How customers are paying – in-store and online

To be successful, retailers must provide customers with their preferred payment methods when they check out in-store and online. This article explores current payment trends.

For customers, it’s the annoying step at the end of a purchase, but for retailers it’s one of the most important: payment for goods purchased.

Payments in physical and online shops are changing and subject to the latest trends, but they are a key factor in a positive shopping experience. But how do Swiss people prefer to pay? What are the latest payment trends? For Switzerland, the “Swiss Payment Monitor” provides the answers, and the trends identified are also reflected in the EHI surveys for Germany.

Cash continues to decline

In Switzerland and Germany, cash continues to decline, a process accelerated by the pandemic. Generally, payment methods can be evaluated in terms of the turnover they generate and the number of payment transactions. Switzerland stands out from its neighbours as a country with a particularly marked decline in the share of turnover accounted for by cash.

With a share of 32 percent of all transactions (high street and online) and 30 percent of turnover, the debit card is the most used means of payment overall. Cash’s share of turnover is falling at 16 percent, putting it in third place behind credit cards (23 percent). When measured by number of transactions, cash was able to halt its downwards trajectory and is in second place with 30.2 percent, just behind the debit card. Swiss consumers still pay cash for a newspaper or a pack of chewing gum in the shop around the corner. For higher amounts, they use their cards.

Online, payment by invoice predominates

The Swiss are much like their neighbours when it comes to paying online. With a 45.1 percent share of turnover, payment by invoice dominates online retail. This means that customers still prefer the riskiest payment method from the company’s perspective. This means giving priority to all measures for detecting attempted fraud and service disruptions before and during check-out in order to actively monitor the provided payment methods.

It is also striking that Swiss consumers like to use mobile payment methods online. They are doing this with apps that have a built-in payment function. Mobile payment methods now account for around half of all online transactions.

Twint: A Swiss success story

Without doubt, one special feature of Switzerland is the widespread use of the Twint mobile payment method. In terms both of turnover and number of transactions, no provider in Germany or Austria has achieved a comparable market position. 62.9 percent of turnover and 61.3 percent of transactions with mobile devices are processed using Twint. This puts the system way ahead of Apple Pay. Twint has become too important for retailers to ignore. Whether in Switzerland or in Germany, payment experts expect to see further growth in mobile payments in the coming years.

Payment service providers want to get to the POS and to customers

The past two years have seen two clearly discernible developments across Europe. The first is payment by instalment – commonly known as “buy now, pay later” (BNPL) – which is attracting greater attention, at least in the media. Swedish fintech company Klarna in particular is pushing this mix of payment by invoice and instalment. The company has greatly expanded its service recently. Where retailers previously had to work directly with Klarna to provide this option, the company now offers its own credit card (both physical and purely digital via app), which customers can then use to pay in the shop in the usual way. From the retailer’s perspective, it’s no different to a classic credit card payment.

Other payment service providers and even banks are following Klarna’s lead. The latest EHI surveys for Germany, however, show no significant jump in payments by instalment.

The second trend is the stronger presence of payment service providers and payment providers, such as Paypal, Adyen or Klarna, at the POS. Adyen has even introduced its own card readers, while Paypal is trying to push its QR code payment service at the POS terminal. Payment via the Klarna app also works directly at the checkout via a QR code. Here, for example, the company is working with terminal provider Verifone. Klarna has also equipped its app with a shopping function, which means it is also challenging retailers’ access to customers.

It remains to be seen how these developments will be reflected in the statistics and how they might change customer preferences.