Europe’s online payments landscape is evolving faster than ever. For businesses, keeping up isn’t just about adding another payment option; it means navigating a complex mix of local preferences, regulations, and emerging technologies.
Contactless payments, open banking, BNPL and the future digital euro – these trends are reshaping how money moves across the continent. Understanding them is key to staying competitive, reducing friction at checkout, and reaching a broader customer base across Europe.
Current payment landscape
Europe has one of the most diverse payment landscapes in the world. In 2024, digital payments accounted for over half of all retail transactions, with cards, bank transfers, and mobile wallets leading the way. Contactless payments are now the dominant method in countries like Sweden, the Netherlands, and the UK, while cash usage remains higher in Southern and Eastern Europe.
This presents businesses with various challenges:
- Fragmented local preferences: Payment methods vary widely. iDEAL dominates the Netherlands, Klarna in Germany and Austria, Swish in Sweden, and Bancontact in Belgium. Integrating multiple options is essential to avoid losing customers at checkout.
- Cross-border payments complexity: Selling across Europe involves handling different currencies, local schemes, and regulations, which can slow settlements and increase operational costs.
- Security and fraud: Online fraud in Europe continues to rise, with card-not-present transactions accounting for around 80% of total card fraud. Strong authentication and monitoring are critical.
- Regulatory pressures: PSD2, SCA, AML directives, and upcoming EU frameworks like the digital euro regulation require constant attention to stay compliant.
Despite these challenges, digital adoption continues to rise, presenting opportunities for businesses ready to adapt.
The growth of digital and contactless payments
Digital and contactless payments have become the backbone of European commerce. Contactless cards and mobile wallets now account for over half of card transactions in markets like the UK, Sweden, and the Netherlands.
Key drivers include:
- Speed and convenience: Checkout times drop 30–50% with contactless or mobile wallet payments, reducing abandoned carts.
- Integration with e-commerce: Platforms are increasingly supporting Apple Pay and Google Wallet, alongside local solutions such as iDEAL, Swish, and Bancontact.
- Mobile-first adoption: Mobile payments are rapidly increasing across Europe, particularly in the Nordics, the UK, and Germany, becoming an essential part of online transactions, especially among younger consumers.
Businesses must stay competitive by offering a blend of global and local payment methods tailored to each market.
Open banking
Open banking is transforming payments by enabling direct transfers from bank accounts without relying on cards. Since PSD2, over 50 banks in the UK and Nordics offer Pay by Bank solutions for near-instant account-to-account transfers.
Benefits include:
- Lower fraud risk: Transactions are authenticated through bank-level security.
- Faster settlements: Instant processing supports marketplaces and subscription services.
- Consumer convenience: Shoppers pay directly from their bank accounts without entering card details.
Adoption of open banking payments is expanding in Central Europe, with countries such as Germany, France, and the Netherlands witnessing an increasing use of this technology.
Buy Now, Pay Later (BNPL)
BNPL is one of the fastest-growing payment options in Europe. In 2024, transactions exceeded €130 billion, with Klarna, Afterpay, and Scalapay dominating markets such as Germany, Austria, and the Nordics.
For merchants, BNPL can boost average order values by 20–30% and reduce cart abandonment by letting customers split payments into instalments. Younger shoppers, particularly Gen Z and millennials, are increasingly viewing it as an alternative to credit cards.
But regulation is catching up. The EU’s updated Consumer Credit Directive now requires clearer terms, stronger affordability checks, and more transparent marketing. Businesses need to balance BNPL’s growth potential with compliance and responsible use.
The digital euro
The European Central Bank is moving forward with plans for a digital euro, a central bank digital currency designed to work alongside cash and existing electronic payments. Unlike cryptocurrencies or private stablecoins, it would be state-backed, offering greater trust and security.
For consumers, it promises fast and low-cost transactions, available both online and offline, while also improving financial inclusion by giving access to digital money without the need for a traditional bank account.
For businesses, the impact will depend on how it is implemented. A digital euro could reduce reliance on cards and private intermediaries, potentially lowering costs. However, it will also require adapting checkout systems and adhering to new regulatory standards.
If launched later this decade, it may reshape Europe’s payments landscape into a more unified and resilient system.
Other emerging trends
Several emerging trends are shaping Europe’s payments ecosystem:
- QR code payments are gaining popularity for both online and offline purchases, especially in the Nordics and Eastern Europe. They allow fast, contactless, and mobile-friendly transactions.
- Sustainable payments, including digital receipts, eco-friendly cards, and lower-carbon payment methods, are attracting environmentally conscious consumers. Merchants offering these options often see higher engagement.
- Digital identity verification, which confirms a person’s identity online using IDs or biometrics, helps prevent fraud, ensures compliance, and makes cross-border transactions smoother.
- Multi-service platforms that combine shopping, banking, and payments are changing consumer expectations and encouraging loyalty, pushing businesses to provide seamless, all-in-one experiences.
Keeping an eye on these trends helps businesses stay competitive and deliver a better overall customer experience.
Payment regulations that influence the European payments market
Regulation is a major force shaping Europe’s payments. Staying compliant protects both businesses and customers:
- PSD2 / PSD3: PSD2 introduced open banking and Strong Customer Authentication (SCA). PSD3, now in progress, will further tighten fraud prevention and unify rules across the EU.
- SCA requires two-factor authentication for most online transactions. While it adds friction, it significantly reduces the risk of fraud and is essential for compliance.
- AML & KYC require payment providers and merchants to verify users, monitor suspicious activity, and report irregular transactions. This increases operational costs but protects against financial crime.
- GDPR governs how businesses collect, store, and process payment data. For merchants, this means ensuring explicit customer consent, secure data handling, and transparency in how personal and transaction data is used. Non-compliance can result in heavy fines and reputational damage.
- Consumer credit rules, such as the updated Consumer Credit Directive, regulate how BNPL and other financing options can be marketed and offered, ensuring affordability checks and transparency in terms and conditions.
Getting regulation right is more than a legal obligation; it builds trust and helps businesses compete in Europe’s highly regulated market.
How businesses can adapt
Europe’s payment market is moving fast, with new regulations, consumer preferences, and technologies shaping how people pay. For businesses, the key to success is adaptability:
- Offer both global and local payment methods to avoid losing customers at checkout.
- Stay compliant with PSD2, GDPR, AML, and upcoming regulations such as PSD3 and the digital euro.
- Integrate secure solutions that protect against fraud while keeping checkout smooth.
- Embrace new trends such as open banking, BNPL, and mobile wallets to match customer demand.
This can be complex to manage alone. That’s where Payop comes in. With over 500 local and international payment methods, advanced anti-fraud tools, and solutions like Pay by Bank, Payop helps businesses simplify payments while staying compliant across Europe. Merchants also benefit from features like mass payouts, scheduled withdrawals, and detailed analytics, making it easier to grow and operate across multiple markets.
Selecting the right payment service provider that meets all your needs can be a tricky task. Payop aims to make it simple, helping businesses stay compliant, expand globally, and give their customers the payment options they trust.
