2019 J.P. Morgan Global Payment Trends

2019 Global Payments Trends Report - Czech Republic Country Insights

CZECH REPUBLIC INSIGHTS REPORT


Although still a relatively small market, the Czech Republic’s e-commerce sector is growing rapidly, drive by an explosion in online shops and a strong affinity for mobile commerce. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

Introduction

 

Czech economic growth moderated in 2018, but remained strong. The main driver of growth has been domestic demand.1 For example, household consumption rose in 2018 as a result of improving wages in the labor force. Unemployment remains low in the country, which is pushing up wages, but the low ratio of job seekers per vacancy could weigh on productivity growth in the longer term.2 For the time being, the picture is relatively positive and this is reflected in the e-commerce sector, which is showing the fastest growth out of all the countries studied in this report series.3*

This document is based on projected figures and is subject to change at any time.

The young drive sales in a market predicted to be the fastest growing in Europe

 

The Czech Republic’s e-commerce market is worth €4.4 billion,14 a figure that accounts for just 0.8 percent of the overall European e-commerce market.15 The country stands out, however, for having the fastest e-commerce growth forecast of all the European countries included in our report series.* The market is projected to expand at a compound annual growth rate of 16 percent to 2021.16 This prediction is underpinned by the large, and growing, number of Czech online shops. The country has one of the highest online stores per capita in Europe. In 2017 alone, the number of Czech e-shops increased by 3,900 to reach 40,100.17

The average annual basket spend in the Czech Republic is low, at €737,18 much lower than the European average of €2,186.19 Attributed to the Czech affection for budget shopping, this disparity in average spend is expected to recede as consumers have started to limit their discount purchases over the past two years. After a period of long-term growth, the share of spending taking place during discount events has started to drop.20 Bargain-focused shopping is instead being replaced with a focus on white goods and electronics. Home appliances is the fastest-growing category in the Czech e-commerce market, with a 24.5 percent growth rate, followed by consumer electronics at 21.6 percent.21

When it comes to demographic segmentation, the frequency of use of the internet varies greatly by age groups. For instance, 96.5 percent of the Czech population within the age group 16 to 24 used the internet on a daily basis in 2017, compared with 19.4 percent for the age group 65 or over.22 It follows that e-commerce growth will largely be driven by younger citizens. Unlike more established markets like the UK and Germany, where keen online shoppers are found across all adult demographics, in the Czech Republic, online spending is largely the preserve of the young. An estimated 67 percent of 25 to 34-year-olds shops online, compared with just eight percent of those aged 65 or over.23

Domestic sites are popular with Czech online shoppers. The top five e-commerce merchants are dominated by local brands with a .cz web address. General merchandise shopping site Heureka.cz is number one, followed by online marketplace Bazos.cz and another general shopping site, Alza.cz. The only international player in the top five is Chinese platform AliExpress.24 Amazon has yet to launch a dedicated site for the Czech Republic, and at present only offers a Czech language translation on its German .de site.

As a result of a high number of local online shops, and underwhelming efforts from international e-commerce merchants, cross-border shopping is poor, with only 15 percent of Czech shoppers having purchased an item from abroad.25 The cross-border market comprises just seven percent of the Czech e-commerce market overall.26 For international e-commerce merchants hoping to win over Czech shoppers, offering a locally-recognized trustmark may help build confidence.27 National e-commerce organization APEK offers a trustmark, which is used by brands representing 80 to 85 percent of total sales in the country.28

As a result of the majority of orders being made from domestic e-commerce merchants, expectations around fast delivery are high: three out of four customers request same-day delivery.29 However, only six percent of Czech consumers are willing to pay for a premium delivery service.30 International sellers will have to hone their delivery offer and pricing to be able to compete with local brands, which can deliver promptly and cheaply while bypassing any import delays.

A market already well versed in shopping on the move

 

Mobile commerce is already well-established in the Czech Republic, and now accounts for the majority – 54 percent – of all e-commerce transactions,31 or €2.4 billion in sales.32 The country’s mobile commerce market is projected to expand at a compound annual growth rate of 21 percent to 2021,33 to reach a value of €5 billion,  showing a strong preference in the country for shopping on the move.34

Smartphone penetration, at 67.3 percent,35 is improving the online shopping experience in the Czech Republic. This is supported by an increasing number of domestic e-commerce merchants optimizing their websites for mobile shopping.36 Apps are preferred over browsers for shopping, accounting for 54 percent of sales.37

Android is the most-used mobile operating system, taking a 70 percent market share, followed by Apple’s iOS with a 25 percent share.38 Similarly, Google Chrome is the most popular mobile internet browser, used by 56 percent of the population, followed by Apple Safari, with 24 percent market share.39

Google released Android Pay (now known as Google Pay) in the Czech Republic in late 2017, enabling consumers to conduct contactless in-store transactions via their Android phones.40 Apple Pay, meanwhile is yet to launch in the country.

The digital-only banking model is gaining traction, which should also support mobile commerce growth. In November 2017, BNP Paribas-backed lender Cetelem introduced mobile-only bank ‘Hello bank!’ to the Czech market. The product offers a full banking product portfolio, including a Mastercard®-branded debit card.41

Cash on delivery dominates Czech payments space, but new methods are gaining traction

 

The Czech Republic stands out among the countries included in our report series* for its high levels of cash usage. Settling payment on delivery with cash is the most popular way to pay in the country, representing 45 percent of transactions.42 A consumer preference for ordering online and then picking up and paying for items with cash in-store has also driven this habit.43 The popularity of cash could be explained in part by the fact that, at 81 percent, the Czech Republic has lower bank account penetration than the other countries examined.44

Cash payments are expected to decline by 2021, however, as card use increases. Card payments, currently used for 13 percent of payments, are expected to grow at a compound annual growth rate of 30 percent during the same period, to take a 17 percent share of the market by 2021.45

Digital wallets currently account for just seven percent of sales.46 Although they are expanding at a compound annual growth rate of 35 percent, they will still only take a relatively minor share of the market (11 percent) by 2021.47 Growth should be aided by rising smartphone penetration and an associated emergence of mobile banking and payment apps.

Bank transfers are also common in the Czech Republic. Used for 29 percent of transactions, they are currently the second-most popular way to pay.48 By 2021, bank transfer is expected to become the number-one payment method, in value terms, accounting for 35 percent of online sales.49

However, the Czech Republic’s infrastructure to support bank transfers is still evolving. The Single Euro Payments Area’s Instant Credit Transfer was launched across Europe in November 2017, and provides instant crediting of up to €15,000 in less than seconds and is available 24 hours a day, year round. The Czech Republic is a member of the Single Euro Payments Area, but it is still unknown when the country will start participating in the Instant Credit Transfer scheme.50

Cash usage helps keeps chargebacks low

 

The Czech Republic has one of the lowest chargeback rates in Europe with a rate of only 0.01 percent for 2018.51 This low level for the Czech Republic is likely due to the very high usage of cash and low reliance on card payments. In fact, for these reasons, online fraud is generally low in the country.52 The main area of e-commerce fraud in the country is lost and stolen cards, but the impact of these thefts will lessen as card protection schemes, like chip and pin, gain strength throughout Europe.53

Key takeaways

 

  • The Czech Republic’s e-commerce market is worth €4.4 billion54
  • The country is notable for having the fastest e-commerce growth forecast of all the European countries included in our report series*
  • Mobile commerce is well established in the Czech Republic, accounting for the majority – 54 percent – of all e-commerce transactions55
  • Settling payment on delivery with cash is the most popular way to pay in the Czech Republic, representing 45 percent of transactions56

 

Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.

 

* J.P. Morgan 2019 Payments Trends – Global Insights Report series includes the following European countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Spain, Sweden, Switzerland, The Netherlands, UK.

 

Global Payments Trends Reports

International e-commerce success can hinge upon understanding the needs, nuances and growth patterns of individual nations. J.P. Morgan’s Global Payments Trends Reports aims to offer merchants the knowledge they need for global success through in-depth, country-by-country analysis.

About J.P. Morgan

 

J.P. Morgan offers a full suite of payments services to enable a seamless connection across the payments continuum for clients. We bring our consultative expertise, data-driven insights, and local service around the globe to provide a more unified view of payables, receivables and cash management. Merchant Services is the payment acceptance and merchant acquiring business of JPMorgan Chase & Co. (NYSE: JPM) – a global financial services firm with assets of $2.6 trillion and operations worldwide.i According to The Nilson Report, it is also the top merchant acquirer of e-commerce transactions in Europe.ii

 

i JPMorgan Chase & Co. Q4 2018 Earnings Report 2018.

ii The Nilson Report, #1132 May 2018.

 

For more information, please contact:

 

Your J.P. Morgan Relationship Manager or visit: https://www.jpmorgan.com/europe/merchant-services/payment-insights

 

Information contained in this document has been prepared by third parties or obtained from sources which are believed to be reliable; but neither Chase Paymentech Europe Limited nor any of its affiliates warrant the completeness or accuracy of the information contained herein. Chase Paymentech Europe Limited and any of its affiliates shall have no liability to the user or to third parties, for the quality, accuracy, timeliness, or for any special, indirect, incidental or consequential damages which may be experienced because of

the use of or reliance on the data or statements made available herein. Third party trademarks, brand names, products and services are only referential and Chase Paymentech Europe Limited and its affiliates disclaims any sponsorship, affiliation or endorsement of or by any such third party.

 

Chase Paymentech Europe Limited, trading as J.P. Morgan, is regulated by the Central Bank of Ireland. Registered Office: J.P. Morgan, 200 Capital Dock, 79 Sir John Rogerson’s Quay, Dublin 2 D02 RK57, Ireland. Registered in Ireland with the CRO under the Registration No. 474128.

Directors: Catherine Moore (UK), Carin Bryans, Dara Quinn, Steven Beasty (US), Eilish Finan

Copyright© 2019

1 European Commission, November 2018. ‘Autumn forecast – Czech Republic.’ Accessed December 2018.

2 European Commission, November 2018. ‘Autumn forecast – Czech Republic.’ Accessed December 2018.

3 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

4 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

5 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via CIA, 2017.

6 World Bank Open Data. ‘Czech Republic.’ Accessed December 2018.

7 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via APEK, 2018.

8 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Go-Globe.com, 2018.

9 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

10 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

11 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Newzoo, 2018.

12 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

13 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via ECB Statistical Data Warehouse, 2018.

14 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via APEK, 2018.

15 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

16 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

17 Radio.cz, April 2018. ‘Czech Republic takes top spot in Europe in internet sales.’ Accessed November 2018.

18 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

19 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

20 Radio.cz, April 2018. ‘Czech Republic takes top spot in Europe in internet sales.’ Accessed November 2018.

21 Radio.cz, April 2018. ‘Czech Republic takes top spot in Europe in internet sales.’ Accessed November 2018.

22 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Cesky Statisticky, 2017.

23 Ecommercewiki.org, July 2017. ‘Czech Republic B2C Ecommerce Country Report 2017.’ Accessed November 2018.

24 Ecommercewiki.org, July 2017. ‘Czech Republic B2C Ecommerce Country Report 2017.’ Accessed November 2018.

25 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, via Eurostat, 2017.

26 J.P. Morgan 2019 Payments Trends – Global Insights Report: Estimate has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

27 European Commission. ‘EU online trustmarks building digital confidence.’ Accessed January 2018.

28 Radio.cz, March 2018. ‘Thirty-six thousand e-shops: a little or a lot?’ Accessed November 2018.

29 Export.gov, October 2018. ‘Czech Republic – eCommerce.’ Accessed November 2018.

30 Ecommercewiki.org, July 2017. ‘Czech Republic B2C Ecommerce Country Report 2017.’ Accessed November 2018.

31 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Go-Globe.com, 2018.

32 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

33 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

34 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

35 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Newzoo, 2018.

36 Export.gov, October 2018. ‘Czech Republic – eCommerce.’ Accessed November 2018.

37 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

38 Ecommercewiki.org, July 2017. ‘Czech Republic B2C Ecommerce Country Report 2017.’ Accessed November 2018.

39 Ecommercewiki.org, July 2017. ‘Czech Republic B2C Ecommerce Country Report 2017.’ Accessed November 2018.

40 Google.com, November 2017. ‘Android Pay goes local in Ukraine, Czech Republic, Brazil and Slovakia.’ Accessed November 2018.

41 BNPParibas-pf.com, August 2017. ‘Hello Bank! by Cetelem: Digital bank is born in Czech Republic.’ Accessed November 2018.

42 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

43CSAS.cz, February 2017. ‘E-commerce: World Trade Online.’ Accessed November 2018.

44 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

45 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

46 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

47 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

48 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

49 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

50 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via European Payments Council, 2018.

51 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Kount, 2018.

52 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

53 FICO, 2017. ‘Evolution of card fraud in Europe 2017.’ Accessed December 2018.

54 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via APEK, 2018.

55 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Go-Globe.com, 2018.

56 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

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