Spain’s ecommerce revenue is expected to surpass $35.5 billion US dollars (USD) in 2024, highlighting the opportunity that exists for businesses contemplating an expansion. But the Spanish market contains its share of challenges, too.

Below, we’ll explain how to succeed in the Spanish payment landscape. Important components include:

• Embracing contactless payments
  
• Gaining customer trust
  
• Mitigating card fraud
  

The state of the market

As the role of cash in Spain changes due to major technological changes, contactless payments, digital wallets, and mobile payments are redefining the culture of payments. Regardless of the payment method they choose, customers in Spain expect to see prices presented in euros.

As a member of the European Union, Spain adheres to broader European regulations that shape its financial sector, including the General Data Protection Regulation (GDPR) and the revised Payment Services Directive (PSD2). The Comisión Nacional del Mercado de Valores (CNMV) oversees Spain’s securities markets, promoting transparency and protecting consumers.

Payment methods

The payment landscape in Spain consists of traditional banking practices and innovative digital solutions. Here’s an overview of common payment methods in this market:

Current usage

While many consumers in Spain still use cash for day-to-day transactions—66% of in-person payments were in cash in 2022—consumers are adapting rapidly to the digital era. Card transactions are on the rise: in 2023, approximately 56% of people in Spain used credit cards.

Contactless methods make up a majority of card transactions. In 2022, 67% of in-person card payments in the country were contactless. The average mobile payment transaction value per user jumped from about $270 USD in 2017 to over $850 USD in 2022, highlighting the growing demand for quick mobile payment methods such as PayPal and Bizum, a local solution.

Popular B2C payment methods in Spain

• Contactless credit and debit cards (e.g., Sistema 4B)
  
• Digital wallets (e.g., PayPal)
  
• Buy now, pay later (BNPL) payments (e.g., Klarna)
  

Popular B2B payment methods in Spain

• Credit cards
  
• Bank transfers (e.g., SEPA)
  
• Wire transfers
  

Emerging trends

QR codes are one type of mobile payment that is on the rise in Spain. They appeal to a digitally savvy demographic that seeks quick and hassle-free payment options. Customers can scan a business’s QR code to pay via a bank transfer or a digital wallet such as PayPal, Apple Pay, or Google Pay.

Ease and friction of entry

Businesses seeking to enter the payment market in Spain must consider topics such as taxes, payment disputes, and international transactions.

Taxes

Value-added tax (VAT) is set at 21% for most goods and services. Consumers pay this tax when they make a purchase, but businesses are responsible for collecting and remitting it to the government. If a business fails to accurately collect and remit VAT, it can face substantial fines.

Chargebacks and disputes

As in much of Europe, regulations in Spain tend to favor consumer protection. The General Law for the Defense of Consumers and Users (Ley General para la Defensa de los Consumidores y Usuarios) protects consumers from fraud by requiring transparency from businesses, and it is particularly strict about digital transactions. If an unauthorized purchase occurs, the responsibility lies with the business to demonstrate the transaction’s legitimacy, so businesses must maintain meticulous records and invest in preventative measures.

EU directives around chargebacks also play a role, and the most important of these is PSD2. PSD2’s emphasis on Strong Customer Authentication (SCA) impacts the way parties address disputes, especially since this authentication can serve as a reference point in resolutions.

International payments

Spain’s thriving tourism industry and extensive trading relationships make it a hub for international transactions. Any business looking to accept cross-border payments in Spain should keep in mind the following topics:

• Currency conversion
  Conversion rates are determined when transactions occur and typically involve fees between 1% and 3%. This cost is either passed to the consumer or absorbed by the business, depending on its pricing strategy. There are several third-party payment processors in Spain, including Stripe, that simplify currency conversion by making it automatic at the point of transaction.

• SEPA transfers
  As a member of the eurozone, Spain is part of the Single Euro Payments Area (SEPA), which connects it with other European markets. The SEPA rules streamline euro-denominated transactions, making cross-border payments within member states as simple as domestic ones.

• Payment methods from other markets
  Accepting popular payment methods from other countries—such as the Netherlands’ iDEAL and China’s UnionPay credit cards and Alipay—can help reduce payment barriers for international tourists.

Security and privacy

Spain remains deeply invested in ensuring its payment ecosystem is safe, compliant, and effectively regulated. Here’s a rundown of security guidelines for businesses seeking entry into the Spanish market:

• Data protection laws
  Spain enforces GDPR, an EU regulation that mandates stringent data protection and privacy. Companies operating within Spain must be transparent about their data collection and usage. They must also guarantee that customers have the right to access their personal data, rectify inaccuracies, and request erasure in certain situations. The Spanish Data Protection Agency (Agencia Española de Protección de Datos, or AEPD) oversees GDPR compliance.

• PSD2 and its impact
  Spain adheres to PSD2, which emphasizes SCA. In practice, this means transactions frequently require multifactor authentication, making payments more secure for consumers.

• Anti-Money Laundering (AML) regulations
  Spain employs stringent AML and counter-terrorism financing (CTF) regulations, consistent with EU directives. Financial institutions—including banks and payment service companies—are obligated to monitor, report, and prevent any suspicious or potentially illicit activities.

• Local payment systems and their safety measures
  Spain offers local payment options that cater to the local market while integrating global safety standards. Redsys, for instance, is a payment processing service in Spain that works with global networks to fortify transaction security.

Key success factors

Businesses in Spain face challenges such as persistent cash payments and high rates of credit card fraud. To succeed in Spain, businesses must address these potential issues with a well-rounded strategy that includes the following features:

• Mixed payment options
  Although digital payment use has increased in Spain, there’s room for growth. About two-thirds of in-person payments take place with cash, so continuing to accept cash for point-of-sale (POS) transactions can help businesses avoid alienating customers who aren’t comfortable with digital payments. For online payments, offering multiple payment options will help businesses support a variety of consumer preferences and reduce cart abandonment.

• Strong data protection measures
  Spain’s adherence to GDPR increases obligations for companies, especially those handling payment data. The Spanish Data Protection Agency reported in 2023 that it fielded 21,590 complaints related to data mishandling, emphasizing the need for businesses to invest in secure payment gateways and ensure compliance with local data protection regulations.

• Top-tier fraud mitigation
  Preventing payment fraud and handling payment disputes effectively remains an area of concern. Credit card fraud is more prevalent in Spain than in many other EU countries as of 2019, and businesses must have adequate resources and training to manage and resolve disputes promptly. Businesses can benefit from using fraud detection tools such as machine learning algorithms and 3D Secure for online payments.

• Trust among locals
  While the country’s official language is Spanish, regions such as Catalonia and the Basque Country have their own languages that businesses should be aware of. Being up front about pricing, transaction fees, timelines, and cancellation policies will help you build trust with customers.

Key takeaways

Tailoring the payment experience to meet diverse payment preferences and behaviors can lead to more completed transactions, in addition to better customer satisfaction and overall business growth. Below are some best practices to help you succeed as you expand your business into Spain.

Embrace contactless payments

• Support popular contactless payments
  Consumers in Spain have shown a strong preference for contactless payments, so ensure your POS systems are equipped to support this mode of payment.

• Implement varied mobile payment options
  Incorporate popular mobile payment methods such as Bizum and PayPal to support evolving consumer preferences.

• Use digital invoicing
  In Spain, it’s mandatory to digitize the business-to-business (B2B) invoicing process. Use electronic invoices with payment links to simplify the payment process for both B2B and business-to-consumer (B2C) transactions.

Gain customer trust

• Provide clarity on taxes and fees
  On receipts and all messaging, be clear about VAT, shipping and handling, and any other fees that may be included during the checkout process. This prevents confusion and cart abandonment that might occur if a customer sees a higher than expected final price tag.

• Acknowledge the importance of holiday shopping
  Spain celebrates several local festivals and holidays, including La Tomatina and Fiesta Nacional de España. Offer timely promotions and discounts aligned with these festivities.

Mitigate card fraud

• Invest in secure payment processing
  Choose a secure payment processor to handle your business’s transactions and use machine learning–based fraud detection systems to pinpoint suspicious transactions immediately.

• Protect customer data
  Implement fraud prevention tools, such as tokenization and encryption, to protect customers’ credit card data. Clearly communicate your security practices and prioritize transparency around data collection.

• Build a habit of regular monitoring
  Monitor transactions and customer accounts on a regular basis to help your business identify unusual patterns and catch potential fraud early.