Payments as a Strategic Asset in the EU

Viewing payment processing as simply an expense overlooks a big opportunity. Leaders should recognise that payments are more than just a necessary function; they can be a powerful way to drive profit. With the latest advancements in payment technology, businesses can reduce costs while creating new sources of revenue.

Today’s payment solutions do more than streamline transactions. They improve customer experiences, encourage repeat business, and build loyalty. In short, payment technology has the potential to transform expenses into valuable assets.

Let’s see how this could unfold in the EU.

Key Trends in European Payments

The European payment landscape is being reshaped by three key forces: changing consumer needs, new innovations from payment providers, and regulatory changes.

Consumer trends

• Decline of cash — People are moving away from cash and turning to digital payments for everyday transactions.
• Mobile-first — Smartphones are becoming the go-to device for managing and making payments. Apps are at the centre of the payment experience.
• Speed and convenience — Consumers want payments to be fast and easy: contactless, uninterrupted checkouts and simple transactions are what they expect.
• Rewards and loyalty — Shoppers are looking for payment methods that offer more: rewards, cashback, and loyalty perks are driving choices.
• Transparency and control — With more financial tools, like multi-banking apps, consumers want to track spending and manage their money in real-time.

Provider trends

• Big players are innovating — Visa, Mastercard, and others are rolling out new solutions, like account-to-account payments and click-to-pay, to keep up with market changes.
• Tech companies are leading the way — A growing number of platforms are making payments easier by letting users store cards digitally and pay with a tap.
• Decentralized finance — Blockchain platforms like Uniswap and Compound are cutting out the intermediaries and opening up new ways for direct peer-to-peer transactions.
• AI and data-driven payments — More companies are using AI to personalise payment experiences, including fraud detection and customised financing options.

Regulatory trends

• European payment independence — The push for more control over payments in Europe continues with initiatives like the Digital Euro, that plan to reduce reliance on global card systems.
• Instant payments — Real-time payments are becoming the new norm, with initiatives like Single Euro Payments Area (SEPA) Instant Credit Transfer, providing faster, 24/7 transactions.
Currently, instant payments make up about 12%, of credit transfers in the SEPA area. Without any major changes, this share could double by 2027. However, if regulators take steps to encourage wider adoption, that percentage could rise to 45% of SEPA’s 23 billion annual transactions. This would also mean a much larger share of A2A payments, including those made through ACH, real-time gross settlement, and instant payments.
• Open finance expansion — Following PSD2, PSD3, will expand open finance to include more areas like insurance and pensions and encourage more innovation.
• Digital identity — The EU’s Digital Identity Wallet, plans to simplify identity verification and secure access to services across Europe.
• Sharing financial data — The Financial Data Access framework, will make it easier for businesses to access and share financial data.

For payments to become a strategic asset, businesses making or facilitating them need to embrace these evolving trends.

Shift from cost center to profit generator

Not every department in a company can be expected to generate profit directly. Some departments, like research teams in brokerages, compliance and auditing staff in law firms, or inventory control in retail, are essential for the business but don’t directly bring in revenue. These are considered cost centres.

Profit generators, in contrast, are units that directly contribute to a company’s revenue. These are the areas where products or services are created, sold, or delivered — like sales teams, marketing, or production. Their success is measured by the revenue they bring in, and their performance directly impacts the bottom line.

Now, payments are traditionally known as a cost centre. They are an essential function that supports the business’s core revenue-generating activities. But what if payments could do more? What if they could transform from a simple cost to a strategic asset that drives growth? Businesses are starting to see the untapped potential of payments, with many new ways to make the most of them.

Localised strategies and cross-border expansion

For years, businesses have focused on cutting costs, mainly by preventing fraud and making sure they can accept as many payments as possible. As companies expand internationally, their payment strategies evolve to include domestic transaction routing. This lowers costs and helps increase acceptance rates.

Local acquiring solutions, for example, reduce transaction fees, Businesses can save 1% to 3% per transaction by processing payments locally, which adds up to better profit margins.

On top of that, multi-currency pricing and dynamic currency conversion improve the customer experience and boost conversion rates. This means customers see prices in their own currency, which makes the purchase feel more straightforward and trustworthy. Dynamic currency conversion lets them pay in their preferred currency at checkout.

Advanced payment platforms also help businesses manage complex regulations so they can stay compliant while keeping costs down. When it’s possible to handle all cross-border transactions through one payment provider, businesses simplify their operations and expand internationally more easily.

Finally, adapting to local payment preferences is paramount. The landscape across Europe has a few differences that are dictated by the biggest players in their respective markets. So, before payments can be used as an asset, it makes sense to study what is popular now.

Germany

In Germany, online shoppers prefer digital wallets, which offer extra security by keeping financial information separate from merchants. These wallets are widely accepted for both local and international transactions, which makes them a convenient choice for many.

For local payments, direct bank transfer systems are popular. These methods are highly integrated with German banking systems, and businesses targeting the local market find them very reliable. Another widely used method allows customers to pay directly from their bank accounts without needing a separate registration or wallet.

France

In France, bank cards are the most common payment method for online shopping. These cards are widely accepted and are known for their security, especially those tied to major international networks like Visa and Mastercard. In addition to cards, digital wallets have been steadily growing in popularity.

The Netherlands

In the Netherlands, direct bank transfers are preferred over traditional credit or debit card payments. The most popular local payment method allows customers to pay directly from their bank accounts without needing a credit card or digital wallet. This system has grown steadily in use and now handles a large portion of online transactions.

Belgium

Belgium’s online shopping market is growing fast. The most popular local payment method integrates directly with Belgian banking systems. Bank cards are also commonly used, but this local method still holds the dominant position.

Poland

In Poland, direct bank transfers are the most common method for online payments. Many consumers also use digital wallets. Local payment systems provide a variety of options, including instant transfers and traditional bank transfers. Mobile payments are also growing in popularity.

Austria

In Austria, many consumers prefer using payment services from neighbouring countries, particularly for international transactions. Locally, direct bank transfer systems are favored.

Spain

In Spain, credit and debit cards are the most commonly used methods for online shopping, but bank transfers — especially those through the SEPA system — are becoming more popular for larger transactions or when customers prefer not to share card details online.

Italy

Italy’s e-commerce market is steadily growing, and Italians prefer a mix of payment methods. Bank cards (debit, credit, and prepaid) lead the way, but digital wallets are a close second. Bank transfers are commonly used when cards aren’t accepted, and buy-now-pay-later services are growing in popularity.

Challenges of managing complex payment systems

Harmonizing payment systems is a major focus for the European Commission, and there are already initiatives, including the Digital Euro and PSD3, trying to boost economic stability across the EU. However, to keep up with these changes, many payment providers need to make updates to their systems to stay compliant and offer consistent service across different regions.

These updates might involve overhauling how payments are processed and how providers interact with both merchants and customers. Even though there’s potential for growth, the investment and compliance challenges are real.

Regulatory Balance and Compliance Challenges

European regulators are balancing the need for greater cooperation in the payments sector with the protection of consumers, businesses, and tax authorities. Regulations set strict standards for data security and user experience across the EU. However, individual countries also impose their own laws — such as Austria’s DSG, Germany’s BDSG, and zerland’s FADP, — that are sometimes more stringent, particularly regarding data consent and security.

For businesses and payment providers, this means adapting to varying regulations in each region they operate in. Upgrading legacy systems to meet these diverse requirements is slow, costly, and risky, which delays market expansion. To scale effectively, providers need flexible infrastructure that can be adapted to local market needs without incurring additional costs or delays.

Regulatory Balance and Compliance ChallengesRegional Payment Systems and Integration Challenges

European payment systems have historically been built regionally, with each area using its own tech stack. This means providers must integrate with different:

• Local issuers and acquirers for processing payments.
• Popular payment methods, from credit/debit cards to mobile payments and e-wallets.
• Hardware requirements, like POS terminals and authentication tools.

For companies with complex tech setups, adding new partners can be a long process. It takes months to plan, develop, and test new connections. With each new market requiring many integrations, these costs add up fast. To scale quickly and smoothly, providers need to enter new markets with as few delays or costs as possible. Working with a technology partner that offers a flexible, secure infrastructure is key to making that happen.

Increasing acceptance rates with AI and machine learning

Improving acceptance rates is a powerful way to increase revenue. For this, businesses can use AI-powered tools to reduce declines and guarantee that more transactions are processed successfully. For example, these tools can detect and flag potential fraud before it happens by evaluating transaction behaviours and identifying suspicious activities. This reduces false declines and directly leads to higher earnings.

Even a small increase in acceptance rates can result in millions of dollars in additional revenue for larger companies. These technologies also adapt to changing market conditions, so your acceptance strategies stay effective over time.

Optimising acceptance also requires a smart approach to managing payment gateways and acquirers. A multi-acquirer strategy allows businesses to use multiple payment providers. This gives them the flexibility to choose the most efficient and cost-effective routes for each transaction. So, they increase the likelihood of successful payments. It also reduces the risk of downtime.

Improving the customer payment experience

Today’s customers want quick, easy payments. For example, only using authentication like 3DS when it’s absolutely necessary keeps things smooth and doesn’t frustrate users. This reduces cart abandonment and builds trust and loyalty, which translates into repeat business.

Next, offering different payment options — like digital wallets or buy-now-pay-later services — makes the process easier for customers and boosts convenience. You want to have a smooth, secure payment process that sets you apart from the competition and encourages customers to come back.

Also, as mentioned, showing prices in local currencies increases conversions. A localised payment experience makes customers feel understood, and businesses should see international sales growth as a result. With the right payment solutions, businesses can handle multiple currencies, optimise exchange rates, and provide a better experience for customers. It comes down to having the right tech.

Conclusion

The payments landscape in the EU is evolving quickly, and businesses now have the opportunity to shift their payment systems from just another expense to a real strategic asset. Some ways to make this happen include improving acceptance rates, reducing transaction fees, cutting foreign exchange costs, and changing your payment strategies to fit broader business goals.

When you start seeing payment technology as something more than just a tool, it becomes a powerful driver of growth, efficiency, and long-term success. With the right approach, businesses in the EU can fully tap into the potential of their payment systems.