Entering the European payments system means tapping into a digital payments market that’s projected to reach almost $2.42 trillion in total transaction value in 2025. Though payment preferences vary by country, accepting contactless payment methods is a necessity throughout the region, and businesses should understand which ones are most popular.

Below, we’ll explore what businesses planning to accept payments in Europe should consider, including these measures:

• Embracing contactless payments
  
• Simplifying international payments
  
• Implementing strong security measures
  
• The state of the market
  

The state of the market

Europe includes more than 40 countries, each with local payment methods. Customers across the region are gradually moving away from cash and toward contactless payment methods such as contactless credit and debit cards, digital wallets, and buy now, pay later (BNPL) options. Nordic countries such as Sweden and Norway are closest to a cashless economy, while many central and eastern European countries still rely heavily on cash for in-person purchases.

The regulatory environment, led by the EU, has adapted to the rise of digital payments. Regulations such as the revised Payment Services Directive (PSD2) create a more accessible and secure payments system. Despite these advancements, payment security and interoperability remain challenges for businesses accepting payments in Europe.

Payment methods

Though each European country has its own payments environment, the region is moving toward more contactless payments. Here's a look at the most common payment methods in Europe, from those currently in use to emerging trends.

Current usage

Though cash usage is still present in Europe, it’s declining. According to a European Central Bank study, cash use at the point of sale (POS) in the euro area decreased from 72% in 2019 to 59% in 2022, but it was still the most used payment method for this transaction type. Credit and debit cards were the most common payment method for online transactions in 2022, accounting for 51% of online payments; they accounted for 34% of POS transactions.

Contactless payment methods have been growing in popularity throughout the region, with the same study finding that contactless card payments at the POS increased from 41% of card payments in 2019 to 62% in 2022. Europe has high digital wallet penetration, with a 2023 Visa study finding that 72% of Europeans actively engage with digital wallets. Switzerland and the Nordic countries have seen the highest usage rates, ranging from 83% to 94% of customers.

Adoption of BNPL payment methods has been increasing, due in part to the popularity of the Swedish BNPL provider Klarna and multiple local providers across Europe. BNPL payments were expected to grow by about 15% annually to exceed $219 billion in 2024.

Popular B2C payment methods in Europe

• Credit cards
  
• Debit cards
  
• Digital wallets
  
• Bank transfers
  
• BNPL
  

Popular B2B payment methods in Europe

• Credit cards
  
• Bank transfers (e.g., Single Euro Payments Area [SEPA])
  
• Wire transfers (e.g., Society for Worldwide Interbank Financial Telecommunication [SWIFT] code)
  
• BNPL
  

Emerging trends

In eastern Europe and the Commonwealth of Independent States, digital wallets have been gaining traction. They constituted 24% of ecommerce payments in the region in 2022. In western Europe and the Nordic countries, people have been embracing digital currencies more often. For example, a 2022 survey showed that 10% of adults in the UK held or once held cryptoassets. Sweden experimented with an e-krona pilot project to test a central bank digital currency (CBDC) that would provide an alternative to the private sector’s digital currencies. If implemented, the e-krona could further influence digital currency adoption throughout Europe.

Ease and friction of entry

Entering the European payments market involves considerations relating to taxes, chargebacks, cross-border payments, and payment security. Here’s what to know before accepting payments in Europe:

Taxes

Value-added tax (VAT) applies to most European goods and services, with an average VAT rate of 21.6% in the EU as of 2024. Customers pay VAT, and businesses are responsible for collecting and remitting it to the government. Late or improper VAT remittance can result in fines, and noncompliance can trigger audits and legal repercussions.

Chargebacks and disputes

Most chargebacks go through a structured process governed by card networks, banks, and financial institutions. When a customer disputes a transaction, this system notifies the business and temporarily holds the funds pending investigation. The business can respond to the chargeback by providing evidence such as transaction records, delivery confirmation, and communication with the customer.

Legislation such as the UK’s Consumer Credit Act offers guidance for the dispute process and establishes corrective measures. The PSD2, which requires Strong Customer Authentication (SCA), influences how chargebacks and disputes are handled—involved parties can cite the verification level in dispute resolutions.

International payments

Consider these factors if your business will accept payments from multiple countries or in multiple currencies:

• Currency conversion: Accepting payments in currencies other than euros will require currency conversion. Financial institutions often add a markup for businesses at the interbank rate, the baseline rate for currency conversion at which banks lend to each other. Third-party payment providers such as Stripe can simplify cross-border transactions for customers and businesses.

• SEPA transfers: SEPA direct debit simplifies cross-border transactions in euros. All 27 EU member states belong to the SEPA zone, as well as Switzerland, the UK, San Marino, Vatican City, Andorra, Monaco, and the three European Economic Area (EEA) countries of Iceland, Liechtenstein, and Norway.

• Legal and regulatory compliance: There are regulations for international transactions and currency conversion throughout Europe. Compliance requires financial institutions and payment providers to disclose conversion rates and associated fees.

Security and privacy

The EU provides a framework with best practices for data protection, customer authentication, and Anti-Money Laundering (AML). Here are the regulations for security and privacy:

• Data protection: The EU’s General Data Protection Regulation (GDPR) sets the standard for customer data protection, requiring explicit consent for data collection and granting customers the right to be forgotten (i.e., have their personal data erased). Noncompliance can result in fines of up to €20 million or 4% of the business’s global revenue, whichever is higher.

• Customer authentication: Under the PSD2, payment service providers must adhere to SCA, and transactions often require two-factor authentication to proceed. The Payment Services Directive 3 (PSD3) will add new requirements.

• AML and Counter-Terrorism Financing (CTF): EU directives on AML and CTF, aimed at stopping illegal income from moving through the financial system or financing terrorism, require financial institutions to monitor transactions and report suspicious activity. Failure to do so can result in severe penalties.

• Consumer protection: Many European countries have consumer protection legislation that requires transparent advertising, pricing, and refund and return policies. Governmental bodies typically regulate unfair business practices based on these laws.

• Payment Card Industry Data Security Standard (PCI DSS): Businesses and payment platforms that accept credit card transactions must comply with the PCI DSS. This global standard outlines best practices for storing, processing, and transmitting cardholder data, reducing the risk of fraud.

Key success factors

Businesses that want to accept payments in Europe should prioritize contactless and mobile payments, simplify international transactions, and maintain strong payment security protocols. Here’s how each of these factors can help businesses successfully expand into the European market:

• Contactless payment options: Customers in Europe often use contactless cards and digital wallets, especially in Nordic countries. For example, contactless payments constituted 86% of in-store payments in Norway in 2022. Businesses should be prepared to accept various contactless payment methods in person and online.

• Mobile payment infrastructure: The broad adoption of mobile commerce makes it even more important for ecommerce businesses to accept mobile payments. Mobile commerce accounted for about 55% of online retail sales in the UK in 2022. Businesses should ensure they have payment pages that are mobile-friendly and can accommodate a variety of payment types.

• Simplified international payments: Displaying prices in different currencies can be a simple yet effective way to make shopping more convenient for customers. For B2B transactions, offering payment options that are customized to cross-border payments—such as SEPA transfers—can further simplify the process.

• Strong payment security measures: Businesses can take measures to mitigate payment fraud, including verifying customer identities and creating impenetrable systems to store customer data. EU regulations such as the GDPR and PSD2 make these practices mandatory and help businesses prevent financial and reputational damage.

Key takeaways

Though each market is unique, the broader European payments system draws on the similarities found across the region. Expanding into Europe requires your business to cater to local payment preferences, and it must take advantage of payment integration initiatives that allow smooth transfers between countries. Here are some of those initiatives, along with tips for your business:

Embrace contactless payments

• Welcome digital wallets: Digital wallet payments are popular in western Europe and becoming more popular in eastern Europe because of their convenience and the ubiquity of smartphones. Accept wallets such as Apple Pay and Google Pay to follow this growing trend.

• Accommodate BNPL payments: BNPL payments are expected to continue increasing, and accepting BNPL transactions through providers such as Klarna gives customers more flexibility.

• Refine for mobile: Update your online payment page to ensure it translates well to mobile, is intuitive to use, and can accommodate different payment types.

Simplify international payments

• Use the SEPA zone: Establish payment processes for cross-border transactions within the euro area, minimize fees, and reduce transaction times by facilitating SEPA transfers.

• Offer multilingual interfaces: The EU is home to 24 official languages—in addition to the languages spoken in non-EU European countries—requiring payment interfaces to accommodate a variety of languages. Localize the customer checkout process to reduce payment friction and cart abandonment.

• Accept multiple currencies: Though the euro is the most used currency in Europe, multiple currencies are used throughout the region, including the Czech koruna, the Polish złoty, and the Swiss franc. Letting customers pay in their local currencies can remove barriers at checkout.

Implement strong security measures

• Verify customer identities: Follow PSD2’s rules on SCA and implement fraud detection tools such as two-factor authentication and 3D Secure to validate user identities and mitigate the risk of card-not-present (CNP) fraud.

• Safeguard customer data: Ensure your business’s security practices comply with GDPR guidelines and global PCI DSS standards to protect customers’ personal data and avoid penalties for noncompliance.

• Update fraud prevention measures regularly: Regular updates to fraud detection and prevention systems, along with customer education on best payment practices, can help maintain a secure payment environment.