Listen on SoundCloud

Austrians Love Paying with EPS

We are all familiar with the saying “Customer is king,” which has never been truer than nowadays. No matter their location, time, and manner of buying products and services, consumers have the final say. By effortlessly switching between different devices and (online) stores, consumers aim to achieve the same experience throughout their entire shopping journey. In other words, they are completely in control.

Although it is easier for consumers to purchase products or services via technological developments (smartphone, connectivity, internet, etc.), it is becoming quite a challenge for merchants and brands to become top of mind or even sufficiently capture consumers’ attention. Therefore, they need to anticipate this change in online shopping well in advance.

To be successful, merchants/retailers that go cross-borders need to understand the local market they are targeting and offer payment methods specific to local customers’ preferences. Also, trust in a brand/merchant is a crucial aspect of selling cross-border; when consumers visit a merchant’s website and recognise a payment option that they are familiar with and trust, they are more likely to use it. As such, customer loyalty increases along with the retailer’s reputation in the market. Furthermore, by offering payment options buyers are familiar with, the seller is telling customers that their needs are recognised and catered for.

Today’s blog post takes us to Austria where we learn about one of the most popular payment methods used by locals: the eps online transfer.

eps is a debit card payment solution offered by Austrian banks. The service was launched in 2001 and has 2.5 million Austrian bank card/account holders. Now, more than 1,000 web shops offer eps, and it can be used for government business because it is the official payment method for e-Government. It is free of charge to consumers, and they do not have to register separately, as they are automatically enrolled through their bank.

How Does It Work?

The main steps of authorising an eps payment are like iDEAL. The bank transfer is made at the consumer’s initiative, and the payment is “pushed” to the merchant’s bank account. When a consumer initiates an online payment with eps, he/she selects their bank, and they are then redirected from the merchant’s website to the secure login page of their financial institution. There, the customer reviews the payment details. If everything is clear and correct, the customer authorises the payment. After the authorisation, he/she receives an immediate confirmation.

When it comes to security, the payment takes place in the online banking environment of the user’s bank, which usually is safe and secure. Data is also kept private, as the order in the web shop and the actual payment are strictly separated.

Benefits for the consumer include control over how much, what for, to whom, and to which bank account money is sent. Plus, it is convenient to use, as the payer doesn’t have to enter banking details from scratch every time a bank transfer is made. This translates into no mistakes, real-time confirmation, and perfect reconciliation later in the payee’s system.

Benefits for merchants accepting eps in Austria:

  • Increase in sales volume – By offering eps as an additional payment method, merchants can increase their sales, as credit cards are not needed.
  • Improved customer experience and retention – Once the eps payment is made, the system provides immediate payment status feedback, enabling the merchant to ship the ordered product/service to clients as quickly as possible.
  • Reduced fraud – Payments via eps are in real time and cannot be cancelled or reversed. Therefore, merchants are also guaranteed payment from the purchase.
  • Access to a larger pool of (Austrians) customers – By accepting eps as an online payment method, you get access to more than 3 million Austrian online banking customers. No wonder 80% of merchants in Austria accept eps online payments on their websites, e-stores, and apps.

Austria is a small e-commerce player, but due to its economic growth, it is poised to grow considerably in the coming years. The rising number of local merchants, domestic demand, high access to the internet, and rising smartphone use have led to an estimated 6.8 billion USD e-commerce growth in 2020.

E-Commerce in Austria

With a sales increase of 13.5% compared to 2018, the e-commerce market in Austria grew from a total turnover of the top 250 online shops of 3.17 billion euros to 3.60 billion euros in 2019. The top 10 online shops in Austria account for almost half of the top 250 online sales (49.7%). Among the top five online stores in Austria, we found (834.3 million euros), Zalando (346.8 million euros), Universal (111.9 million euros), Shop Apotheke (93.7 million euros), and Otto (84.4 million euros).

Despite being a small country with a population of 8.8 million citizens, in 2020, 6.2 million users were recorded in the digital commerce segment, with this number expected to amount to 7.1 million by 2024. This accessibility has been mediated by high internet penetration, with 88% of Austrian households having access to the internet in 2020.

In 2020, the COVID-19 outbreak and the accompanying measurements have led to a boost in digitisation and an increase in sales for the biggest online shops in Austria. According to Rainer Will, CEO of the Austrian Retail Association (Handelsverband Österreich), at the end of this year, Austria will, for the first time, have an e-commerce share that’s over 11% of total retail sales.

In Austria, cards and open invoicing are the two most popular ways to pay online, accounting for 31% and 28% of transactions respectively, in terms of value. Citing research from Worldpay E-commerce News reveals that 34.5% of transactions in Austria happen with cards, while bank transfers (31.1%) are also very popular. Most of these bank transfers are done online in real time.

Other interesting demographic data reveal that:

  • Clothing and sporting goods are the most popular product category bought online in Austria, with books and magazines coming in second place.
  • Men have been more likely to shop online than women, and this trend is set to continue.
  • High-income households shop online more frequently and spend more per transaction than lower-income households, suggesting growth potential within the lower-income shopper demographic.
  • Austrian consumers enjoy using click and collect services, with 9% of the Austrian population buying products online and then picking them up in store.
  • Another factor that supports future e-commerce growth in Austria is their logistic/delivery services. Austria stands fourth globally in the World Bank’s logistics ranking for ease of delivery and trade logistics, surpassed only by Germany, Sweden, and Belgium.