How will shoppers pay online in 2026?

Cards have been successful in driving global commerce over the last century, but they weren’t designed for digital. The experience of paying by card online is often poor and security is weak — yet costs to businesses remains high.  

In 2021, credit and debit cards made up 41% of all ecommerce payments in the UK and Europe, but this number is falling. By 2026, two thirds of ecommerce purchases will be made using ‘alternative’ payment methods (APMs).  

We partnered with Edgar, Dunn & Company to examine the rise of alternative payments in more detail. Below are five of our findings. 

The findings in this blog post are from our report: Beyond cards: the rise of alternative payments. TrueLayer partnered with Edgar, Dunn & Company, an independent consultancy with extensive experience in payments, to compete this report.

1. Bank transfer, wallet and buy now pay later payments are growing much faster than cards

More online shoppers are switching from card payments to alternatives. In just four years’ time, two thirds of all ecommerce purchases in the UK and Europe will be made by bank transfer (19%), digital wallet (31%) or through buy now pay later (14%). 

The growth of these alternative payments is being driven by a number of trends. Global smartphone adoption (which increased from 3.7 billion users in 2016 to 6.3 billion in 2021) has made it easier for consumers to authenticate payments with their face ID or fingerprint, and pay in-app. This in turn has led to fast adoption of mobile-first payment methods.

Meanwhile, technological advances such as APIs have made it easier for merchants to offer alternative payment methods while improving the experience for consumers at the same time. Open banking APIs for example have created a pan-European network for faster bank payments that can be embedded at checkout.

2. APMs are becoming mainstream in Europe

In some European markets, alternative payment methods have already overtaken cards; in others they're growing quickly.

Sweden

Two thirds of the population use the mobile payment app Swish. Adoption skyrocketed alongside an increase in non-cash payments during the pandemic.

Netherlands

Bank payments already dominate ecommerce, accounting for two thirds of purchases in 2021, mostly through payment system iDEAL. 70% of iDEAL payments are made on mobile.  

Norway

Alternative payments will represent almost two thirds of total payments by 2026. Initially designed for P2P payments, mobile payments service Vipps is now used to pay for online purchases as well. As is the case for Venmo in the United States, Vipps is now used as a verb, with consumers “vipping” to pay others.

Poland

Bank payments account for just over half of total ecommerce spending. Mobile payment method BLIK is especially popular: over 90% of Polish bank customers have the option of using BLIK in their mobile banking applications.

United Kingdom

Cards still dominate ecommerce in the UK, but alternative payments methods are on the rise. In 2021, for example, there were 25 million open banking payments, with an estimated worth of more than more £10 billion. UK consumers can already make a variety of open banking transactions through providers like TrueLayer. 

3. Early adopter industries include video gaming, elearning and iGaming

There are some industries where alternative payment methods are already thriving. In Europe, for example, APMs account for nearly two thirds of video game payments, where they typically provide simplicity and better conversion rates for merchants.

In particular, digital wallet payments made up 30% of video game payments in 2021, and these are expected to increase to 35% by 2026.

Meanwhile, open banking payments are increasingly popular in industries like igaming and wealth management because they offer instant settlement, low transaction costs and a low risk of fraud.

4. Offering the right alternative payment methods can help you reach new customers

Letting customers choose how they want to pay — and offering the right alternatives to cards — drives sales.

Research shows that online shoppers are more likely to buy from a retailer and less likely to abandon their basket if the right payment options are available. Providing more payment choices also speeds up the purchase process, especially on mobile.

5. Open banking is driving the growth of card alternatives 

Open banking payments are likely to become the dominant method of bank transfer payment in ecommerce in the next five years. They will also act as underlying rails for other alternative payment methods, like BNPL or wallets. 

Open banking payments offer a number of advantages: 

• Consumers pay straight from their bank account – and in many markets they authenticate with their face ID or fingerprint.

• Funds settle with the merchant instantly or near-instantly, helping them manage cash flow and enabling them to ship goods immediately.

• Coverage is pan-European because EU banks are required to have APIs available (in contrast to schemes that only work domestically, such as iDEAL in the Netherlands).

• They can be embedded into checkout via API. This generally means that the payment starts and ends in the merchant’s app or website, increasing convenience for consumers.

• They are based on secure, regulated APIs. No credentials are shared, significantly reducing the risk of fraud.

But while open banking APIs are pan-European, the maturity of user experience and API reliability varies by market. It’s important to build your open banking payments strategy with a trusted partner, who’ll help you navigate opportunities and challenges – and support you with implementation on a global scale.

Access the full report on alternative payments or contact a member of our team to speak about your open banking project.