British e-commerce. Feel the difference!

Based on real life purchase transactions, the Pago Report 2008 highlights national differences in consumer and payment behaviour in European e-commerce

British online merchants are increasingly attracting more international consumers. Whereas consumers from Germany make up over 95% of custom in German online shops, only 45% of customers in UK shops are from the UK. Nearly one third of international customers stem from countries outside Europe, like the USA or Asia. The Pago Report 2008 has just been published by Pago eTransaction Services, the international Acquirer and Payment Service Provider. This, the seventh edition of this respected report, entitled "Trends in E-commerce Purchasing and Payment Behaviour based on real Transactions", analyses developments in European online consumer and payment behaviour, non-payment risks and trends in important e-commerce industry sectors. Essays by prominent experts from the major credit card organisations, the Deutsche Bank, giropay and the University of Karlsruhe round off the Pago Report 2008. More information is available at www.ecommerce-report.de.

According to the Pago Report 2008, online shops in the UK are more attractive to foreign consumers than are, for example, German online merchants. In German shops less than 5% of online purchases are made by international consumers and only a negligible 0.8% from outside Europe. This could be a result of the language barrier. In contrast to German, English is the most widespread language in the world and with over 340 million native speakers alone and it is understood by a majority of e-commerce consumers. Overall in Europe, German and British online consumers are the most active e-commerce participants but Irish consumers have gained a lot and now rank fourth in Europe behind French consumers.

"E-commerce is still a black box for many. The Pago Report attempts to shed light on the matter," said Dr. Markus Weber, Pago eTransaction Services GmbH's Managing Director, adding: "In contrast to all other studies which are based on polls, the Pago Report is unique. We analyse real life purchase transactions processed by thousands of European merchants through the Pago platform. This gives a valid picture of e-commerce which is not only interesting for experts and researchers but also provides European merchants valuable information to assist in their entry into this promising market."

Selection of about 30 million purchase transactions forms basis of the Pago Report 2008

The Pago Report 2008 is based on a selection of about 30 million purchase transactions processed through the Pago platform between October 2006 and September 2007. The report is based on real life purchase transaction and not on analysis of polls and surveys. The Pago Report covers online merchants in Germany, the UK and the rest of Europe. The report analyses consumer origin, merchant country, transaction values, purchase time, consumer gender, payment methods - including the new online payment methods Maestro and giropay - success rates, chargeback ratios, direct debit chargeback ratios as well as the general non-payment risk with a detailed look at the implementation of 3-D Secure. 3-D Secure is a procedure introduced by the major credit card organisations which allows the identification of the cardholder thereby preventing a large proportion of e-commerce chargebacks. The chargeback ratio is the percentage of credit card transactions which are reversed due to cardholder dispute.

No real Christmas shopping season in UK e-commerce

Online consumer behaviour in Europe is characterized by differences between individual countries. Whereas German online consumers make about one third of their purchases between October and December, UK consumers do less than 10%. In essence: E-commerce for British consumers takes place only between May and September.

British e-commerce consumer slowdown at weekends

Whereas e-commerce is becoming a more attractive weekend activity for consumers in Europe generally, there is a marked slump of activity by UK consumers at weekends. In contrast to global trends, UK weekend online consumer activity has dropped further. Only 20% of all weekly transactions are executed in the UK on Saturdays or Sundays. In comparison, consumers outside the UK and Germany account for 26% of their purchases over the weekends.

UK online consumers do their shopping during office hours

According to the Pago Report 2008, there are also differences in the preferred time for online purchases: German consumers use the period from 8pm to 10pm, i.e. after work, most whereas the peak period in the UK is between 2pm and 4pm, i.e. during working hours.

The credit card dominates European e-commerce

The Pago Report also found differences in payment behaviour between the consumers' countries of origin. Whereas German consumers still pay for two out of three purchases with payment methods other than the credit card, consumers in UK and from the rest of Europe and Non-European customers use credit card payment for over 90% of their online purchases. As the first non-UK acquirer, Pago has offered Maestro since the summer of 2006, the internet enabled debit card payment method, to its merchants. Maestro is already a leading payment method in the UK and will gain importance with the introduction of the European-wide SEPA framework. Maestro payments, analysed separately in this year's Pago Report for the first time, account for about 10% of online purchases in the UK.

The future success of the SEPA Direct Debit Scheme (SDD) still remains incalculable. As a single European legal framework is required, the European Directive needs to be transformed into national legislation by November 2009 before SDD can be introduced throughout Europe.

New payment methods gain importance in European e-commerce

Until now, the analysis of consumer e-commerce activity was limited to European countries. The Pago Report 2008 has extended its analysis to include Non-European countries and individual continents. And for the first time the report looks at European consumer behaviour based on time of day. Due to differing time zones, only German consumers could be properly examined previously. Insofar the Pago Report is taking into account the harmonisation of the Single European Payment Area (SEPA). Beyond Maestro, for the first time the 2008 Report also looks more closely at giropay, the new national online funds transfer method introduced by the German banking system. Analysis of these two new payment methods reveals their growing importance.