In Luxembourg, half of all electronic payments are made with a smartphone, according to EPA EU Photo: Payconiq

In Luxembourg, half of all electronic payments are made with a smartphone, according to EPA EU Photo: Payconiq

With 3.7bn transactions in 2019, electronic payments account for 90% of local purchases in Luxembourg, according to a report co-authored by the Emerging Payments Association EU (EPA EU).

The most popular electronic payment methods in the grand duchy were mobile payments (51%) and bank cards (37%), says the study, which was published in July.

JP Morgan estimates that each inhabitant of Luxembourg has 4.35 bank cards, both debit and credit. For the latter, the most widespread are Visa, Mastercard and American Express, while for debit cards Visa Debit dominates the market.

“The main characteristic of Luxembourg is its role as a European hub for payment operators such as Amazon, Rakuten, PayPal, but also Payconiq, which for Luxembourg is reflected in the very high penetration of its mobile application (Digicash by Payconiq), one of the highest in Europe. In the field of B2B payments, Banking Circle is the latest big arrival on the scene, with a worldwide presence that already accounts for more than 6% of European e-commerce flows,” says Thibault de Barsy, vice-president and general manager of the Emerging Payments Association EU.

Last June, Payconiq counted 245,000 users in Luxembourg, says its marketing and communications manager Pierre-Alexandre Ravaille.

As for EPA EU, the Luxembourg-based non-profit organisation has just welcomed its 30th member, the company FinFlag. Based in Brussels, this provider of back-office tools for credit card issuers is, Thibault de Barsy says, “a good example of the multiple businesses that make up our value chain.”

European gap

Beyond Luxembourg’s borders, the proportion of cash used for daily payments fell from 79% to 73% between 2016 and 2019 across Europe, while card payments saw their share rise from 19% to 24%, reports EPA EU.

The report does not take into account the rise in cashless payments prompted by the pandemic, when many shops preferred digital or contactless forms of payment to avoid the handling of cash, seen as a potential source of contamination.

Cash remained dominant in countries like Germany, Austria and Slovenia, with a share of almost 80%, compared with 30% in the Netherlands, Estonia and Finland.

According to the Luxembourg Central Bank, electronic money accounted for €143.7bn in payments in 2019, 35 times more than cash withdrawals. Ten years earlier, the difference was around ten-fold with €14.1bn in e-money.

This story was first published in French on . It has been translated and edited for Delano.