Current trends in electronic payments
Today, most shops in Austria accept contactless payments by debit or credit card, smartphone or smartwatch. Contactless payments rely on near field communication (NFC) technology and are also possible without PIN verification. All you need to do is hold your card or mobile device close to a payment terminal. Payment terminals and cards that are equipped to handle contactless payments usually feature a small transmission symbol (contactless symbol or contactless indicator).
Background information: NFC allows for wireless data transmission between electronic devices over a short distance (up to roughly 4 cm).
Strong rise in contactless payments in 2020
Contactless payments are already fairly widespread – not only in the USA and Asia, but also in Europe. According to PSA Payment Services Austria, a domestic provider of card payment services, the share of contactless payments in overall debit card payments in Austria already came to around 83% at end-2020, which represented an increase by 10 percentage points against 2019.
Contactless card payments
To make a contactless card payment, you just need to gently tap the payment terminal with your card – no need to insert it. For payments up to EUR 50, you do not even have to enter your PIN unless you have spent more than EUR 125 in several successive contactless payments since your last PIN verification. Single payments in excess of EUR 50 can also be made without inserting the card but you need to enter your PIN. No matter whether your payment is contactless or not, the card payment process that occurs in the background is always the same.
Contactless mobile payments
If you initiate a contactless payment with your smartphone, the payment is made with the payment instrument stored in your chosen payment app (e.g. credit card, direct debit). Contactless mobile payments either rely on NFC or QR codes that can be scanned by retailers or consumers. Such payment options have been available in Austria for several years.
Payments in e-commerce
Online trade has been steadily growing over the past years. This trend has gained further momentum as traditional shopping options were restricted during COVID-19 lockdowns. According to the Austrian Retail Association, the money spent in Austria for online purchases reached EUR 10.4 billion in 2020 – a new record high that represents a 20% increase compared to the previous year.
The boom in e-commerce can also be explained by the growing acceptance of digital payments by retailers and customers. Next to traditional credit transfers and credit card payments, there is a growing number of diverse, user-friendly online payment methods to choose from.
Most often, people use credit transfers (31%) and online payment methods (25 %) to settle online transactions. 15% of online transactions are paid for with credit cards, 11% with direct debits.
What are instant payments?
Under the SEPA Instant Credit Transfer scheme, European banks have been able to offer their customers instant payments since November 2017. Unlike ordinary credit transfers, which require at least one bank business day, instant payments make it possible to transfer funds to a recipient’s account within seconds.
Instant credit transfers can be used for many different purposes, e.g. for making payments between private individuals (peer-to-peer (P2P) payment), for buying a used car from a private seller or making other private purchases, or for buying things online. Making instant payments available at check-out counters in retail shops is also being discussed.
Most Austrian banks are already offering their customers instant credit transfers in their online banking portals.