Online spending between European countries is currently
being held back by a lack of consumer trust and a fragmented
payments landscape. Louise Naughton reports on government and
business initiatives to put some life back into the market,
including the launch of Barclaycard’s SmartPay


E-commerce: Research – percentage of cross-border offers technically accessible to consumers for which the ordering process failedFragmented, unequal and
suffering from a lack of consumer trust, it is evident something
needs to be done to kick-start cross-border e-commerce in

The internet is extending
consumers’ access to new information and products across the world,
yet strangely even though online spending is increasing,
cross-border e-commerce in Europe is stagnant. The issue has
attracted a combination of state and business solutions in recent
months which focus on building trust and making cross-border
payments easier for consumers.

The most recent is Barclaycard’s
launch of a new cross-border e-commerce platform called SmartPay,
which aims to make transactions simpler and more convenient.
Europe’s Internal Market Committee, in an attempt to address a lack
of trust among consumers using websites in different countries, is
considering a number of initiatives, including introducing a trust
mark for qualifying websites.

Both projects are looking to
address the worrying state of e-commerce in Europe. European
Commission (EC) figures, published in October last year, show the
gap between domestic and cross-border e-commerce is widening.
Between 2006 and 2008 online transactions grew from 27% to 33%,
while cross-border purchases remained stagnant, increasing from 6%
to 7% during the same period.

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The Commission’s report also shows that consumer demand is
clearly there. It found that 61% of failed cross-border orders
occur because merchants refuse to serve the customer’s country.
Shoppers in Romania, Bulgaria, Latvia, Belgium and Malta
experienced the highest failure rates (see chart).

This is despite the introduction of
a single currency for the majority of the EU’s members and a huge
emphasis on standardising the continent’s payments

Barclaycard believes SmartPay could
be part of the answer. The platform has the technology to provide
merchants with a customised payment platform “skin” to blend in
with their own website, creating a more seamless payment process.
The transaction is localised in one payment page to ensure the
consumer is not “bounced around” from one website to another.

It uses the IP address to determine
what country the consumer is from and tailors the language,
currency settings and payment preferences to the payment

“Satisfying the complex
expectations of European online consumers has become critical for
success,” said Stewart Roberts, business development director of
global payment acceptance at Barclaycard. “By simplifying the
online transaction processes, Barclaycard SmartPay will make it
easy for businesses to present a seamless, localised and familiar
payment environment across the EU.”


Meeting complex

Barclaycard, together with e-commerce solutions provider Adyen,
argues that a one-size-fits-all approach is not sufficient in the
European market. It believes that the ability for retailers to use
the consumer’s domestic preferred payment option is what makes
SmartPay stand out from its competitors.

SmartPay is being targeted at
mid-size to larger retailers. Roberts said it can be used as a
stepping stone for them to expand their cross-border capabilities
without technically changing their payment and security
infrastructure. Merchants will then be allowed to expand at their
own pace, and can deploy the platform domestically, adding other EU
markets as they please.

An attractive benefit to merchants
is that SmartPay also rids them of the expense and complexities of
becoming PCI DSS compliant.

Not everyone is convinced SmartPay
alone will be able to put right the problems lying at the heart of
Europe’s online payments market. Trust is a critical element in the
minds of merchants and consumers alike if European markets are to
merge and borders are to blur. Paul Love, a business solutions
consultant at ACI Worldwide, says SmartPay does not do enough to
address that fundamental issue.

“I don’t think that SmartPay is the
answer on its own,” said Love.

“The platform is more likely to be
used for multiple domestic commerce through a cross-border payment
mechanism. SmartPay does not rid the industry of the real world
issues such as lack of trust. These problems still remain and do
not go away with some new whizzy technology.”

Central to the regulator’s approach
is a focus on building consumer trust. The main regulatory barriers
to cross-border e-commerce are the fragmentation of consumer
protection regulation and other rules on value-added tax (VAT),
recycling fees and levies.

The EU has pledged a number of
initiatives to untangle this web. These include: condensing
consumer rights directives into a single, EU-wide set of rules,
regular sweeps to monitor website compliance with EU laws, imposing
regulations to ensure consumer trust in online offers, and
simplifying VAT reporting for merchants.

In was also announced in June that
a trust-mark is set to be introduced by the Internal Market
Committee to guarantee the reliability and quality of goods placed
on the cross-border e-market, in a bid to boost consumer confidence
and protection.

European e-commerce is to hit €172bn ($230.6bn) this year,
according to Centre for Retail Research estimates. It is clear that
the online space is thriving. As far as cross-border e-commerce
goes however, there is a lot of work still to do.