The Czech Republic uses a blend of conventional payment methods and digital alternatives. Even as bank transfers remain popular, electronic and mobile payments are gaining momentum. In 2023, over 72% of Czech internet users shopped online, a significant rise from about 32% in 2015. This surge is helping to drive the shift towards electronic transactions.

This central European nation has also developed financial regulations in line with European standards. Its adherence to the General Data Protection Regulation (GDPR) and established guidelines for digital transactions echo this balance between global best practices and regional character. The Czech financial sector includes traditional banking institutions as well as a spectrum of specialized financial service providers to meet diverse customer needs.

Below, we’ll explore the intricacies of Czech payments, financial services, and the factors that shape its payment space, including:

• Catering to local payment preferences
  
• Focusing on compliance
  
• Making security a core part of operations
  

The state of the market

Credit cards are widely used in the Czech Republic. However, residents strongly prefer debit cards to credit cards. According to the Czech National Bank (ČNB), there were 14.6 million debit cards in circulation in 2024, compared to just 1.2 million credit cards.

The ČNB serves as the central authority that oversees monetary policies and financial stability in the country. Working alongside the ČNB, the Ministry of Finance sets fiscal and economic policies. Its financial regulations are strongly influenced by the European Union’s standards, particularly the Single Euro Payments Area (SEPA) and GDPR.

Payment methods

The Czech Republic uses a mix of payment methods that range from bank transfers and debit cards to mobile payments. Here are the most popular payment methods.

Current usage

While cash is still very widely used, digital payment options are rising in popularity. A 2024 report found that three-quarters of the Czech population preferred contactless payments. The prevalence of mobile banking apps and the introduction of features such as mobile payment solutions and QR code payments are further proof of this shift. The rise of contactless payments in the Czech Republic parallels global trends towards faster, safer transaction methods. The Czech populace has eagerly embraced near-field communication (NFC) technology. In 2022, about 98% of all cards in circulation were contactless.

Mobile payments are commonly used in smaller retail transactions, dining experiences, and casual financial exchanges among friends and family. While there’s a growing acceptance for completing larger transactions with mobile wallets, larger expenditures are usually paid for through conventional payment methods.

Local solutions have also found broad success. Twisto, a Czech mobile payment app known for its intuitive interface and integrations with many Czech banks, boasts a substantial user base. Beyond payments, the app facilitates peer-to-peer money transfers and bill sharing, and even provides options for delayed payments and credit.

Popular B2C payment methods in the Czech Republic

• Direct debits
  
• Bank transfers (e.g., PayU)
  
• Digital wallets (e.g., Paysera)
  

Popular B2B payment methods in the Czech Republic

• Credit cards
  
• Bank transfers
  
• Digital wallets
  

Emerging trends

Czech regulators have implemented programs to encourage digital payments over cash. In late 2023, the ČNB launched a program that allows individuals to make payments with only the recipient’s phone number to make these transactions even easier.

Ease and friction of entry

As you’re planning to enter the Czech payment market, it’s worth knowing about factors such as the country’s tax policies and its rules for chargebacks and disputes. Here’s a closer look.

Taxes

The Czech Republic generally levies value-added tax (VAT) at a standard rate of 21% for most goods and services, with lower rates for food, books, medicine, and other goods. Customers feel the immediate impact of VAT in their bills, but the onus of collecting this tax and sending it to the state is on businesses. Failing to properly collect or remit VAT can lead to severe fines and legal complications.

Chargebacks and disputes

The Czech Republic’s stance on chargebacks and disputes aligns with broader European trends that favor consumer protection but is also informed by national priorities. Businesses that operate in the country, especially those used to different chargeback protocols, should closely follow local norms and remain flexible as regulations change.

As a member of the EU, the Czech Republic adheres to the revised Payment Services Directive (PSD2). This directive emphasizes Strong Customer Authentication (SCA), which directly impacts chargebacks and disputes. When transactions undergo rigorous verification processes, it’s easier to ascertain the validity of these payments and minimize potential chargebacks.

The Czech Republic’s Act on Consumer Protection guards customers against unfair commercial practices and brings relevant EU laws into national law. It tends to side with the customer in the event of unauthorized transactions, putting the responsibility on companies to validate a transaction’s legitimacy.

As part of SEPA, the Czech Republic follows the attendant rules for direct debit chargebacks. Customers can request a refund for any direct debit transaction within eight weeks, making it an important regulation for businesses to know about.

International payments

While it’s not in the eurozone, the Czech Republic adheres to European financial regulations as an EU member state. SEPA facilitates cross-border payments for smoother transactions within EU countries. The GDPR also sets stringent standards for data protection and privacy for Czech companies and financial institutions.

• Currency conversion
  Travelers frequently convert their home currencies to the Czech koruna (CZK) at local banks, exchange kiosks, or automated teller machines (ATMs). Businesses that operate in the Czech Republic, particularly those that serve tourists or international clients, often incorporate multicurrency capabilities in their payment systems. Conversion rates are determined at the point of transaction, and there’s typically a 1%–3% fee that’s either passed on to the customer or borne by the business.

• Trade partnerships and their payment implications
  Germany remains one of the Czech Republic’s largest trading partners, given their geographical proximity and deep economic ties. This strong trade relationship means the payment systems of both countries have adapted to facilitate smooth cross-border transactions. Similarly, partnerships with countries such as Slovakia, China, and Poland have also influenced payment preferences, adoption rates, and infrastructural developments in the Czech financial system.

• Cross-border transactions
  The Czech Republic has seen a growing volume of cross-border transactions. As a result, businesses face challenges tied to exchange rates and varying regulations across borders. These can be especially prevalent with transactions outside SEPA.

• GDPR
  The GDPR introduced strict compliance requirements for companies that operate within member states, including the Czech Republic. Violating these mandates can result in substantial penalties so businesses have to put resources into data governance—especially in sensitive sectors such as payments.

Security and privacy

The Czech Republic has reported a rise in cyberattacks that target financial institutions. These cybersecurity threats pose risks to business assets and raise concerns about data privacy and the trustworthiness of digital payment channels among Czech customers. Here are some security considerations.

• Data protection laws
  The Czech Republic strictly adheres to the GDPR. This commitment ensures that EU residents’ data is collected, processed, and stored with the utmost care and grants individuals control over their information. The Office for Personal Data Protection is the supervisory authority in the Czech Republic. It monitors GDPR compliance and can impose fines on entities that fail to comply.

• The national bank’s oversight
  The ČNB is the central authority that oversees the functionality and integrity of the country’s financial sector. It sets rules and standards for payment institutions to maintain a stable, secure payment environment.

• Anti-Money Laundering (AML) efforts
  Just like other EU member states, the Czech Republic has stringent measures to combat money laundering and prevent the financing of terrorist groups. These efforts follow the EU’s AML directives and are vigilantly implemented by financial institutions.

• Adoption of contactless payments
  Contactless payment systems such as NFC technology have become commonplace in the Czech Republic. Most payment terminals in the country support contactless transactions, which expedite the payment process and add another layer of security.

Key success factors

The Czech Republic’s payment systems pose challenges, but these obstacles provide valuable insight for businesses and stakeholders on how to succeed in this market. Here’s a closer look.

• Reluctance to use emerging technologies
  Mobile payment use has seen slower growth in the Czech Republic. Still, mobile payments accounted for one-third of all card transactions in 2023. The slower adoption rate means businesses should support several different payment systems.

• Cross-border transactions in the EU
  The Czech Republic is linked to its European neighbors through SEPA regulations. SEPA simplifies euro-denominated bank transfers, making cross-border transactions easier for both businesses and customers within the eurozone.

Key takeaways

The Czech Republic’s payment space presents a mix of traditional preferences and emerging trends. Recognizing the nuances of this market and customizing payment experiences accordingly can be instrumental for businesses that want to improve both customer satisfaction and transaction success rates. Here are our top tips for entering this market.

Cater to local payment preferences

• Accept contactless payments
  Contactless payments have seen a surge in the Czech Republic, with the overwhelming majority of customers using them. Incorporating contactless payment terminals supports this popular method and appeals to tech-savvy residents who seek fast payment options.

• Support multicurrency options
  Although the country is a member of the EU, it doesn’t use the euro. Its official currency is CZK. Allowing payments in both CZK and euros is convenient for local residents and the vast number of tourists who visit the country.

• Integrate with local payment methods
  The Czech Republic employs a mix of local and international payment systems. GoPay, for instance, is a popular local payment gateway, while international giants like Mastercard and Visa are also widely accepted. These systems collaborate to bolster security measures and enable easier cross-border transactions.

Focus on compliance

• Know the GDPR’s role
  The GDPR governs how users’ personal information is stored and processed by payment providers. Noncompliance can result in hefty fines.

• Comply with PSD2
  Just like other EU member states, the Czech Republic adopted PSD2. This directive mandates SCA in digital transactions, which often means two-factor authentication.

• Research local regulations
  Comply with both EU regulations and the Czech Republic’s own set of rules that govern digital transactions and data protection. Keeping payment systems compliant with these rules can build trust and help your business avoid fines.

Make security a core part of operations

• Implement advanced security protocols
  Recent cyberincidents that have targeted the Czech financial sector highlight the need for top-tier security measures. Incorporating features such as two-factor authentication and advanced encryption methods can boost customers’ confidence during transactions.

• Know the role of external payment providers
  Payment solution providers like Stripe operate in the Czech Republic. Their operations often include advanced security measures such as machine learning algorithms to detect and prevent suspicious activities.

• Abide by national security standards
  Beyond international standards, the Czech Republic has also instituted its own national security protocols. These include the adoption of the Czech Banking Association’s BankID, which provides secure online identification for users.