A recent European Commission report on the state of e-commerce offers some great insights on how consumers and merchants are dealing with cross-border e-commerce payments.

Here are some highlights of the EC Digital Agenda Scorecard:

  • The UK led the pack with nearly 80% of individuals ordering a product or service online in 2014. The EU as a whole rose 14 percentage points to reach 50% of citizens shopping online.
  • Top three reasons for shopping online: Ability to order at any time of the day or week, lower prices and saves time.
  • Main concerns of online shoppers include data protection and payment security.

Interestingly, while 44% of EU citizens engage in domestic online shopping, cross-border e-commerce between Member States makes up a smaller percentage (15%) when doing so. Nine percent do both, while 6% buy only from abroad, mostly in smaller Member States with less developed offerings. However, cross-border e-commerce is making its mark on customer shopping habits. The current percentage is 6.5 points higher than it was four years ago.

Eye on SMEs

When it comes to e-commerce growth, one sector to watch is SMEs. European SMEs have not yet reached their full online retail potential, as only 14.5% of them sell online. This represents growth of only 3.5 percentage points over the last five years. According to the report, the best-performing countries include the Czech Republic and Croatia. However, despite the growth, even the best-performing countries have a ways to go to reach the EU-wide target of 33% SME online sales activity by the end of 2015.

Large companies are much more active online, with 35% of them engaging in some form of e-commerce. This number is up six percent over the last five years. The e-commerce gap between SMEs and large companies seems to be increasing.

Large Up-Front Costs—In Time and Money

For most products and services, it would seem like selling online is hardly the complex endeavor it once was. However, for many companies, barriers to entry remain. One of the main concerns for businesses not currently selling online is shipping and handling, stemming from concerns about both logistics and costs. Will offering direct shipping, guarantees and free returns be worth the sales volume? Dealing with local regulations is another headache to add into the mix.

For SMEs, naturally these issues are of greater concern than they are to larger companies—big retailers can more easily afford the significant up-front investment in money and the time it takes to set up reliable systems and research local laws.

According to the report:

Online suppliers of goods and services who wish to serve a pan-European market may potentially need to know about, and comply with, 28 differing sets of national regulations. Finding out which regulation applies in which case may be difficult. 37% of EU online exporters to other Member States have problems identifying which rules to follow. That figures rises to 63% for companies trying to start exporting online. This situation creates significant information and compliance costs for many online traders, especially for SMEs, in particular when the value of the transaction remains low.

It’s important to remember both large and small enterprises must deal with the complex regulatory issues that can make cross-border e-commerce cumbersome and difficult. Through our role as a merchant acquiring bank with jurisdiction in each EU country and through our partnerships, Credorax is breaking down barriers to entry to make cross-border e-commerce affordable and accessible for all.