Why Europeans love PayPal…

Published June 20, 2012 Share

After Shopatron’s launch of PayPal for European currencies, the number of consumers using the payment method has been surprising.

In December 2011, Shopatron introduced PayPal integration for British pounds. Today, 26% of all our orders made in pounds are through PayPal. This astounding statistic is only rivaled by the growth of PayPal orders made in euros. These orders now account for 27% of all Shopatron orders made in the European currency – a huge percentage for such a small time frame.

This European growth is an interesting trend and certainly good news for our international clients accepting PayPal, but what about here in the US?

Shopatron has been accepting PayPal payments stateside since May 2011, but they still only account for 13% of Shopatron orders received in US dollars. This statistic left us wondering, why do Europeans use the payment method more than Americans?

We know that in the US PayPal actually increases shopper conversion on eCommerce websites.  We believe that this is because of the following reasons:

• Some shoppers abandon an order because they don’t have a credit card.
• Some shoppers are still uncomfortable submitting their credit card online.
• Some shoppers simply don’t want to take the time to enter their credit card information.

 
But are these the reasons why so many Europeans are using PayPal in our stores? Not entirely. After a little digging I found a nice Forrester Research report that offers some alternate explanations.

One answer is that a major part of online payment preference simply boils down to the amount of credit cards in use. According to Forrester, only 50% of European online buyers actually own a credit card, as opposed to 78% of Americans with credit cards.

Yes, we do love our plastic, don’t we…

But a closer look at the data shows that purchasing preferences are even more fragmented across Europe. In fact, individuals in the various countries across the EU all prefer different forms of payment. This makes alternative payment options like PayPal more valuable to cater to these diverse customer preferences.

Take Germany for example. German debit cards currently can’t be used online and credit cards aren’t as widely used in the country. Germans love a type of direct debit called “Girokonto” to pay for all sorts of things. (Trust me, as a credit card loving American living there for years, it was difficult to get used to filling out forms for Girokonto to pay for stuff.)

This is where PayPal steps in.

50% of German shoppers polled claimed to use PayPal compared to just 38% using credit cards. Why? Because PayPal serves as a nice front for the Girokonto payments that Germans are used to, just as it serves as a nice front for credit card payments in the US.

Comparatively, UK shoppers prefer to use debit and credit card payments, while the Dutch prefer online banking transfers to complete their orders. In other words, Europe varies widely in payment preferences – with no single payment option dominating across every country. But because a PayPal account can be linked to one’s preferred payment method (a credit card with points for me, a bank account for a Brit), it feels natural for shoppers from all regions to use it – which may be at least a step toward a universal payment method.

The thing to remember here is that you have to understand the needs and preferences of your international customers. By understanding customers’ needs you can better equip yourself to meet those needs; hopefully finding common tools like PayPal that can help you meet the needs of diverse customer bases.  But whatever it takes, meeting shoppers’ needs results in increased online conversions and more sales internationally, so it must be worth it, right?

While you’re already thinking about selling internationally, be sure to checkout our recent Selling Internationally webinar to learn even more about worldwide online trends.

And until next time… Auf Wiedersehen…