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More Than Just Payments: Understanding Consumers and Cross-Border E-Commerce in Europe

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Europe is a hotbed of omnichannel consumers with 54% of retailers selling through at least three different channels and, thanks to the Single Euro Payments Area (SEPA) regulations, it has never been easier for you to start selling there. If you are thinking of starting an e-commerce website and targeting European consumers, you need to consider more than just payments if you want your business to succeed. And while the Euro and SEPA may have harmonized a fragmented European market (regarding payments), Europe remains as culturally, linguistically, and economically diverse as ever.

SEPA, coordinated by the European Payment Council, is a payment-integration initiative that introduced a single, harmonized payment system for all Euro transactions within the Eurozone (the full list of SEPA countries can be found here). Cross-border Euro transfers within this area are equivalent to a domestic bank transfer. Money can be transferred freely across borders within Europe and you can conduct business in the EU using a common infrastructure and the same set of payment tools and standards across member countries.

And yet, only 7% of small to medium-sized enterprises (SMEs) in Europe actually sell across borders, despite the fact that 2 of the 3 of the world’s largest markets for cross-border e-commerce are in Europe, specifically the UK (#2) and Germany (#3). So why is Europe still an untapped market? Because the barriers to entry for SMEs in e-commerce still remain costly and prohibitive for some. If you look at these barriers as opportunities, you may be able to successfully differentiate your e-commerce business from the rest.

Linguistic diversity

UK, Germany, and France together account for about 75% of the European e-commerce market. However, if you are a unilingual English speaker running a small business with an English website, targeting Germany and France may not be the best option. Language diversity is a defining factor of Europe, and the percentage of English speakers varies widely by country. As you can see from this chart, it is not surprising that so many British and North American businesses target Norway, Denmark, and the Netherlands, despite them being smaller markets than Germany and France. is key to converting customers, but providing multiple translations of a website and product descriptions, and marketing initiatives are likely too expensive of an investment for a small business.

Country-specific laws

There remains legal diversity as well, even though the introduction of SEPA has encouraged the European Union to begin standardizing e-commerce regulations across the continent. An example of a standardized European regulation is the law that requires merchants to include a statement within any “add-to-cart” button that states the customer will be required to pay for the product upon completing the transaction. All rules and regulations are, however, by no means close to being universally applied across all European countries. There remain country-specific laws, such as the German law requiring retailers to pay a fine when they have incorrect information on their website.

Before selling in Europe, it’s important to be diligent and identify particular, unique laws within each national market to avoid expensive fines and legal fees that may undermine your small businesses with its limited resources.

Preferred payment methods

Within SEPA, it’s easy to sell throughout Europe using a single set of payment tools, but each EU country has preferred payment methods. The Germans favor offline credit transfers, while the Dutch prefer local payment method, iDEAL, for example. Shopping habits and preferred methods of payment vary from country to country. The success of your e-commerce business in Europe will thus depend on your ability to offer a variety of payment options so that your European customers can pay whichever way they prefer. For more information on local payment options available in your next target market, visit Payza’s local payment options page.

Stay tuned to the Payza Blog as we explore the shopping habits, preferred payment methods, and other e-commerce idiosyncrasies of the European market, one country at a time. If you want to learn more about a particular European market, give us your suggestions in the comments below.