REPORT FROM THE U.S.—Many North American hoteliers and businesspeople might not understand just how complicated and varied the payment landscape is in Europe.
During a recent webinar titled “Payment unsettled: Europe’s complex travel payments landscape,” officials with Phocuswright discussed some of the most important aspects of how payments work in the continent, based on a recent study on the topic.
Here are five of the top takeaways from that presentation.
1. There is no ‘European’ way of doing things
There seems to be as many different cultures around payments as there are countries in Europe, said Norm Rose, senior technology and corporate market analyst for Phocuswright.
Rose started the presentation by outlining some of the most obvious differences between the countries, which include:
- Scandinavian countries are among the most technologically advanced and are more likely to use mobile payments and virtual credit cards;
- the Netherlands has many payment options not available in other countries;
- the United Kingdom has been one of the earliest adopters of Apple Pay;
- credit cards are less common in Germany, a country that largely relies on debit cards and bank transfers;
- French consumers are likely to use dual credit/debit cards;
- Italian credit cards operate more like charge cards, and the prevalence of use for Paypal is much higher in that country than other European nations; and
- fraud is a significantly larger problem in Spain, Russia and several eastern European countries than other countries on the continent.
2. Mobile payment support is still low and could stay that way
While Rose noted some countries are doing a better job than others in supporting mobile payment systems such as Apple Pay, the overall adoption numbers are still low and could remain low as few travel companies seem to be prioritizing their use.
He said only 8% of those who responded to the Phocuswright study indicated they currently support mobile payments, and just 14% have plans to do so in the future. He noted that decision might not be consumer-driven.
“That’s surprising,” Rose said. “It’s a decision that may not meet with the expectations of the individual. The fact that there is no major impact of mobile yet does not mean it will not happen.”
He also noted that the adoption numbers were even more tepid for cryptocurrencies like Bitcoin, which are only accepted by 2% of those who responded, while only 7% plan to accept it going forward.
3. Technical difficulties slow adoptions
Rose said many businesses included in the survey said their top driver to include a payment method is having consumers ask for it, but at the same time, many are not offering methods that guests seem to desire.
The results of Phocuswright’s research showed the top reason, given by 42% of respondents, for not adopting “alternative online payments” is the methods are “technically difficult to implement on our website.” Another 26% pointed to accounting and reporting systems not working with those payment methods.
Regulatory issues also seemed to rank high among payment adoption hang-ups with 26% saying “these methods are not available in our market.”
Only 18% said they didn’t adopt alternative payments because their “customers do not want it.”
4. Younger travelers favor alternative payments
Thomas Helldorff, VP of vertical growth for airlines and travel at Worldpay, said his company’s data shows millennials are more likely than the average of all age groups to choose alternative payment methods over credit cards, and travelers in European countries like Germany are more likely to favor alternative payments than travelers in China or Mexico.
But for the time being, those desires seem to be unmet.
“There’s a huge gap between what the customers want in the market and what travel agents are offering,” Helldorff said.
5. Chinese travelers are coming in droves, and they want their payment systems to follow
European destinations are enjoying a period of extremely high desirability among outbound Chinese travelers, and while this represents a business opportunity for many, it also represents a challenge given that those travelers want to make payments in the same way they do in China, Rose noted.
When arriving in European countries, Chinese travelers want to make use of systems including Alipay and UnionPay.
“That’s an important aspect due to the unbelievable growth of outbound Chinese travelers,” he said.