A Glimpse into the Future: European Payments Landscape in 2024

In the year 2023, significant shifts in the landscape of payments were witnessed across the United Kingdom and Europe as a whole. However, as we stand on the cusp of 2024, it becomes evident that the forthcoming year will usher in an era of innovation and transformation for the European payments sector, according to Fintech Futures.

Social commerce, a phenomenon propelled by the robust adoption of Generation Z, is expected to experience a remarkable annual growth rate of 34% in Western Europe leading up to 2025, as reported by Deloitte. This paradigm shift is compelling businesses to adapt their cross-border payments strategies to cater to an increasingly diverse global market through tailored digital marketing approaches.

As we turn our attention to 2024, specific trends around e-wallets, the evolution towards a cashless society, and the advancement of cross-border payments are poised to play pivotal roles in shaping the payments industry.

E-wallets: Europe’s Digital Revolution

E-wallets have already gained substantial momentum in regions like China and Southeast Asia, where 84% of Chinese consumers actively use these digital wallets, according to GlobalData. The rise of e-wallets has been instrumental in reducing cash usage and transforming payment habits across all age groups.

Now, Europe is poised to follow suit, with transaction values for mobile wallets surging by over 30% in the past three years, according to eClear data. Furthermore, the European Payments Initiative (EPI) is set to launch a pan-European digital wallet, commencing in France, Germany, and Belgium in the coming year.

In 2024, we anticipate a surge in the adoption of digital wallets across Europe. However, the European e-wallet landscape presents unique challenges due to the diversity of payment preferences and technology disparities among EU member states. While some countries like France favor card payments, others, like Greece, rely heavily on cash. Bridging these gaps will be a complex undertaking, and localized payment preferences are likely to persist.

The Road to a Cashless Society

The benefits of transitioning to a cashless payments system are well-documented, offering enhanced convenience and security for consumers and increased customer loyalty for merchants. It also streamlines payment processing for businesses.

Several European countries have made substantial progress toward a cashless society, with cash payments in the UK plummeting from 54% in 2012 to 14% in 2022, as reported by UK Finance. This trend is expected to continue in 2024.

However, cash remains a vital payment method for certain demographics across Europe, particularly in Eastern European regions. Concerns about excluding those without access to technology or lacking tech-savviness loom large.

Instead of outrightly eliminating cash, Europe should focus on expanding payment options with a consumer-centric approach, offering greater flexibility in payment methods. By providing convenient and secure alternatives to cash, Europe can advance toward a cashless society inclusively, allowing consumers to choose their preferred path.

Thinking Internationally: Cross-Border Payments

According to a recent study by Juniper Research, cross-border e-commerce spending is predicted to exceed $3 trillion in value by 2028, accounting for one-third of all e-commerce transactions. As globalization continues to gain momentum, 2024 will witness businesses shifting their focus internationally, seeking opportunities to diversify revenue streams abroad.

Europe holds particular appeal for regions like China and Southeast Asia, which exhibit a high demand for European goods. To capitalize on this demand, businesses must ensure that their cross-border payment processes are efficient and up-to-date.

Consumers now expect swift and convenient payment options, even for international purchases. A critical aspect of this convenience is the ability to use familiar local payment methods. Therefore, in 2024, we can anticipate more businesses adapting their payment methods to cater to international markets. As merchants aim to globalize their offerings, we can expect further advancements and innovations in cross-border payment technology.

2024 promises to be a year of transformation and innovation in the European payments landscape. To harness the opportunities presented by cross-border commerce and alternative cashless payment methods such as e-wallets, Europe is set to establish itself as a tech powerhouse within the payments sector, striving to reduce reliance on global financial technology giants like the US. Eva Zhang, CEO of Alipay UK, anticipates that Europe will make significant strides towards achieving this ambitious goal.