Europe are Germany and Italy. As mentioned fourth-highest ATM withdrawal value, and was fifth when it comes to earlier, ATM withdrawals in these countries are not free, unless a cash market share. This was an exception, though, as most countries consumer withdraws money from their own bank. Cash withdrawal from Southern and Eastern Europe showed mixed results. Cyprus, for values in both countries were noticeably higher than in other countries example, was somewhere in the middle when it comes to cash in close-by. The same was true for the cash market share: Germany’s cash circulation (11.5 percent) but was found in the upper regions of ATM share in 2018 was higher than that of its western neighbors, but also withdrawals (77 euros per capita per week) and cash market share (70 than that of Poland. Italy’s figure was slightly above that of Spain, a percent). Latvia went in a different direction than Cyprus, starting off southern European country similar in economic size. For these reasons, with high CIC (15.8 percent) but with above-average values for ATMs we will look closer at Germany and Italy, alongside Cyprus, Greece, and withdrawals and cash market share (70 euros, 61 percent). On the Latvia. following pages, we will look more into these three countries.

Source(s): IMF 17 Spotlight: Cyprus

Share of cash in total payment transactions in Cyprus I don’t trust myself (with loving you)

100% At first glance, the cash market share for Cyprus over 90% 90% 90% 88% 90% multiple years looks to be more volatile than that found 90% 82% 82% 80% in most European countries. This can, of course, be 80% 76% attributed to data availability and methodology changes 70% 70% over time. There might, however, be another element at 70% 65% play here: 60% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 It is said that Cypriots carry a mistrust towards banking institutions, with both the Financial Mirror and ABC News claiming that locals in 2018 preferred to have cash Debit and credit payment value in Cyprus (in billion euros) hidden underneath their mattresses rather than storing it in their bank account. This distrust stemmed from the Cypriot financial crisis in 2013, when Cypriot banks had 5.8 to revert to personal savings accounts to pay their debts. 5 3.5 3.5 3.9 3 3.3 3.2 3.2 It is in that same year, as well as in 2014, that card 2.5 2.8 2.8 2.9 1.7 1.6 2 payments in Cyprus show a decrease. Since 2015, 0.9 1 1.2 however, they have picked up again. This potentially indicates that trust is somewhat restored, albeit 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 gradually.

Note(s): Cyprus; 2008 to 2019 Note(s): Cyprus; 2001 to 2019 18 Source(s): ECB; IMF; PYMNTS; Central Bank of Cyprus. ID 1094788 Source(s): ECB. ID 436284 Source(s): Financial Mirror; ABC News Spotlight: Germany

Share of cash in total payment Share of payment methods in retail in Fast car transactions in Germany Germany Europe’s biggest economy, Germany, has a Cash reputation of not being that willing to part with cash 2019 62.8% EC cash (incl. Maestro, VPay) money. In German retail alone, for example, cash 2018 65.5% EC debit Credit cards money payments were worth roughly 410 billion 2017 68.3% Customer cards euros in 2018. Especially supermarkets were a Invoices etc. Revenue share 2016 70.7% popular POS for such transactions.

2015 71.7% 2019 There are possibly two reasons for this popularity: 2018 The first one might be speed. EHI Retail Institute 2014 71.6% 2017 2016 estimated that a cash transaction in Germany takes 2013 74.4% 2015 roughly 22.3 seconds, whereas a card payment with 2012 76.9% 2014 a PIN code is seven seconds slower. Using a 2013 signature to verify a card payment, a common 2011 78.2% 2012 2011 practice in the country, takes about 38 seconds. A 2010 79.4% 2010 second reason could be anonymity – Germans seem 2009 81.6% 2009 to value their privacy. 2008 2008 82% 2007 Interestingly, though, figures do show a declining 2006 2007 0.83 2005 use of cash. Slowly but steadily, cash is losing ground in Germany.

Note(s): Germany; 2007 to 2019 Note(s): Germany; 2005 to 2019 19 Source(s): IMF; PYMNTS; ECB; Deutsche Bundesbank. ID 1094959 Source(s): EHI Retail Institute. ID 509224 Source(s): EHI Retail Institute Spotlight: Greece

Share of cash in total payment transactions in Greece Breaking the habit

99.3% 99.5% 98.7% 99% 98.4% Figures suggest that Greece is the European country 100% 95.3% 95% that is most into cash money. For a long time, 99.5% 99.4% 98.6% 98.9% 98.8% 85.8% 90% 96.3% Greeks used coins and paper money for most of 85% their payments, including rents, utility bills, and 78.6% 77.6% 80% Share Share cash of 75.2% taxes. There were allegedly also a great number of 75% freelancers or family-owned enterprises working for 70% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 cash, according to Athens Insider. This only tells part of the story according to the Share of individuals who have never used the internet European Payment Council. In recent years, the Greece EU-28 country made big strides in digitalization as well as in promoting the use of cashless payment methods. 60% 52% 45% It became mandatory, for example, to fill in taxes 50% 42% 36% using electronic payment instruments. 40% 33% 30% 28% 28% 25% 30% 22% Nevertheless, cash is still used often in the country. 20% 27% 11% One out of five individuals in Greece, for example, 24% 23% 9% 10% 20% 18% has no internet access, and certain taxpayers are Share Share householdsof 16% 14% 13% 0% exempt from using digital payments. More 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 incentives to reduce cash use are due to follow.

Note(s): Greece; 2004 to 2019 Note(s): Greece; 2010 to 2019 20 Source(s): IMF; PYMNTS; ECB; Bank of Greece. ID 1094976 Source(s): Eurostat. ID 1115581 Source(s): European Payment Council, Athens Insider Spotlight: Italy

Share of cash in total payment transactions in Italy Mixed emotions

80% 75.6% 76.9% 75.6% 73.3% 72.7% With roughly six out of ten POS transactions being done 69.8% 67.8% with cash, Italy is trailing behind other big economies in 70% 65% 63.3% Europe. There have been changes in recent years, though: 59.9% 60% Digital payments grew, as Italian banks and fintech 56.5% companies spearheaded initiatives to let consumers move 50% away from coins and banknotes. In 2019, this translated 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 into a survey where most Italian consumers seemed quite interested in online banking and digital payments, citing ease of use and the ability to save time as their main “How have you paid in stores, restaurants and other points of sale in the past 12 motivation. Mobile proximity payments also saw more use. months?” 72% There is, however, also domestic criticism of a perceived lack of strategy from previous Italian governments. 47% 43% Economic newspaper, Il Sole 24 Ore, for example, 21% mentions that payment thresholds were lowered and 12% 3% 3% 2% raised eight times in 15 years, and POS operators find commissions too high. The newspaper also mentioned it Share Share respondents of Cash Credit card Debit Prepaid card/ Mobile Check Other I have not depends on who you ask in Italy about cash money, as card vouchers payment paid at any (via smartphone) point of sale elderly people preferred this payment method.

Note(s): Italy; February 20 to March 31, 2020, and August Note(s): Italy; 2009 to 2019 8 to August 29, 2019; 18-64 years; 2,098 respondents 21 Source(s): IMF; PYMNTS; ECB; Banca d'Italia. ID 1095029 Source(s): Statista Global Consumer Survey. ID 1000766 Source(s): MasterCard, Il Sole 24 Ore Spotlight: Latvia

Share of cash in total payment transactions in Latvia Under pressure

Having joined the eurozone in 2014, Latvia faced 98% 98% 97% 96% 95% 94% 93% 91% 89% 88% 86% 84% 81% 79% increasing pressure from the EU and the United States 75% 69% 67% 65% 61% 53% to limit the use of cash money. After 1989, Latvian banks promised secrecy and an entry into former Soviet

markets. Cash money, however, became associated Share cashof with money laundering, according to Reuters. 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Facing reviews from the United States and international watchdog Moneyval, Latvia was forced to reform. This led to domestic laws that limit cash transactions above Corruption perception index score of Latvia a threshold of 7,200 euros. Law firm TRINITI Latvia 56 57 58 58 56 53 55 mentions, for example, that people are not allowed to

49 100)

- buy a house in Latvia with paper money anymore as of 2019.

Because outside powers force the country to reform,

CPI Score CPIScore (0 overall cash use in Latvia is declining fast. Advantages to this can be seen already: Latvia’s corruption perception index grew. The higher that number, the 2012 2013 2014 2015 2016 2017 2018 2019 better.

Note(s): Latvia; 2000 to 2019 Note(s): Latvia; 2012 to 2019 22 Source(s): IMF; PYMNTS; ECB; Bank of Latvia. ID 1095082 Source(s): Transparency International. ID 870102 Source(s): TRINITI Latvia, Reuters 03 Debit and credit cards ▪ Number of cards ▪ Most popular brands

▪ Country spotlights: Belgium, France, Iceland, Portugal, Turkey Europe: the house of (debit) cards Debit cards see more use, but there is little market harmonization

As seen in the previous chapter, the exact use of cash money in Europe The biggest reason for these differences, however, could arguably be is difficult to establish. This is not the case for plastic cards. Payments that Europe does not have one shared payment method across the with either debit cards or credit cards are documented in extensive continent. Europe does not guarantee a cross-border acceptance of datasets in both EU and non-EU countries, each including precise domestic card schemes, which means card payments have two numbers and values of payments by card. These figures suggest that identities: Domestically, national and international card schemes (Visa, card payments are Europe’s most used electronic payment method. In Mastercard, etc.) could be competing against each other through single- 2017 – the latest figure available - there were nearly 70 billion branded and co-badged cards. Internationally, the “big” card schemes payments, with roughly 54 billion of these done with debit cards. are more prominent as they do provide somewhat of a Europe-wide coverage. The same can be argued for digital applications, such as Furthermore, the use of payment cards grew significantly in recent PayPal or Klarna. This will be analyzed in chapter four. years. The introduction of contactless options on cards, or so-called near-field communication (NFC) technologies, fueled this growth. As The following pages will look at how these debit and credit card European consumers increasingly find this payment service to be differences look like. Additionally, five countries will be highlighted that convenient, contactless could still convince them even further to pay for stand out when it comes to cards: Belgium, France, Iceland, Portugal, their low-value transactions by card instead of cash. and Turkey. These were selected for their domestic schemes or other extraordinary circumstances. The following pages will cover the overall use of debit and credit cards. Much like with cash money, there are many differences between the countries. One determining factor for this is the previously mentioned difference in attitudes towards e-commerce. Some consumers barely shop online at all and others prefer to buy domestically instead of from abroad.

Source(s): ECB 24 Turkey, the UK, and Spain take top spot for credit cards …

Number of cards issued per country Finland Norway 4.69 | 5.24 5.30 | 7.31 UK Sweden Russia 60.62 | 102.08 8.03 | 10.70 37.18 | 248.65

Note(s): Europe; 2019; colors concern the “credit cards (in million)”: the darker the color, the higher the number; 6 the debit card figure for Belgium saw a noticeable increase in 2019, but was not explained by domestic sources; 7 25 Source(s): ECB; BIS; Norges Bank; Central Bank of Iceland. ID 1112722 4 … but Luxembourg and Iceland are highest in relative terms

0 Note(s): Europe; 2019; Card numbers compared to country population of 15 years and older; 6 colors concern the “credit cards (per capita)”: the darker the color, the higher the number 7 26 Source(s): ECB; Norges Bank; Central Bank of Iceland; World Bank; BIS. ID 1112757 Scheming on different levels Market share of the most popular card payment schemes in selected countries in Europe

Domestic solution Other

Belgium 81% 11% 4% 1% - 4% Denmark 68% 14% 18% - - - Finland - 55% 44% - - 1% France 85% 2% - 2% - 12% Germany 72% 14% 12% 2% - - Ireland - 89% 11% - - - Italy 46% 24% 28% - - 1% Netherlands - 5% 95% - - - Norway 73% 12% 13% 1% 1% 1% Poland - 54% 46% - - - Russia 8% 46% 38% - - 6% Spain - 67% 33% - - - Sweden - 32% 66% 3% - - Turkey - 54% 44% 1% - 1% UK - 83% 15% 1% -

Note(s): Europe; 2018; includes both POS (offline) as well e-commerce (online) transactions 27 Source(s): Worldpay. ID 1116580 Spotlight: Belgium

Number of processed online and Revenue of online stores in Belgium One love offline payments in Belgium (in (in million U.S. dollars) millions) Belgium is the one European country where national and international card schemes are strictly separated from each coolblue.be 399.2 Bancontact other. Its domestic scheme, Bancontact, is found in no other Visa/Mastercard bol.com 361.3 country and includes almost all debit cards issued by Belgian Maestro/V-Pay banks. Interestingly, Bancontact works both offline, in brick- amazon.fr 219.3 and-mortar stores, as well as online. Several web shops, such 1,593 as Zalando (from Germany), Coolblue, and Bol.com (both zalando.be 189.3 1,442 1,480 from the Netherlands) offer Bancontact as a payment option, 1,375 1,307 allowing consumers to pay for their purchase online with any apple.com 115.2 Belgium-issued debit card. vandenborre.be 98.9 Because of this high acceptance, Bancontact sees a much

amazon.com 83.9 higher use in numbers than international cards like Visa and Mastercard. However, the value of processed payments was amazon.de 75.6 higher for these two brands. This could be caused by Belgium’s cross-border e-commerce behavior; Belgians also 205 228 236 200 246 vente-exclusive.com 73.6 tend to visit Amazon in France, the U.S., or Germany. Here, 73 79 68 94 100 Bancontact might not necessarily be available as a payment hm.com 64.6 2015 2016 2017 2018 2019 option.

Note(s): Belgium; 2015 to 2019 Note(s): 2019 28 Source(s): Worldline (Belgium). ID 864090 Source(s): ecommerceDB.com. ID 871157 Source(s): BeCommerce, Comeos Spotlight: France

Number of credit cards and debit cards per capita in France Blurred lines

Credit cards Debit cards In this DossierPlus, we have so far talked about debit cards 1.22 1.08 1.09 and credit cards as different kinds of payment schemes. 0.95 0.95 0.99 0.9 0.92 0.92 0.88 Separating between the two types of payment schemes does 0.58 0.6 0.58 not work as well for France. 0.48 0.51 0.52 0.54 0.54 0.38 0.45 Cartes Bancaires, or CB, is France’s domestic payment scheme, which co-brands with Visa and Mastercard. User 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 penetration was around 95 percent in 2014 already, meaning almost every consumer in France uses it. It is this popularity, however, that creates a problem: “Carte Bancaire” stands for Most popular payment methods in France in November 2019 “bank card”, and the French do not specifically distinguish With a bank card, by entering your confidential between debit cards or credit cards in their language. 95% code This language issue comes back in different datasets. In cash (coins and bills) 93% Domestic surveys ask French consumers about bank cards in general, not the scheme or the brand. In international By check 73% datasets, France’s data might seem confusing whenever the respondents are asked about debit or credit card usage. Most With a bank card, with contactless payment (NFC) 73% data suggests, however, that debit cards are more popular than credit cards.

Note(s): France; 2010 to 2019 Note(s): France; November 19-20, 2019 29 Source(s): ECB; Banque de France; World Bank. ID 1098129 Source(s): IFOP. ID 1081691 Source(s): IFOP, Buckaroo Spotlight: Iceland

Credit and debit cards issued in Iceland Country of most recent online Otherside (in hundreds of 1,000s) purchase of consumers from Iceland Debit cards make up most card payments across Credit cards Debit cards 28% 27% the European continent. This is not the case, however, for Iceland, where credit cards are the dominant card type. The island nation has a high acceptance rate for both credit cards and debit 21% cards, with many shops accepting them even for 374 337 low-value transactions. Buying a pack of gum with a 372 339 358 credit card is not unusual here. 432 424 Furthermore, Visa and MasterCard are Iceland’s biggest credit card brands, with all domestic banks servicing them. This raises the question why Iceland

Share Share respondents of is so different from other European countries. Unfortunately, there is no clear-cut answer. Possible 487 477 496 415 448 explanations likely have to do with the country’s size 319 339 and position, either due to its domestic currency or its reliance on imports from the UK and the United States. 2013 2014 2015 2016 2017 2018 2019 China UK U.S.

Note(s): Iceland; 2013 to 2019; numbers as of December 31st Note(s): Iceland; 2019; 35,737 respondents 30 Source(s): Central Bank of Iceland. ID 1111821 Source(s): IPC. ID 1023213 Source(s): RUV, Landsbankinn Spotlight: Portugal

MultiBanco transactions in Portugal in billion euros Harder, better, faster, stronger

Cash withdrawals (Online and offline) shopping Card payments in Portugal are tied to ATM machines, 47.1 43.5 more than in other European countries. In 1985, the 39.8 36.5 MultiBanco ATM network started in Lisbon and Porto. 28.4 28.9 29.6 30.3 By 2019, this system processed over 75 billion euros worth of transactions. It is in the type of transactions, however, that things get interesting:

2016 2017 2018 2019 MultiBanco acts like a normal ATM, in that consumers can withdraw cash money. Alongside that, the machine allows consumers to pay their utility bills, ATMs per 100,000 adults in Portugal pay taxes, or order concert tickets. These machines can be found at banks, but also in retail shops for 194.6 191.17 184.91 180.42 POS transactions. Furthermore, shops can offer the 176.87 174.74 170.24 168.04 165.69 169.91 system’s services via their online stores. Because of this, ATM penetration in the Mediterranean country is significantly higher than in most European countries. Austria, for example, had 115 ATMs per 100,000 adults in 2017, while Portugal had 168. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Note(s): Portugal; 2016 to 2019 Note(s): Portugal; 2010 to 2019 31 Source(s): SIBS. ID 1115877 Source(s): World Bank. ID 564106 Source(s): Adyen, Boa Compre Spotlight: Turkey

Number of credit card transactions in Turkey (in millions) Unfinished sympathy 1,250 1,135 1,072 1,101 In terms of size, Turkey’s credit card market is one of 1,011 1,050 958 982 the largest in Europe. When looking at overall 898 898 859 881 1,104 810 790 799 801 1,002 payments in the country, credit cards make up 850 758 759 756 763 706 roughly three quarters of the market. Transactions 650 also saw increases in recent years, with combined Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 numbers of credit and debit cards in Turkey 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 surpassing those in the UK and Germany.

Foreign card payments are an important driver for this, with tourists shopping for around 75 million Distribution of payment methods in Turkey 2018 Turkish lira (roughly 11 billion euros) in 2019 whilst 74% using credit cards. When it comes to domestic use, on the other hand, the size of card payments changes somewhat: In 2019, cards made up around 40 percent of domestic consumer expenditures. Turkey plans to follow the Northern European countries in 11% their digitalization plans and to increase this share to 6% 4% 3% 2% around 50 percent in the coming years. Credit cards E-wallet Debit cards Cash Pre-paid Bank transfer

Note(s): Turkey; Q1 2015 to Q1 2020 Note(s): Turkey; 2018 32 Source(s): Bankalararası Kart Merkezi. ID 881098 Source(s): Paypers; Worldpay. ID 883079 Source(s): Bankalararası Kart Merkezi 04 Card-based contactless payments ▪ Penetration rate ▪ Card limits

▪ Country spotlights: Czechia, Denmark, Poland, Hungary, Spain Contactless in Europe: round one Separating between card-based and mobile-based contactless payments

In a time of rapid digitalization and changing consumer payment credit cards. Here, too, are differences between the European behavior, contactless payments (or NFC payments, after the near-field countries, and contactless card payments can be influenced by the communication technology they are based on) take center stage. As respective popular payment scheme in the country. mentioned earlier, it is likely that the introduction of contactless options As early as 2015, the ERPB (Europe Retail Payments Board) stated that on cards was a reason why debit cards increasingly grew in popularity the adoption of contactless card technologies was happening much in several European countries. faster in Czechia and Poland than in other European countries. It “Contactless”, however, is a vast term, encompassing different types of observed that especially the deployment of payment terminals that payments through different means. A debit card with an NFC chip is supported NFC had been successful here, as deployment coordination one way. Other examples include smartphones or wristbands with an had taken place on a country level. NFC token built in, or apps that decipher a QR code. These types of In this chapter we will briefly look at the use of card-based contactless contactless payments are fairly new in their development and typically payment and highlight five countries which stand out in this regard: require a mobile device (a smartphone, tablet, or a wearable device or Czechia and Poland, along with Denmark, Hungary, and Spain. token) in their use. To avoid overlap, this latter type of contactless payment has been classified “mobile payment” and will come back in chapter five.

In this chapter, we will briefly investigate payments done in close physical proximity via cards. In some way, this is a continuation of the previous chapter and our look into the penetration of debit cards and

Source(s): ERPB 34 Contactless adoption is relatively high in Eastern Europe … Penetration rate of contactless payments in selected countries in Europe in 2018

93% 89% 83% 82%

70%

57% 51% 50% 50% 49% 48% 46%

31% 25%

23% Share Share totalin transactions POS

14%

4% 3%

Czechia Poland Romania Netherlands Austria European average Switzerland Luxembourg Belgium

Georgia Hungary Spain Italy Bulgaria UK France Germany Portugal

Note(s): Europe; July 2018 35 Source(s): MasterCard. ID 946228 … although card limits were lower in Eastern Europe Contactless card limits in Europe in 2019 (in euros)

47€

37€ 36€ 34€ 30€ 25€ 21€ 20€ 17€ 16€

Limiteuros in 15€ 13€ 12€

Denmark Iceland Switzerland UK Ireland Romania Serbia Hungary Slovenia Bulgaria Macedonia France Ukraine Turkey Croatia Poland

Latvia Italy Portugal Norway Lithuania Belgium Spain Slovakia Finland Netherlands Czechia Sweden Estonia Greece Germany Austria

Note(s): Europe; January 2019 36 Source(s): merchantmachine.co.uk. ID 971686 Spotlight: Czechia

Card payment value in Czechia (in billion Czech koruna) Long train running

Contactless card payments increasingly gained 584.27 popularity in Czechia over the years. Public transportation plays a big role here, as the regions of Plzeň, Lotmerice, and Ostrave implemented NFC 123.24 106.09 2.34 payment technology in their transport systems. Originally modeled after the London Underground, NFC (contactless) Online transactions Credit card transactions Cash back transactions the ability to purchase tickets on-board public transactions transportation with a bank card was the country’s first introduction to contactless payments. Level of cash use in Czechia Because of this growing popularity, cash money use 95% 86.6% sees an overall decrease in the country. However, 84.2% 85% 81% 79.4% coins and banknotes remain popular choices for 76.8% 75.8% low-value transactions. One possible explanation 72.5% 75% 69.3% could be the low interest rates found from the local 64% currency, leading to a growing cash in circulation Share Share cash of 65% 61.3% (CIC). Whether cashless payments might only be 55% possible from a certain amount of money upward, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 as retailers would have to pay a fee, is unclear.

Note(s): Czechia; 2019; domestic as well as cross-border Note(s): Czechia; 2010 to 2019 37 Source(s): Sdružení pro bankovní karty (SBK). ID 1117022 Source(s): IMF; PYMNTS; Czech National Bank; ECB. ID 1094801 Source(s): Intelligent Transport, Radio Prague Spotlight: Denmark

Share of contactless payments in number of POS transactions in Denmark Digital love

72% Boasting the highest contactless card limit found in any 61% European country in 2019, Denmark’s growth of 37% contactless payments is in a league of its own. When launched in 2016, the initial card threshold was set to 10% 200 Danish kroner (or roughly 27 euros). This soon increased, as consumers were fast to familiarize Q3 2016 Q3 2017 Q3 2018 Q3 2019 themselves with the new technology.

The national debit card scheme, Dankort, can be Use of payment cards in Denmark, by location (in million transactions) considered a big driver behind this. Dankort adopted contactless options in 2016, when the technology was launched. Interestingly, it has to follow regulations set by POS (staffed check-out) 430 11 the Danish government. Transaction fees, for example, are kept to a minimum, as Dankort is not allowed to E-commerce 107 8 Debit cards make a profit. Additionally, when online or offline shops do not accept Dankort, some cards automatically switch Self-service check-out 25 Credit cards 1 to Visa. These factors combined make Denmark one of Europe’s leading countries when it comes to payment ATM cash withdrawal 13 0 card use.

Note(s): Denmark; Q3 2016 to Q3 2019 Note(s): Denmark; Q2 2019; domestic and foreign transactions 38 Source(s): Danmarks Nationalbank. ID 1098015 Source(s): Danmarks Nationalbank. ID 881075 Source(s): Mobile Transaction, European Payment Council Spotlight: Hungary

Contactless card functionality among cards issued and POS terminals in Hungary Party affair

Ratio of contactless cards Ratio of POS terminals with contactless support In August 2010, cashless payments were introduced in 85.7% 89.2% 83.1% 79% 85% Hungary. Contactless card payments followed suit, 75.9% 72% 62.5% 62% reaching roughly 275,000 transactions in 2015. These 48.6% 54% 35.7% 42% payment methods were not possible nationwide, 20.7% 20% though: These developments were taking place at 7% music festivals. Sziget, Volt, and the Balaton Sound Festival all featured early introductions to contactless 2012 2013 2014 2015 2016 2017 2018 2019 payments, with the Volt Festival offering Apple Pay in 2019.

Credit cards and debit cards per capita in Hungary 2015 is the year that is believed to be the turning point Credit cards Debit cards for contactless technology in the country, as over 50 1.1 percent of issued debit and credit cards supported it. 0.9 0.96 0.97 This trend continued to increase in following years. 0.88 0.89 0.9 0.89 0.88 0.9 0.9 0.92 0.7 Alongside this, Hungary launched a POS terminal 0.5 deployment program in 2018, significantly increasing 0.16 0.16 0.16 0.17 0.17 0.16 0.17 0.16 0.3 0.15 the number of POS terminals in the country. Debit card 0.15 Cards per Cards per person figures changed somewhat during this period, as more 0.1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 consumers joined the contactless payment party.

Note(s): Hungary; 2012 to 2019; figures as of end of the year Note(s): Hungary; 2010 to 2019; 15 years and older; country population 39 Source(s): Hungarian National Bank. ID 1117094 Source(s): ECB; Hungarian National Bank; World Bank. ID 1098144 Source(s): Budapest Business Journal, Festipay Spotlight: Poland

ATMs that support BLIK and contactless POS payment methods in Poland Get ready payments in Poland Poland has a high contactless payment adoption rate, Total ATMs BLIK-compatible ATMs preparing its consumers to embrace new payment Contactless ATMs Cash 67% technologies. Government policies fuel this development, according to Payments Europe, as the Eastern European 7,780 Card payment Euronet 7,780 51% country develops its payment infrastructure. This can be seen, 7,592 (contactless) for example, when looking at ATM figures: In 2019, Payments IT Card / 4,013 3,786 Card payment (in Europe claimed that nine out of ten POS terminals in the Planet Cash 1,434 24% terminal) 3,071 country had contactless support. Polish retailers see PKO BP 3,071 Mobile app (BLIK contactless transactions as a key benefit from card payments. 0 11% 1,808 code) Partially because of this support, the roll-out of contactless BPS 990 0 Mobile app technologies happened fast. 9% 1,726 (contactless) Santander 1,726 This development continues with the mobile banking app, 227 1,674 Google Pay 7% BLIK. This domestic payment method generates special Pekao 1,674 0 passcodes within a mobile app. This code is then used at a 1,364 Apple Pay 6% compatible ATM or web shop. This affects contactless SGB 0 35 payments, as Polski Standard Płatności (BLIK’s operator) and 422 MasterCard announced a strategic cooperation in late 2019, ING 422 Wearables (watch) 6% 422 making it easier to use BLIK for in-store contactless payments.

Note(s): Poland; 2019 Note(s): Poland; October 21 to November 4, 2019; 1,530 respondents 40 Source(s): Cashless.pl. ID 1102759 Source(s): Izba Gospodarki Elektronicznej. ID 1082648 Source(s): Payments Europe, Finanteq Spotlight: Spain

ATM cash withdrawals in Spain (in billion euros) Ready or not 135,000 125,189 122,474 Allegedly, Europe’s first contactless ATMs were found in 125,000 113,197 113,196 113,570 114,863 the Mediterranean in 2011. Boasting Japanese 109,223 124,864 115,000 technology from Fujitsu, Spanish bank, La Caixa, initially 101,619 116,555 118,275 105,000 114,162 110,570 111,404 rolled out several machines in Barcelona and Palma, 91,024 107,976 95,000 paving the way for future contactless payments in Spain. 82,025 96,013 In 2019, however, the use of cash does not appear to Value millionin euros 85,000 have decreased much in Spain. ATM cash withdrawals, 75,000 2002 2004 2006 2008 2010 2012 2014 2016 2018 for example, have reached their highest point yet. Spanish consumers show an interest in new payment “How have you paid in stores, restaurants, and other points of sale in the past 12 months?” methods. Survey information from Ditrendia, for example, indicates that payment cards and mobile 72% 59% payments are used in retail transactions. Domestic 49% research often connects contactless payments to 20% 10% smartphones, with little data on the card-based variant. 2% 2% 2% A reason why adoption might be behind is Spain’s card Cash Debit card Credit card Mobile Prepaid card Check Other I have not limit of 20 euros, which is relatively low compared to that payment (via / vouchers paid at any of other Western European countries, and that cash smartphone) point of sale might be preferred for small-value transactions.

Note(s): Spain; February 13 to March 27, 2020 and August 5 to September 20, 2019; Note(s): Spain; 2002 to 2019 18-64 years; 2,091 respondents 41 Source(s): Bank of Spain. ID 788821 Source(s): Statista Global Consumer Survey. ID 1001436 Source(s): Adyen, Ditrendia 05 Mobile payments ▪ Smartphone apps ▪ In-store and online

▪ Country spotlights: Finland, Norway, Switzerland, Sweden, UK Contactless in Europe: the sophomore payment technology? Apps and mobile-based payments are potentially exciting new challengers in Europe’s payment arena

Discussions regarding the payment methods of the future tend to ranging from a “double-digit increase in volume” (Payconiq, 2020) to include two things: the end of cash and a transition to new, technology- “one third of European consumers in early 2020 being willing to try based digital payments. These new payments tend to include payments mobile-based payments in the next six months” (PwC, 2019). In the near with mobile devices (smartphones and tablets) or, in some cases, even future, though, traditional payment methods such as cash or debit with cryptocurrencies. Mobile payments, then, can be either swiping cards are believed to remain popular in European POS transactions. your phone past a terminal in a brick-and-mortar shop or paying for an Mobile payments are to complement these, rather than replacing them. Amazon purchase via a tablet. It is this digitalization that this chapter If European consumers are using mobile-based payments, it tends to be will focus on. for person-to-person (P2P) payments. Sending money to friends or Most developments regarding digital payments or online payments family via a smartphone app is a common practice in, for example, the originate outside of Europe, according to Deutsche Bank. In China, for Nordics. Additionally, other countries have tried to remove example, online payments equal roughly 75 percent of GDP, a value that psychological barriers for its consumers to use more digital solutions as has doubled since 2012. Additionally, slightly less than half of in-store governments promoted the use of cards and their contactless options. purchases in the country were done via a digital wallet on a These factors combined could pave the way for future growth and smartphone. U.S. companies, especially tech companies from Silicon potential change in Europe’s payment infrastructure. Valley, are also promoting innovations in digital payments. Apple and Google launched their own payment methods in Europe, for example, This chapter will look at the current status of mobile-based payments in in 2014 and 2015, respectively. Europe, either in-store or online. Like in previous chapters, five countries will receive more attention for their involvement in the topic. In Europe, however, these developments are only just beginning. Here, these are Finland, Norway, Switzerland, Sweden, and the UK. Different sources mention a potential for growth in the coming years,

Source(s): Deutsche Bank; Payconiq; PwC 43 Europe has many digital options Mobile payments in POS and e-commerce transactions in selected European countries

In-store Online Safe and sound

Debit and/or prepaid card Debit and/or prepaid card Mobile-based payments play their part in Europe, Fintech mobile/online application Cash but they seem to depend on which digital solution Credit card Credit card Banking mobile/online application Banking mobile/online application consumers know best. Apple Pay and Google Pay, Fintech mobile/online application Cash for example, were used less than other services in Apple Pay / Google Pay Apple Pay / Google Pay 2019. These payment options launched at different Other Other times in Europe: The UK got Apple Pay in 2014, whereas the official launch in the Netherlands was only in 2019. Consumer familiarity is therefore not 36% 33% on the same level in all countries.

Banking and fintech solutions are used more often 20% than Apple Pay or Google Pay. Domestic bank apps 23% are popular, due to brand familiarity. These apps can support different payment methods: Apple Pay, 19% 19% for example, is a feature in the app of Dutch bank ING. Fintech apps includes solutions like Germany’s 11% 16% 7% 7% online bank, N26, or Sweden’s payment service, Klarna, and also, PayPal. 2% 3% 3% 3%

Note(s): France, Germany, Italy, Poland, Sweden, UK; September 5-20, 2019; 3,120 respondents (520 per country); consumers 44 Source(s): Payments Europe. ID 1113474 (left), ID 1113514 (right) Source(s): PostNord In-store mobile payments: smartphone apps Use of proximity mobile payments on a smartphone in selected European countries

40.9% Close to me

36.2% Consumers from Denmark and Sweden were more interested in proximity mobile payments (paying contactless by swiping a smartphone past a payment terminal in a store or restaurant) than those from

25.8% other countries in 2019. No European country came close to China, however, where penetration reached 22.3% 21.1% slightly above 80 percent. 19.7% 19.1% 17.9% In most of the countries mentioned here, the use of 17.2% 16.5% 15.6% contactless (debit) cards was more common. Cards

Share Share smartphoneof users 12.5% have only recently taken over the use of cash money for most of Europe. Continuing growth in card-based contactless payments could lead to more familiarity and spill-over to proximity mobile payments. It must be noted, however, that implementation of these new type of payments was fragmented for a long time, due to different technical standards. Europe- Denmark Norway Italy UK Russia France wide regulation to unify the continent, like PSD2, or Sweden Switzerland Netherlands Finland Spain Germany Payment Services Directives 2 (see Glossary), is meant to address this. Note(s): Europe; September 2019; 14 years and older; smartphone users who have made at least one proximity mobile payment transaction in the past six months; includes point-of-sale (POS) transactions made by using a mobile device as payment method; excludes transactions made via tablet 45 Source(s): eMarketer. ID 1113874 Source(s): eMarketer, Euro Retail Payments Board (EPRB) In-store mobile payments: wearables Distribution of processed transactions from wearable devices in Europe in 2019

Clocks

Smartwatches, tokens, armbands, and rings are only Netherlands 33% used in a few European countries for payment transactions. One third of transactions from these wearables in Europe was done in the Netherlands, a MasterCard survey found. United 18% At the end of 2019, Rabobank and ABN AMRO, two of Kingdom the three biggest Dutch banks, supported the use of smartwatches by Fitbit and Garmin. Another big Dutch bank, ING ,did not support these watches, whereas Rabobank did not offer support for tokens. ABN AMRO Switzerland 8% offered additional options, such as payment via Swatch watches or keychains, wristbands, and rings.

Other countries where wearables were popular were Poland, Sweden, Czechia, Finland, Germany, and

Russia 7% Ukraine. There was no mention in the survey, however, of how many times consumers used these devices or how much money they paid per transaction.

Note(s): Europe; 2019 46 Source(s): MasterCard. ID 1080078 Source(s): MasterCard, Tweakers Online mobile payments: banking apps Use of mobile banking apps in Europe in 2019

Norway 95% More than a feeling Iceland 94% European banks do not often share figures on their online Finland 91% banking users, be it on desktop or on mobile. Exact market Netherlands 91% sizes of mobile banking, therefore, do not exist. Survey Sweden 84% United Kingdom 78% results like this one by Eurostat, however, indicate that most Switzerland 73% users of banking apps were found in the Nordics, followed Czechia 68% by the Netherlands, Estonia, the UK, and Switzerland. Ireland 67% Already in 2018, research from comScore indicated that the France 66% European banking industry seemed relatively successful in Lithuania 65% integrating mobile technology. Banking apps were more Austria 63% commonly used than apps for financial information or Germany 61% Spain 55% online trading. This is likely caused by the increasing number Hungary 54% of functions on the apps. Mobile banking apps in the Croatia 47% Nordics, for example, inherently support payment options. Portugal 46% When asked why European consumers might not be keen Cyprus 42% on using an app, it involved a preference for PC or laptop for Italy 41% internet banking, potential security issues, or a preference Greece 35% Romania 9% to visit a local branch.

Note(s): Europe; 2019; 16 to 74 years 47 Source(s): Eurostat. ID 222286 Source(s): comScore Online mobile payments: PayPal Average daily active users (DAU) of PayPal smartphone app

Finland Born in the USA 91% Norway Finland 5,695 Much like with card payments and cash use, Europe Norway 3,505 is fragmented when it comes to digital wallets. U.S.- 5,695 Sweden based PayPal, on the other hand, is the only mobile 14,592 wallet that sees use in most European countries.

Denmark As mentioned above, Europe does not guarantee a 7,480 cross-border acceptance of domestic card 100k schemes. PayPal, for most consumers, is the closest Netherlands 24,432 option available for cross-border acceptance. UK Additionally, some consumers say that linking 330,134 Germany Poland 312,011 26,666 PayPal to a web shop prevents sharing unnecessary Ireland data and feels more secure. 22,968 Czechia 200k 5,474 Belgium This latter point is evident in Germany and the UK, 15,611 Austria where use is higher than in other countries. In the 17,069 Hungary 6,636 France Romania Nordics, however, there is more competition from Portugal 96,124 6,205 domestic alternatives. One example is Danish 20,796 mobile wallet, MobilePay, which is found in both 300k Italy Denmark and Finland. 71,811 Spain Portugal 55,000 20,796

Note(s): Europe; January 1 to December 31, 2019 Source(s): Worldpay, Attest Turkey 48 Source(s): Airnow Data. ID 1116663 4,835 Spotlight: Finland

Mobile payment apps in Finland in 2019 Hot and cold

20% Mobile payments arrived in Finland in December 15% 2013, with the introduction of MobilePay. Launched by Denmark’s Danske Bank, the mobile payment app 9% 6% was swiftly adopted by Finnish consumers and was 3% 2% expanded in 2018 with partnerships with Finland’s largest retailer, S Group, and its subsidiary, S Bank.

MobilePay PayPal Pivo Siirto Apple Pay Google Pay Mobile payments in Finland, however, are believed to be behind when compared to the other Scandinavian countries, according to research from Deloitte and Respondents who never paid in-store with mobile in the Nordics in 2018 BearingPoint. This is likely due to Finland’s 84% 76% fragmented market and lack of a clear market leader. Finns, for example, did pick up MobilePay, but in lower numbers than the Danes. PayPal, Pivo, and 44% 39% Siirto are other available options.

Alongside this, MobilePay and Siirto are mostly online

payment solutions. Using a smartphone to pay offline Share Share respondents of was done less often in Finland than in the rest of the Finland Norway Sweden Denmark Nordics region.

Note(s): Finland; August 14 to September 3, 2019; Note(s): Denmark, Finland, Norway, Sweden; 2018; 49 18 years and older; 1,879 respondents 18-75 years; 5,000 respondents Source(s): YouGov. ID 1098540 Source(s): Deloitte. ID 1017014 Source(s): Deloitte, BearingPoint Spotlight: Norway

Mobile apps with highest perceived importance in Norway in 2019 With a little help from my friends

In many regards, Norway is the country that leads the way 21% 20% 17% regarding mobile payments. Market penetration in 2018 was 15% over 80 percent, which was slightly more than in Sweden and 10% 9% was the highest of the Nordics.

Norwegian mobile wallet, Vipps, is a big reason for this. Launched in 2015, the mobile payment app allows Facebook Snapchat Instagram Facebook Spotify Vipps consumers to pay for bills and products and to send money Messenger to other people. People with a fødselnummer (a personal ID number), a Norwegian bank account, and a debit card can Market share in number of retail transactions in Norway in 2019 register on the app for free and link it up to the bank 85% account and the debit card. This includes children under 15 years, who can use the app with a parental control feature.

There is a catch, though: Vipps currently sees most usage as a P2P system. Sending money from Vipps via a linked bank

9% account to pay friends, for example, takes immediate effect. 4% 1% Sending money via a debit card, on the other hand, can take up to three business days. Payment card Cash Mobile phone Other

Note(s): Norway; 2019; Spring 2019 Note(s): Norway; Q3 2019; 2,000 respondents 50 Source(s): Norges Bank; ID 1062905 Source(s): AudienceProject. ID 656163 Source(s): Vipps, Deloitte Spotlight: Switzerland

Number of domestic online banking transactions in Switzerland (in millions) Start me up

162.13 Famous for its banking sector, Switzerland very much relies 140.73 134.99 134.61 144.21 142.83 143.60 154.20 126.89 126.73 121.27 123.92 133.39 on its financial institutions for domestic payments. Online bank transfers play a big role in the country, and this is reflected somewhat in the usage of local mobile wallet, TWINT. This app can be linked to accounts at Credit Suisse, Postfinance, UBS, Raiffeisen, and other banks, which can Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 then be used to shop online, to pay in a supermarket, or to pay for charging an electric car. TWINT is primarily used for P2P payments.

Preferred payment methods in Switzerland Compared to other payment methods in the country, mobile 2018 2019 payments are seemingly lagging behind. Still, in 2019, the number of users of either TWINT, Apple Pay, or Google Pay 38.3% 39.3% 34.1% 36% doubled. A criticism of TWINT is its fragmented nature, with 25.2% 23.2% different banks offering customized versions of the app in addition to the normal prepaid version. This leaves possible 1.2% 2.3% room for improvement, especially since the Swiss do show Share Share respondents of an increasing interest in online payments. Debit cards Cash Credit cards Mobile payments

Note(s): Switzerland; Q1 2017 to Q1 2020 Note(s): Switzerland; January 2019; 1,028 respondents 51 Source(s): Schweizerische Nationalbank. ID 791189 Source(s): Comparis. ID 1117395 Source(s): Moneyland.ch, Die Ost Schweiz Spotlight: Sweden

Use of different digital payment methods in Sweden in 2019 The model

100% 92% What is Sweden’s secret? Why are they considered the 79% world’s first country that is to become a cashless society, if not the first already-established cashless society? One 33% possible reason is Sweden’s online innovation. Mobile P2P 16% 9% system, Swish (a cooperation between six banks), e- 4% 4% 3% 0% commerce payment solution, Klarna, and online bank, Swish Klarna PayPal Qlirno PayEx Trustly Apple Pay Samsung Trustly, are all examples of fintechs – tech companies Pay active in financial innovation. Stockholm had over 100 start-up investments in early 2019, according to EY, making Cash use for payments over the past month in Sweden it one of Europe's most attractive start-up destinations.

Another part of the secret could be trust: both the Swedish 2012 2014 2016 2018 2020 Bankers’ Association and Swedbank claim that Swedish 55% citizens have a lot of faith in government and internet 41% coverage. Digital payments have become so common that 26% Swedes barely carry cash with them for offline payments. 20% 19% 12% 13% Debit cards, on the other hand, are used more frequently, 9% 8% 10% 7% 5% 4% 5% 3% with mobile POS payments set to follow. In 2019, Swish Share Share respondents of launched a trial for in-store use at payment terminals to Below 100 SEK 100-500 SEK Above 500 SEK expand from online payments to offline payments.

Note(s): Sweden; 2019; 16-74 years old; 1,000 respondents Note(s): Sweden; 2012 to 2020; 16-84 years; Source(s): Internetstiftelsen; Insight Intelligence; SEQR; ca. 2,000 respondents 52 Bankgirot; Visa Inc.. ID 617423 Source(s): The Riksbank. ID 674315 Source(s): EY, European Payments Council, NS Banking Spotlight: UK

Contactless transactions “In what situations would you like to be Riding the digital wave in the UK (in millions) able to pay with your smartphone (without debit/credit card or cash)?” The UK tends to be a fast adopter of digital developments. Online banking quickly rose to prominence, PayPal ranks as I would like to pay with my Feb 2020 889 23% one of the most used apps in the country, and contactless smartphone all the time Jan 2020 payments are very popular. After Sweden, the UK is closest 878 For public transportation tickets 17% Dec 2019 746 to becoming a cashless society. For everyday purchases (e.g. food) 17% Nov 2019 740 London is said to be at the center of early UK contactless For food and drinks in bars and cafés 17% Oct 2019 761 developments. Introducing automatic deduction from a bank For food and drinks in restaurants Sep 2019 740 16% account at no extra cost for Oyster cards (a tap and go travel card) in 2014, Mobile Transaction states that the London Aug 2019 726 For minor purchases (e.g. decoration items) 14% Underground registered roughly 60 million contactless Jul 2019 766 For admission tickets 11% transactions in the first six months after launch. By 2018, Jun 2019 689 For travel booking 7% however, the capital was overtaken by East Anglia, the south- Jul 2018 650 east, and the Midlands in terms of use. For major purchases (e.g. washing machine) 4% Jun 2018 601 Other 1% According to UK Finance as cited in the Guardian, mobile Jun 2017 470 payments are seemingly growing in popularity but are mainly I don't want to pay with my smartphone at all 36% Jun 2016 219 used by Millennials. Penetration was 29 percent among 25- Jun 2015 81 Don't know 8% to-34-year-olds and made up roughly ten percent of total contactless payment volume in 2017. Note(s): UK; February 7 to March 27, 2020 and August 7 to September 3, 2019; Note(s): UK; June 2015 to February 2020 18-64 years; 2,095 respondents 53 Source(s): UK Finance. ID 488054 Source(s): Statista Global Consumer Survey. ID 997907 Source(s): Mobile Transaction, The Guardian 06 COVID-19 ▪ Effects on payment behavior ▪ Country spotlights: Netherlands, Russia, Romania The coronavirus: payments’ next episode Noticeable early effects on payment behavior in some European countries

So far, this DossierPlus investigated payments up until early 2020, The big question is: What will happen in the future? The answer analyzing whether European countries are edging closer towards depends on many aspects, for example on how the pandemic develops becoming a cashless society, or not. In early 2020, however, this or how everyday life will adapt to the new situation. If social distancing development experienced a significant disruption in the form of the requirements are to remain in place for a long time to come, it is likely coronavirus pandemic. COVID-19 undoubtedly destroyed lives and that overall payments in Europe, be they in retail or in P2P, are to evolve livelihoods, wreaking havoc all over the world, and changing everyday further into a digital form, albeit at a faster rate than originally life. Surely this must have effects on payments in Europe? expected.

Evidence or facts for this impact are hard to find as the topic is too As mentioned earlier, the differences between European countries do recent. At the time of writing, the full effects of the coronavirus have play a part here as well. In the initial stages of the coronavirus outbreak, not yet been identified. Additionally, as we saw in previous chapters, cash grew in importance in some countries. Other countries did not Europe tends to be fragmented. This likely means that information on change their attitudes towards digital payments that much. To illustrate COVID-19 impact on offline and online payments could be available for this, three countries will get an individual analysis: the Netherlands, one country but not for another. Romania, and Russia. Overall, COVID-19 seems to have accentuated European differences in payment behavior in March and April 2020 Regardless, initial finds overwhelmingly suggest that Europe is forced to instead of removing them. It will be interesting to see if Europe will grow adapt to digital ways due to the pandemic. Contactless payments grew, to become more unified in digital payments. as governments promoted their use and payment schemes increased their card limits. Online shopping increased, as offline shops had to close, and governments enforced social distancing rules. It is also likely that people spent more time on mobile applications whilst being at home, increasing the likelihood of trying out in-app payments.

Source(s): Forbes, Payment Cards & Mobile, Deloitte, Bloomberg 55 More demand for cash in initial stages … Euro banknotes in circulation in Europe (in trillion euros)

Intuition Euro banknotes that entered circulation saw their biggest growth since late 2008, increasing by nearly 19 billion euros in week 12 of 2020 (the One expects that digital payments, especially contactless payments, week from March 16 to March 22). It marked the high point of a build- would see an increase in the early days of the coronavirus pandemic up that started in week 9 (February 24 to March 1), with especially the and a decrease in cash use for fear that banknotes might be contagious 50-euro banknote showing a large increase, as fears grew that access to and spread COVID-19. This, however, was not necessarily the case. cash would be limited. Cash demand was not as high in April, showing Instead, the demand for banknotes grew. Germans, for example, fluctuations between four billion euros and eight billion euros per week. withdrew nearly twice as much cash as usual.

1.5 1.4 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 ) 1.3

1.2

euros circulation in 1.1 Financial crisis 2008 COVID-19

trillion 1.0 2020 (in

0.9 Banknotes 0.8 0.7 0.6

Note(s): Europe; Week 1, 2008 to week 19, 2020 56 Source(s): ECB, Bundesbank, Financial Times, Cash Essentials. ID 1117483 … with later encouragement to use contactless payments … Contactless card limits of Visa and MasterCard in Europe in 2020 (in euros)

76€ Rise up

63€ Earlier we established that in 2019, Denmark had Europe’s largest contactless card limit, set at 47 euros. 51€ 50€ COVID-19 changed this dramatically, as card limits were 48€ 46€ 42€ 41€ increased substantially in order to promote contactless

euros 37€ 35€ 34€ payments.

22€ Most countries saw their limits (more than) double, like Limit in in Spain, Swizerland, and Austria. Interestingly, limits in the Nordic countries were not increased as much, according to PYMNTS. Finland, for example, stayed the same, with Norway and Sweden seeing limit increases of Switzerland Bulgaria/ Iceland Hungary Sweden Turkey UK Croatia Romania Norway Poland roughly 50 percent. The biggest increases are observed Russia in Russia, Bulgaria, North Macedonia, and Croatia, with card limits nearly tripling when compared to 2019. Austria Greece Monaco Belgium Ireland Netherlands It should be noted, though, that the limits can vary. In Cyprus Latvia Portugal Germany, for example, Visa and MasterCard were Estonia Lithuania Slovakia relatively early to raise their limits, whereas retail France Luxembourg Spain magazine iXtenso mentions that GiroCard (Germany’s Germany Malta leading domestic scheme) followed later.

Note(s): Europe; May 2020 57 Source(s): Visa Inc.; MasterCard. ID 1117539 Source(s): PYMNTS.com, iXtenso … whilst payment apps grow, but at varying speeds. Year-to-year percentage change of daily active users of the PayPal app in Europe

Turkey 132% Changes France 128% PayPal, as mentioned earlier, is one of the few mobile wallets Belgium 126% that sees use in multiple European countries. This allows for Denmark 123% a comparison to see if online payment behavior has Switzerland 92% Italy 91% changed. Naturally, this is only an estimate. PayPal is not the Sweden 89% market leader in every European country, and we already Romania 77% saw several examples of more popular domestic alternatives. Portugal 77% At the end of March, initial research from Devere Group Norway 64% indicated that overall use of fintech apps had already Hungary 54% increased in Europe, with claims mentioning it was over 70 Austria 53% percent higher than before COVID. As shown here, PayPal’s Spain 45% Netherlands 44% average DAU also grew in early 2020 when compared to the United Kingdom 39% same period in 2019. User rates went up significantly, more Germany 36% than doubling in Turkey, France, Belgium, and Denmark. Russia 36% Whether these are new or existing users is not known. In Ireland 30% that sense, it is interesting to look at the UK and Germany. Czechia 27% Daily use here was already much higher than in other Finland 18% European countries, and both still went up by nearly 40 Poland 2% percent.

Note(s): Europe; week 10, 2020 to week 19, 2020; for this statistic, the weekly average number of DAU was compared to the same period in 2019. 58 Source(s): Airnow Data. ID 1117593 Source(s): Devere Group Spotlight: Netherlands

Year-on-year percentage change in debit Share of debit card transactions in POS What’s my age again? card transactions in the Netherlands payments in the Netherlands in 2019 The Netherlands was not unfamiliar with digital payments, and yet, behavior changed during the 3/19/2020 3/20/2020 3/27/2020 Debit card (contact only, in Dutch: contactrijk ) coronavirus pandemic. POS transactions, for Debit card (contactless only) 3/31/2020 4/10/2020 5/6/2020 example, were significantly lower due to government measures and the fact that many 7% shops were closed. Supermarkets, on the other 5% -8% hand, heavily promoted the use of contactless Supermarkets 22% -9% 24% cards. These payments saw an increase in the first -3% -2% 28% 25% weeks, even though contactless had a market share 57% 23% of 45 percent in points-of-sales (POS) in January -68% 20% 54% Fashion, -72% 24% 2020. shoes, -81% 44% 42% 43% 41% accessories, -72% 22% This shift is likely caused by elderly people using jewelry -67% -38% these digital payments for the first time. Card- based contactless payments, for example, made up -81% 33% -81% 21% more than half of POS transactions from Millennials Cafés and -79% in 2019. Older age groups, on the other hand, were restaurants -75% -69% less likely to use these methods. COVID-19, and the -58% 12-18 19-24 25-34 35-44 45-54 55-64 65-74 75 years years years years years years years years safety measures it sparked, was likely their and introduction to contactless payments. older Note(s): Netherlands; March 19, 2020, to May 5, 2020, versus "comparable days" in 2019; payments processed by ING Note(s): Netherlands; 2019 59 Source(s): ING. ID 1106541 Source(s): DNB. ID 1032459 Source(s): ING, Betaalvereniging Nederland Spotlight: Romania

Credit cards and debit cards per capita in Romania Upside down

Credit cards Debit cards In chapter 3 of this DossierPlus, we mentioned that 0.88 0.93 1.0 0.82 credit cards were not as popular a choice for 0.74 0.78 0.68 0.71 0.72 0.62 0.66 European consumers as debit cards. This is even more the case for Romania, where credit cards have 0.5 historically had a small impact in the country 0.17 0.17 0.18 0.19 0.13 0.13 0.14 0.13 0.14 0.15 according to research from the University of Oradea. In 2017, for example, credit card 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 penetration in Romania was lower than that of other countries in the region. The number of debit Change in payment behavior in Romania since the COVID-19 outbreak cards, on the other hand, showed a steady increase, as more cards were issued and more payment Previously terminals supported them. Currently COVID-19 therefore marks a turnaround in 59% 51% Romanians’ opinions on payment methods. Cards 45% 49% 50% grew in popularity, but cash was very much king 21% 17% still. With potential contagion issues surrounding Share Share respondents of 12% the trusted banknotes, most Romanians were quick Cash Card Contactless card By phone to distance themselves from them in April 2020.

Note(s): Romania; 2010 to 2019; 15 years and older; country population Source(s): ECB; National Bank of Romania; World Bank. Note(s): Romania; April 13-17, 2020; 18-65 years; 500 respondents 60 ID 1098567 Source(s): iSense Solutions. ID 1114099 Source(s): Researchgate, Computop Spotlight: Russia

Share of cash in total payment transactions in Russia “New” sensation?

85% 76.3% The use of money in Russia changed dramatically since 2012, 71.1% 75% 65.1% with coins and bank notes seeing their market share in total 59.7% 65% transactions drop by half in six years. Data from Taxcom 52.4% 55% mentions this has to do with the transfer of people’s salaries to 42.6% 45% debit cards in the late 2000s. This change made it almost

Share Share cash of 35.6% 35% 30.7% mandatory to use payment cards. Gradually, this led to a spill- 25% over effect and people started to use these cards in daily 2012 2013 2014 2015 2016 2017 2018 2019 payments, according to Sberbank. Another reason for increased digital payments is the increasing popularity of e- commerce. Payment methods that were considered safe to use in Russia in April 2020 In a way, then, Russian responses during COVID-19 resemble a 100% culmination of these previous developments. Cash money was not considered a safe payment method at all, with bank cards taking the top spot. Interestingly, nearly half of respondents 71% mentioned contactless payments via mobile. Whether Russians 48% 9% 21% use mobile-based contactless more than card-based 0% contactless payments is difficult to establish, but it shows some Cash Smart watch Mobile phone Bank card (contactless (contactless (debit, credit) connection with Russia’s big increase of contactless payment payment) payment) limits, as observed on page 57.

Note(s): Russia; 2012 to 2019 Note(s): Russia; April 13-15, 2020; 18-65 years; Source(s): IMF; PYMNTS; BIS; Central Bank of the 1,000 respondents; residents of cities with over one million inhabitants 61 Russian Federation. ID 1099412 Source(s): Ipsos. ID 1113586 Source(s): Taxcom, Sberbank Has cash money reached the end of the road in Europe? Conclusion

European consumers do pay more digitally – either in-store, using a Like in many other industries, the COVID-19 pandemic revealed an payment card or a smartphone, or through online payment solutions, immediate impact on consumer payment behavior in Europe. Initially, it for example when sending money to friends via an app. Some countries highlighted the already-existing differences between countries. As are further along in this process than others. Consumers from home quarantine and social distancing continued, more consumers and countries like Denmark, Norway, and the UK, for example, show a big businesses seemingly became interested in cashless payments. Overall, interest in digital developments. Card-based payments or payment government measures to use contactless payments to prevent the apps are already popular here and have been for a while. Governments spread of COVID-19 introduced many Europeans to this digital payment in Central Eastern Europe, on the other hand, are implementing method for the first time. This coincided with many consumers in payment technologies on a high scale, promoting digital payments Europe doing their first online purchase during home quarantine. there. To summarize, circumstances forced people to use digital means, The speed of this payment digitalization varies greatly as well. There are reinforcing a process towards cashless that was already taking place. big differences in how each individual European country approaches The coronavirus therefore speeds up the digitalization of payments B2C and P2P money. It is not uncommon, for example, that countries across Europe. There are still differences in the continent, but the have their own domestic payment schemes. A Visa card might be the cashless trend is developing. most popular one in one country, but not in another. Technological innovations from an app in one country might not always be applied in another, because the application is not used there. This fragmentation of the European continent (also within the European Union itself) is why regulations such as PSD2 arrived, designed to bring the splintered market together.

62 Glossary

B2C Credit cards B2C, or business-to-consumer, refers to the process of selling products Credit cards allow consumers to make purchases via an extension of and services directly between a business and consumers who are the credit. They are issued by financial institutions affiliated with a global end users of its products or services. card brand network, such as MasterCard, Visa, or UnionPay.

Cashless society The cashless society refers to a society where physical currency has Cross-border e-commerce been replaced by digital payment methods, such as contactless Cross-border e-commerce refers to goods and services that are bought payments or mobile wallets. online outside of the domestic country, e.g. a consumer from the UK CIC purchasing something from a Chinese web shop, or a consumer from Belgium purchasing from a French online store. Cash in circulation, or currency in circulation, represents the amount of coins and paper notes that have been issued by a country’s monetary DAU authority and are physically used in transactions between consumers Daily active users measures the total number people who interact with and businesses. a mobile app or website on a given day. DAU is usually seen as a Contactless payments primary measure of engagement. Contactless payments refer to digital payments conducted with a debit card, credit card, or a device with a special chip, where a consumer does not have to type in a PIN code but tap the card or device near a POS terminal. These payments use RFID technology or near-field communication (NFC).

63 Glossary (continued)

Debit cards Debit cards allow consumers to make purchases with funds directly NFC debited from accounts held at their financial institution. Debit cards are Near-field communication (NFC) refers to the short-range wireless issued by financial institutions affiliated with a global card brand connectivity technology that allows NFC-enabled devices to network. communicate with each other in distances of four centimeters or less. E-commerce This allows for sharing small sets of data between two devices, like payment data between a POS terminal and a smartphone. E-commerce or online shopping involves the purchase of goods and services online and is the opposite of POS or offline shopping. P2P Peer-to-peer (P2P) refers to the process whereby two individuals Fintech interact directly with each other, without intermediation by a third Fintech, or financial technology, is used to describe new technology that party. seeks to improve and automate the delivery and use of financial services. This includes consumer-oriented financial services, but also PSD2 cryptocurrencies like Bitcoin, among other services. PSD2, or Payment Services Directive 2, is a European Union regulation for electronic payment services. Its main aims are to make payments in Mobile wallet Europe more secure, help banking services adapt to new technologies, Mobile wallets (sometimes also called digital wallets) are payment and boost innovation by allowing Amazon, Apple, and Google access to methods that allow consumers to securely store payment credentials payment services. on mobile devices to pay for purchases in both POS and e-commerce. Global examples are Alipay, Apple Pay, Amazon Pay, and Google Pay.

64 Glossary (continued)

POS POS, an abbreviation of points-of-sale, refers to offline shopping in a brick-and-mortar store and is the opposite of online shopping or e- commerce.

Proximity mobile payments Proximity mobile payments, or NFC mobile payments, refers to the use of a smartphone app to pay for goods and services at a physical point- of-sale (POS) terminal.

Wearables Wearable technology, or "wearables“, refers to a category of electronic devices that can be worn as accessories, such as rings, bracelets, and (smart)watches. Examples include Apple Watch, Samsung Watch, and Garmin fitness trackers.

65 Sources

ABC News Comparis Adyen Computop Festipay Airnow Data comScore Financial Mirror Athens Insider Credorax Financial Times Attest CRR Finanteq AudienceProject Czech National Bank Forbes Banca d'Italia Danmarks Nationalbank G4S Bank of Greece Deloitte Global Data Bank of Latvia Deutsche Bank Hungarian National Bank Bank of Spain Deutsche Bundesbank IFOP Bankalararası Kart Merkezi (BKM) Devere Group Il Sole 24 Ore Bankgirot Die Ost Schweiz IMF Banque de France Ditrendia ING BearingPoint DNB Insight Intelligence Betaalvereniging Nederland ECB Intelligent Transport BIS Ecommerce Foundation Internetstiftelsen Bloomberg ecommerceDB.com IPC Boa Compre EHI Retail Institute Ipsos Buckaroo eMarketer iSense Solutions Bundesbank EPRB Izba Gospodarki Elektronicznej Cash Essentials European ATM Security Team Landsbankinn Cashless.pl European Payments Council MasterCard Central Bank of Cyprus EuroShop Mag merchantmachine.co.uk Central Bank of Iceland Eurostat Mobile Transaction Central Bank of the Russian Federation EY Moneyland.ch

66 Sources (continued)

N26 Transparency International National Bank of Romania TRINITA Latvia Norges Bank Tweakers NS Banking UK Finance Payconiq Vipps Payment Cards & Mobile Visa Inc. Payments Europe World Bank Paypers Worldline (Belgium) PostNord Worldpay PwC YouGov PYMNTS Radio Prague Researchgate REUTERS RUV Sberbank Schweizerische Nationalbank Sdružení pro bankovní karty (SBK) SEQR SIBS Statista Global Consumer Survey Taxcom The Riksbank

67 Recommendations

DossierPlus Dossiers More Cross-border e-commerce ATMs and POS terminals in the Benelux eCommerceDB.com European banking sector Contactless payment in the UK (UK) Statista Global Consumer Survey The next U.S. recession Contactless payments and near-field communication (NFC) payments in the Benelux Israel: The Tech Innovation Nation Credit and debit cards in Italy Gen Z and the internet in the UK Credit and debit cards in the UK Omnichannel retail in the United States Debit and credit cards in Scandinavia Gen Z and the internet in the UK E-commerce in Europe Omnichannel retail in the United States Fintech in Europe Quantum Computing Mobile payments in the Nordic countries Payment instruments – France, Spain and Italy Payment methods in Denmark Payment methods in Finland Payment methods in Italy Payment methods in Norway Payment methods in Sweden Payments in Belgium Payments in the Netherlands

68 RAYNOR DE BEST

Expert – Financial Services & Real Estate Raynor is a research expert with several years of experience. At Statista, he focuses on digital developments and their influence on finance, as well as e-commerce and other consumer-driven categories.

TEL (040) 284 841 248 E-MAIL [email protected]