Are Debit Cards Making a Comeback in Europe?

Debit cards are making a comeback in Europe, after years of languishing due to market saturation. But things seem to be changing, as recent studies show. 90% of all cards issued in the continent, except the UK, Ireland, and Greece, are debit cards. Debit card payments in Europe have grown twice as fast as the number of debit cards issued. Across the region, over 17 markets see over a billion debit card transactions each year! This includes the Czech Republic, with more than 100 debit transactions per person every year. People clearly seem to love their debit cards.

Why is this happening?

Consumer preference for ease and flexibility has been driving the growth of non-cash payments. In 2021, card transactions made up 49% of all non-cash payments, while direct debits made up 20%. On the other hand, several countries in Europe saw major spikes in debit spending. Even markets like Greece, where credit cards are popular, saw debit card payments rise by over 55%. In Germany, debit card payments rose by over 25% to exceed €296 billion. More than a billion e-commerce transactions were done using debit cards, with more businesses and consumers using domestic debit cards to make cross-border payments.

And while there has been growing adoption of open banking and alternative payments, such as BNPL, crypto, or account-to-account payments, debit cards don’t seem to have gone away. In fact, they are flourishing. One reason for this can be partly attributed to the fact that any banking relationship in Europe come with a current account plus card. Plus, the old ATM and cheque guarantee cards have evolved into debit cards. There has also been a huge growth in the use of contactless cards for daily purchases, driven by the pandemic and NFC technology going mainstream. Eight in ten card transactions across Europe are now contactless, with two in three Europeans using them. Lower interchange fees on debit cards and lower processing costs have also been a cause for this shift.

What can we learn from it?

Three things:

1. The pandemic has led to a big push towards digital payments from cash, and debit cards are gaining from this.
2. Businesses and consumers seem to prefer debit cards for smaller transactions and internet spending. The number of transactions is growing rapidly both online and offline.
3. There is a growing shift from credit cards to debit cards. This seems linked to consumers’ lower risk appetite and aversion to short-term credit in the face of recent economic uncertainties.

How to apply this to your business?

• Ensure you use digital payments: leverage the push to digital by adding digital payments to your checkout. Your customers will love the convenience and see you as a tech-first brand.
• Use local knowledge to offer popular payment methods + currencies: be aware of local trends to know what works in which market. Offer local payment methods and currencies to win customers in international markets.
• Switch to contactless payments (cards, digital wallets, QR-codes): their usage is growing across Europe as more digital-savvy customers demand them. They are safer, quicker, and more secure. They also come with lower fees.
• Use real-time payments (SEPA Inst Credit, SEPA Direct Debit, etc.): pay your suppliers or recurring bills with instant payments. These are fast, secure, and allow large transactions.

Read more:
SEPA Payments For Business (in 2022): All You Need to Know
Why Accept Contactless Payments? A Guide for Merchants in Europe

How can Novalnet Help?

We are a global PSP who are trusted advisors to Europe’s leading brands when it comes to payments. Our state-of-the-art technologies and methods help businesses in Europe accept payments globally. From our instant payment plug-ins to our AI-based risk management tools, we have the resources to get you up and running with your payments in a short time, and with zero hassle.
We can help you set-up and prepare your payments for the coming sales season. Reach out to us today to know more.

Jose Augustine

Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.