How do business' approach to payment method vary across Europe

Question posted by Julian Hucker, on behalf of Open to Export in PE2

We operate in Spain, France and Ireland and have recently launched in Germany. We've experienced vastly different attitudes to payment methods - prepayment vs contracts / cash vs wire transfer / standard credit vs credit card vs Direct Debit.

We've had to "win" this experience - is anyone aware of any more empirical evidence. It's increasingly important as we expand further

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Colin Jones, on behalf of Transpact.com in NW11.

Can you clarify who your customers are - are they consumers, SME's or larger businesses ?
And also clarify what your average payment size is ?

If non-consumer business, I would suggest opening a Euro account with a bank in a Euro zone country (maybe Ireland, due to language, but can be France, Germany, etc.). Under EU law, a bank cannot charge more for sending payment in Euro in the EU than it charges for local payment, so payment across the EU tends to be free or almost free.
Under EU law, Euro payment in the EU is also next day at the latest by law, so no delays.

This way, your customers can pay you straight to your bank account, without problem, delay or cost.

Have you also considered one of the ultra-low cost escrow services operating across Europe ?
They can guarantee that you get paid 100%, whilst guaranteeing your clients that they will get everything they were promised from you, or their money back - that gives you quite a marketing advantage.
And at only €3.49 per party per transaction, the cost is negligible (and this method enjoys the next-day Euro payment advantage).

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Julian Hucker, on behalf of Open to Export in PE2.

Thanks for your prompt response Colin. Our service enables businesses to use SMS within their day to day business communications. The range of uses is very broad - from appointment reminders to engineer communications to customer communication and marketing

Whilst we don't promote it as an SME-based service, our broad approach (16,000 customers worldwide) inevitably means that we have more SME customers than PLCs. Out payment and collections tools are reasonably sophisticated. We support ecommerce of course but we are also a pan-European DD originator (via SEPA).

So although we have the flexibility and breadth, I'm trying to find out how potential customers prefer or would choose to pay. The danger is we promote everything to everyone!

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Colin Jones, on behalf of Transpact.com in NW11.

And you have had problems with pan-European DD origination (via SEPA) in which countries ?

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Julian Hucker, on behalf of Open to Export in PE2.

Not at all, SEPA is excellent. We can offer a range of payment and contracting methods. I'm trying to find information on how businesses prefer to pay in different markets

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Hi Julian,

Thanks for posting this interesting question. Each transaction can vary depending on customer requirements (and yours) but such info would certainly be useful preparation as you gear up for expanding into new markets.

I have approached the European Payments Council and the European Commission’s Payment Services team to ask if some info has been collated on this topic. I will certainly keep you posted on responses.

My own research brought up these 2 reports - not quite what you need but perhaps of interest;

Atradius Payment Practices Barometer: International survey of B2B payment behaviour- Core results Western (Spring 2012)
http://www.atradius.co.uk/images/stories/AtradiusPaymentPracticesBarometer/PPB11_HQ_en_fin.pdf

The World Payments Report (WPR) from Capgemini, The Royal Bank of Scotland (RBS) and Efma (2012)
https://www.ebaportal.eu/_Download/Research%20and%20Analysis/2012/The_8th_Annual_World_Payments_Report_2012.pdf

I know you are already working with a UKTI adviser so she can help you direct queries to individual countries if you need country specific info . (Also note our Doing Business Guides to the countries sometimes mention payment terms and methods - http://www.ukti.gov.uk/es_es/export/countries.html )

Kind regards,

Steve

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