Insights into local developments and payment preferences from industry experts – US, Australia, Spain

What are the main local developments impacting ecommerce? 

Jennifer Lucas, EY Americas: Consumer behaviour coupled with digital adoption have been driving ecommerce growth over the past few years. During the height of the COVID-19 pandemic, cash usage slowed as consumers relied more on digital platforms to purchase goods and services during lockdown. Organisations that offered a seamless experience continued to attract consumers as they settled into their ‘new normal’ post-pandemic routines. Despite the slower ecommerce growth rate since the pandemic, we can expect mobile shopping to continue to drive most of North America’s ecommerce growth over the next three years, as a result of entrenched consumer habits and smartphone ubiquity. 

Andy White, AusPayNet: Ecommerce continues to grow in Australia. According to figures from the Australian Bureau of Statistics, in non-seasonally adjusted terms, online retail increased from AUD 42 billion in 2021 to AUD 44 billion in 2022. An ever-increasing number of consumers are confident in making their purchases online, owing partly to their trust in and familiarity with electronic payment methods. 

Regarding cross-border payments, the adoption of the ISO 20022 messaging standard continues at pace. Widespread implementation of the Committee on Payments and Market Infrastructures’ (CPMI’s) ISO 20022 data requirements is expected to lead to increased straight-through-processing of cross-border payments, making them cheaper, faster, transparent, and more accessible for consumers and ecommerce. 

Additionally, Australian Payments Plus’s fast payment system, the New Payments Platform, is expanding to incorporate an international payments business service to process the final domestic leg of an inbound international payment. This business service, also powered by ISO 20022, will be available to all financial institution participants by April 2024. It is expected that this service will speed up the delivery of incoming cross-border payments, benefiting consumer and merchant participants in cross-border ecommerce. 

Ángel Nigorra, Bizum: Today, with the rise of fintech and new digital payment solutions, there is a clear growth in alternative payment methods to card payments, some based on SEPA Instant Transfers, which allow merchants to receive the sales income immediately in their accounts. Bizum is the main Spanish successful project within the local payment system sector that was launched by local banks in 2016, as part of its commitment to digitisation and innovation, to compete with the use of cash in Spain. Bizum is a mobile payment method whose value proposition is to provide users and merchants with a simple, immediate, convenient, and universal payment method, regardless of their bank or mobile device brand. 

Bizum emerged from the collaboration across an entire Spanish financial sector with the bonus of being based on European standards and being an operational solution on the SEPA Instant Transfers scheme, the only one in Europe. With this, Bizum has anticipated the rise of account-to-account payments, positioning Spain at the forefront of the use of immediate transfers. At the same time, it can further develop cross-border operations, as demonstrated by its expansion into the Andorran market and its interoperability with other current solutions (for example, within the framework of EMPSA) or other initiatives that may be driven by European institutions (such as the digital euro). 

Bizum, as a pioneering success case in Europe and the only one based on SEPA Instant Transfers, has pledged to help the European payment regulation that guarantees the possibility for this type of solution to compete on equal terms with other payment instruments. This will contribute to the adoption of immediate account-to-account payments in commerce and public administrations, facilitating opportunities for innovation and competition. 

What are the payment preferences of consumers in your local market? 

Jennifer Lucas, EY Americas: Compared to other countries, US consumers tend to be particularly attached to cards – both debit and credit cards. Credit cards, however, are the dominant payment vehicle for ecommerce. Digital wallets are becoming the de facto standard for accessing payment credentials like credit cards for online purchases. Last year, digital wallets were the top runner for consumers’ preferred online payment method. 

Debit cards are used for ecommerce purchases, albeit at a lower volume than credit cards. We can assume that Gen Z’s preference for debit cards largely contributes to its popularity. As the next generation expands its footprint in the ecommerce market, we should see other targeted consumer payment options such as Buy Now, Pay Later (BNPL) continue to gain momentum. 

The slower-than-anticipated growth of account-to-account (A2A) payments in the US may begin to gain pace with the launch of a new real-time payments network, FedNow, yet ubiquity among financial institutions offering real-time payments needs to happen to make this a substitute for other payment capabilities. 

Andy White, AusPayNet: Today, Australians use a variety of payment methods, including credit cards, debit cards, mobile wallets, Buy Now, Pay Later (BNPL), and account-to-account payments, as well as – decreasingly – cash and cheques. Cards are by far the most popular payment method in Australia, with most in-person card transactions being contactless. Online purchases are growing strongly, while in-app purchases are becoming increasingly popular. 

While the COVID-19 pandemic has driven much change, consumers across all demographics continue to opt for the convenience and ease of use of cards. This was highlighted by the Reserve Bank of Australia’s (RBA’s) most recent Consumer Payments Survey, which revealed that consumers over the age of 65, who have traditionally been high users of cash, now use cards for nearly two-thirds of their payments. 

Because of the consumers’ increasing preference for digital payments, the industry in Australia must focus on leading transformation in this space to drive efficiency, innovation, and choice, to facilitate optimal outcomes for end-users. This means ensuring our regulatory environment is fit-for-purpose and proactively planning and managing legacy payments systems, including frameworks for paper-based payments, namely cheques and cash. The RBA’s survey showed that between 2019 and 2022, Australians halved their share of cash payments by number, from 32% to 16% of in-person transactions.

Ángel Nigorra, Bizum: Before the launch of Bizum, Spain was one of the countries with the highest cash usage, although card payments were growing year after year and continue to do so. On the other hand, the use of smartphones, with one of the highest ratios in Europe for mobile lines per capita (now reaching 50 million in a country with 48.5 million inhabitants), was – and still is – a circumstance that profited the success of a mobile payment solution. Additionally, the pandemic has changed many of the habits of Spaniards, including an exponential increase in online purchases, accompanied by exponential growth in digital payments. 

Currently, both merchants and payment solutions in Spain focus on offering users one-click shopping experiences that do not require many steps to authorise or complete a transaction. In this sense, Bizum has brought an improvement in the ecommerce shopping experience from mobile devices: with just their banking app and phone number, users can make an online purchase without having to provide additional data. Now, Bizum is used for more than 30% of purchases in some stores for its convenience when paying. 

What are the specificities of consumer behaviour in your local market that brands should be aware of before entering it? 

Jennifer Lucas, EY Americas: The US ecommerce market is highly attractive to new entrants, boasting an immense and diverse population of consumers, high purchasing power, and growing adoption of digital and technology solutions and interesting economics. While the opportunity in the US ecommerce market is vast, the number of financial institutions and options for payments makes it difficult to penetrate the full potential of the market. One thing that holds true, however, across all US consumers is the freedom of choice. We are seeing that Gen Z consumers, in particular, prefer to delay their entire purchase rather than select a payment option that’s not their preference. While younger consumers may lean toward frictionless payment solutions, many US consumers still rely heavily on legacy payment options (cheques, ACH, wires) for their purchases.

Andy White, AusPayNet: In an environment in which the number of consumers engaging in online retail will continue to grow, brands entering the Australian marketplace must be cognisant of the ongoing shift to digital payment channels, and factors such as simplicity and convenience that continue to drive that shift. It is essential to understand what a best-in-class online and in-app transaction experience looks like. 

At the same time, merchants entering the Australian market must be acutely aware of the growing threat consumers and businesses face from economic crime, including fraud and scams. Unsurprisingly, with ecommerce being so prevalent, card-not-present (CNP) fraud now accounts for 90% of all fraud on Australian-issued payment cards. More specifically, CNP fraud rose 14.4% to AUD 516.8 million in 2022, after increasing by 7.6% in 2021. The picture is complex, though; of that total, AUD 239.9 million consisted of fraud perpetrated overseas through Australian-issued cards. However, fraud perpetrated in Australia actually fell. Scam losses also increased to at least AUD 3.1 billion in 2022, according to figures from the ACCC. 

In response to the scourge of fraud and scams, AusPayNet facilitates the Economic Crime Forum (ECF). The ECF brings together a broad range of participants, including law enforcement and intelligence agencies, regulators, representatives from AusPayNet’s membership, and other key stakeholders in the banking and payments ecosystem to share intelligence on emerging threats and collaborate on joint responses and tactical initiatives to prevent all forms of economic crime. AusPayNet is also a member of the Advisory Board of Australia’s National Anti-Scam Centre. 

Ángel Nigorra, Bizum: Although convenience is a highly relevant factor for Spanish users when making online purchases, security is the key factor in completing an order and making a payment. Users and merchants are loyal to their payment methods, and it is necessary to be didactic for that security to be perceived. In the case of Bizum, the fact that it is included in banking channels, with all the legal requirements, has made security one of the pillars of value perceived by users.

This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2023–2024, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 

Jennifer Lucas, Payments Consulting Leader, EY Americas

Andy White, Chief Executive, AusPayNet

Ángel Nigorra, General Manager, Bizum