2019 J.P. Morgan Global Payment Trends

2019 Global Payments Trends Report - Portugal Country Insights

PORTUGAL INSIGHTS REPORT


Portugal is a small market, but it is expanding rapidly as the country improves its internet connectivity and smartphone penetration continues to increase.  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

 

Unemployment in Portugal in 2018 fell to 7.1 percent, from nine percent in 2017,1 while consumer spending has also been increasing. These factors have been supporting e-commerce growth, and the sector is set to expand at a double-digit growth rate up to 2021, making it one of the more dynamic markets in Europe.2* However, gross domestic product growth is expected to slow in 2019 and 2020, which might have an impact on the retail sector.3 Despite this, Portugal is on track to be one of the faster-growing European e-commerce markets in 2019, perhaps also as a result of its historical underdevelopment.

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

Double-digit growth expected for a nation of international online shoppers

 

When comparing the Portuguese online shopping market with other European countries in our study, it is small, at €4.3 billion.13 This makes Portugal the second-smallest e-commerce market by annual sales in the 18 European countries reviewed in our report series,* with only Luxembourg’s market being smaller. However, the country is expected to register double-digit sales growth in the coming years, increasing at a compound annual growth rate of 12 percent to 2021, making it one to watch.14

To date, growth has been hampered by lower than average internet connectivity. Home internet access is on the rise, but it still lags behind other European countries included in our report series. An estimated 74.7 percent of households had a fixed broadband connection at the end of the first half of 2018, an increase of 3 percent compared with the previous year.15 Four out of 10 citizens now shop online, with the average Portuguese e-shopper making 15.2 purchases per year in 2018, four more purchases when compared with 2017.16

Portuguese e-commerce growth will be driven by a rise in internet penetration and purchase frequency. However, one potential problem is the fact that the average transaction value is declining.17 There is an overall unwillingness to spend large amounts online: the average annual online spend per capita is €1,236, below the European average of €2,186.18 Portugal’s e-commerce enthusiasts are largely younger consumers, a group that is likely to have a limited disposable income. When it comes to demographic segmentation, 80 percent of e-shoppers are within the age group 15 to 44.19

 

Social media growing in relevancy among shoppers

 

While search engines are the main source of traffic to e-commerce sites, social media comes second, perhaps as a result of this youth-led online shopping culture.20 Facebook has a high utilization rate in Portugal, but it is worth noting that for two years in a row, there has been a decrease in the number of online shoppers who claim to use it. However, within that same period growth was evident in the number of shoppers claiming to use image-based social networks – Pinterest (24.7 percent) and Instagram (51.7 percent).21

Cross-border spending accounts for a significant proportion of overall e-commerce in Portugal, at 23 percent, or €1 billion.22 Some 48 percent of Portuguese online shoppers have already purchased products from abroad and 63 percent say they are interested in doing so.23 The most popular markets are China, neighboring Spain and the UK.24 China, in particular, has been making efforts to boost trade relations with Portugal, signing multiple new co-operation deals in late 2018.25

That said, the two most popular shopping sites in Portugal are still domestic and platform-based. Classified ads site olx.pt is number one, followed by consumer electronics seller worten.pt. In third place is the Chinese seller platform AliExpress.com.26

This could present an opportunity for international e-commerce merchants to gain traction in a market that has historically been underserved by major e-commerce giants. Establishing domestic .pt web addresses and offering sites with clear layouts and Portuguese-language item descriptions could help international sellers to gain trust and credibility.

Perhaps due to the high numbers of products bought from other countries, perceptions of delivery speed vary depending on the product category. While in other highly developed European e-commerce countries, such as the UK and the Netherlands, same or next-day delivery is now a norm across all categories – with the ability for a washing machine or a book to arrive within hours – such immediacy is still seen as ‘nice-to-have’ in Portugal, rather than an expected part of the e-commerce experience.27

E-commerce merchants should hone app offerings to court smartphone shoppers

 

Portugal’s mobile commerce market is worth €0.43 billion, and accounts for around 10 percent of all e-commerce transactions in the country.28 Mobile commerce sales in the country are expected to outperform overall e-commerce sales, increasing at a compound annual growth rate of 16 percent out to 2021, to reach a value of €0.78 billion.29

The number of Portuguese e-shoppers who own smartphones is 68 percent.30 As the devices rise in popularity, ownership of tablets, laptops and televisions with access to the internet is diminishing.31 Smartphones have become a key tool for product research: they are the preferred device for searching the internet with 70.8 percent of e-shoppers, a factor that should help drive sales via this channel.32 To avoid cart abandonment and convert browsing to sales, e-commerce merchants should provide mobile-optimized shopping apps. Used for 52 percent of completed transactions, apps are now the dominant method for shopping via a mobile device.33

Android is the most popular mobile operating system, used by 68 percent of mobile device owners. Apple’s iOS is second, with a 29 percent share of the market.34

A payments market dominated by cards, as digital wallets grow

 

Cards are the most popular online payment method in Portugal, taking a 40 percent share of the market.35 Debit cards are the preferred payment card, with the risk of credit card fraud a key concern for the average Portuguese shopper – there has been a 40 percent decrease over the past two years in customers naming credit cards as their preferred method of payment for this reason.36 Overall, however, card transactions are expected to grow at a compound annual growth rate of 20 percent out to 2021, where they could take a 44 percent share of the market and maintain their leading position.37

Digital wallets and bank transfers will be the fastest-growing payment methods, but they start from a lower baseline. Digital wallets are at present used in just 10 percent of all completed e-commerce transactions, while bank transfers are used for seven percent.38 Both are predicted to grow at a compound annual growth rate of 29 percent out to 2021 when they are set to occupy a 15 percent and 10 percent share of the online payments market respectively.39

 

ATM-based payments method is a key part of Portuguese payments culture

 

When looking at open invoicing, a key Portuguese payment method to be aware of is Multibanco, which takes a 30% share of the payments market.40 This system launched in 1985 and allows users to pay bills and invoices at automated teller machines. All major Portuguese banks participate in the scheme, which enables international online merchants offering payment via this method to access the vast majority of the Portuguese online shopping population.41 Digital wallet providers paysafecard and PayPal® have collaborated with Multibanco to allow users to transfer credit to their digital wallet accounts using Multibanco, which in turn may help drive digital wallet usage.42

Apple is yet to work with Portuguese banks to offer its mobile payment system in the country, which could hinder long-term digital wallet growth among Portuguese users of its mobile products. Other brands are jumping into the space instead: Google Pay is available for Android users,43 and Dubai-based digital wallet Beam has announced its intention to break into Portugal in 2019.44

International merchants can capitalize on Portugal’s strong existing card payment uptake and the cross-border payment security offered by cards, by using them as their key payment solution before considering other local payment options such as Multibanco. It should be noted, however, that offering Multibanco and other open invoicing methods might mean merchants incur delayed payments after the product has been delivered. Domestic e-commerce merchants are providing a broad range of other payment options, from digital wallets to cash on delivery, in an overall effort to drive sales. For example, there was a six percent increase in availability of payment on delivery between 2017 and 2018.45

Low fraud rates don’t match perceptions

 

E-commerce fraud in Portugal is relatively low, with only one percent of online buyers being affected in this area each year, compared with a European average of two percent,46 while chargebacks also remain low. Concern remains over credit fraud in the country but it is largely unfounded. Over the past five years there have been sharp reductions in card-not-present fraud and fraud due to lost or stolen cards.47 The environment will improve further with the introduction of Strong Customer Authentication for card-not-present payments, as part of the wider European revised Payment Services Directive regulation.

Key takeaways

 

  • Portugal’s business to consumer e-commerce market is valued at €4.3 billion48
  • Portugal is the second-smallest e-commerce market by sales of the 18 European countries surveyed
  • Portugal’s mobile commerce market is worth €0.43 billion, and accounts for around 10 percent of all e-commerce transactions in the country49
  • Cards are the most popular online payment method in Portugal, taking a 40 percent share of the market50

 

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 J.P. Morgan 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 Western Europe Economic Research, J.P. Morgan Chase Bank, January 2019.

2 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.

3 European Commission, ‘Autumn economic forecast – Portugal.’ Accessed December 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. ‘Portugal.’ 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 Ecommerce Foundation, 2016.

8 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been estimated for J.P. Morgan Merchant Services by Edgar, Dunn and Company, 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 Newzoo, 2018.

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 World Bank, 2017.

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 Banco De Portugal, 2018.

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 Ecommerce Foundation, 2016.

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, 2018.

15 Anacom.pt, November 2018. ‘Internet access service at a fixed location - 1st half 2018.’ Accessed December 2018.

16 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 2018.

17 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 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 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 2018.

20 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 2018.

21 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 2018.

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

23 DPD.com, 2017. ‘E-shopper Barometer Report 2017.’ Accessed December 2018.

24 IPC.be, 2017. ‘Cross-Border E-Commerce Shopper Survey 2017.’ Accessed December 2018.

25 ChannelNewsAsia.com, December 2018. ‘Portugal to cooperate with China to create 'new Silk Roads' of trade.’ Accessed December 2018.

26 SimilarWeb.com, December 2018. ‘Top sites ranking for Shopping in Portugal.’ Accessed December 2018.

27 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 2018.

28 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.

29 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.

30 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.

31 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 2018.

32 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 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 Ecommercewiki.org, August 2018. ‘Portugal B2C Ecommerce Country Report 2017.’ Accessed December 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, 2018.

36 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 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 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.

39 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.

40 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.

41 Boacompra.com, April 2018. ‘Multibanco: The most popular payment method in Portugal.’ Accessed December 2018.

42 Shifter.Sapo.pt, May 2018. ‘PayPal e Multibanco passam a entender-se e dispensam cartão de crédito.’ Accessed December 2018.

43 Google.com, 2018. ‘Countries where you can use Google Pay.’ Accessed December 2018.

44 CNBC.com, December 2018. ‘Dubai-based mobile payments provider Beam goes global after major retail acquisition.’ Accessed December 2018.

45 CTT.pt, November 2018. ‘Ecommerce Report CTT 2018.’ Accessed December 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 via Eurostat, 2017.

47 Fico, 2018. ‘European Fraud Map 2017.’ Accessed December 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 via Ecommerce Foundation, 2016.

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, 2018.

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