2019 J.P. Morgan Global Payment Trends

2019 Global Payments Trends Report - Switzerland Country Insights

SWITZERLAND INSIGHTS REPORT

 


With strong spending power and widespread internet and smartphone adoption, the Swiss e-commerce market is well positioned to grow. The influx of international e-commerce providers and innovative delivery partners should also support expansion in this relatively small online shopping market. 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

 

E-commerce growth in Switzerland over the next three years is set to expand at a compound annual growth rate of 7.5 percent, one of the lower forecasts for the European region,* linked to an overall economic slowdown in the country.  Economic expansion was driven by strong domestic demand in 2018, with gross domestic product growth hitting three percent.1

Looking ahead, however, growth is expected to slow to around two percent by 2020.2 The main reasons for this deceleration is lower disposable incomes among consumers, related to moderate wage growth and the impact of inflation on spending power, and these are weighing on the prospects for e-commerce.

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

A compact e-commerce market with consumers willing to shop abroad

 

The Swiss business to consumer e-commerce market is worth €10.1 billion,13 representing just 1.9 percent of the overall European market.14* The Swiss appetite for online shopping has been relatively muted in recent years, with a deceleration in annual e-commerce growth.15

Moreover, the Swiss spend €1,548 online each year, significantly less than the European average of €2,186.16 The Swiss market is therefore projected to expand at a compound annual growth rate of 7.5 percent up to 2021,17 the second-slowest rate out of the countries we have surveyed – only Germany’s expected growth ranks lower, at 7.3 percent.18

There are other prevailing factors, however, that make the Swiss market one to consider. Citizens are highly active online; nine out of 10 households have internet access and use has increased rapidly across all regions, not just in urban areas, enabling a broad range of potential customers.19 In addition, English is widely spoken and cross-border spending is a defining feature of the Swiss market, with 64 percent of shoppers having made a cross-border purchase in the past year.20

 

International e-commerce merchants making strong gains as domestic brands fight back

 

Domestic e-commerce merchants have therefore faced pressure from foreign giants, who made early efforts to attract Swiss online consumers. In the five years leading up to 2018, the growth of foreign e-commerce merchants has been more than three times greater than that of their Swiss counterparts.21 For example, Germany’s Zalando was quick to offer a dedicated Swiss site, entering the market in 2011, before rising to become Switzerland’s second-biggest e-commerce merchant.22 Due in part to its geographical proximity and also to Zalando’s popularity, Germany is the most popular international destination for the Swiss to shop from. This is followed by China (second) and France (third).23

However, domestic brands are fighting back. Major Swiss e-commerce merchants include Nespresso and Digitec Galaxus (the biggest e-commerce merchant in Switzerland), specializing in consumer electronics but also offering homewares and lifestyle products.24 Digitec Galaxus also began operating as a platform for other brands in late 2016.25 International e-commerce merchants and payment providers hoping to enter the Swiss market should be aware of this site, which enjoys high consumer recognition and has strong domestic warehouse facilities.

Digitec Galaxus is continuing to expand – the company has: (i) increased its Swiss warehouse capacity;26 (ii) launched in Germany;27 and (iii) has plans to expand into other markets. In the past two years it has also introduced a ‘re-commerce’ concept, whereby users can re-sell Digitec Galaxus products on the site. The seller has to do little work to re-sell their product, as images and item descriptions are already available via the site.28  Delivery of domestic products is usually fast. Products ordered from the Digitec Galaxus site by 5pm are dispatched the same day and delivered by the following morning. Domestic e-commerce merchants, including Digitec Galaxus, largely outsource their logistics to Swiss Post.29

 

Customs processes can present barrier to fast delivery

 

It can be a different story for international e-commerce however. As with other European states seeking to recoup lost VAT from foreign e-commerce sales made into the country, the Swiss authorities have turned their attention to incoming international e-commerce mail. From 2019, all international e-commerce orders will become liable for Swiss VAT payments.30

As a non-EU member, customs processes can make delivery from abroad a day longer than from a domestic hub, so international e-commerce merchants who establish domestic logistics centers may be able to outpace competitors by streamlining customs processes.31

Swiss shoppers seek customs-friendly options

 

Switzerland’s mobile commerce market is worth €2.72 billion,32 accounting for 27 percent of the overall e-commerce sector.33 The mobile commerce market is forecast to increase at a compound annual growth rate of 15 percent up to 2021,34 double the pace of overall e-commerce growth, to reach a value of €4.76 billion.35

The Swiss are a nation of smartphone users, which should support this confident mobile commerce growth outlook.36 Popular apps include Facebook – over 75 percent of Swiss citizens have an account on the social networking site – and there is a culture of leaving product feedback on social media, with 50 percent of consumers using social media platforms to submit complaints to businesses or leave reviews.37 Online product research is largely carried out on smartphones, so ensuring mobile commerce sites are information-rich, clear and easy to navigate is evidently important.38 Zalando, Wish and H&M are the top-three downloaded shopping apps on the Swiss Apple Store.39

Mobile apps are also emerging that offer ways for Swiss shoppers to divert paying import duties on international e-shopping. The Deutsche Lieferadresse app, for example, is available for Apple and Android operating systems and allows Swiss e-shoppers to get their items delivered to hundreds of pick-up points close to the Swiss border. Shoppers cross the border to pick up their item and therefore avoid paying VAT.40

This is part of a wider trend threatening Swiss Post’s dominance in the e-commerce delivery market. In 2018, Germany’s DHL launched a Swiss domestic delivery service with plans to install 1,000 parcel pick-up points across the country.41 E-commerce providers look likely to have a wide range of delivery options to meet Swiss consumer demand over the coming years.

Open-invoicing payments dominate

 

Bank transfers are popular and are used for the majority of online payments, at 53 percent42 or €5.3 billion of sales.43 This appetite for payment from domestic bank accounts means international e-commerce merchants should have a Swiss bank account. While open invoicing requires retailers to pay for delivery costs before being paid for the product, the Swiss are known for prompt payment.44

Card payments are also well used, accounting for 24 percent of sales, although this share is forecast to decline slightly to 22.9 percent by 2021.45 Cards are often the best solution for e-commerce purchases as they do not have the reconciliation challenges of bank transfers. Card penetration is also high in the country,46 so this payment method is convenient for the population.

In contrast, digital wallets are expected to grow in popularity. At present, digital wallets are used to pay for 20 percent of online transactions, and the method is expected to grow to take a 24 percent share of the market by 2021.47 PayPal® takes a double-digit share of the market at 12 to 15 percent48 and local payment brands, including Twint and its domestic rival SwissWallet, are also popular. Twint is a real-time payment scheme for person to person payments on mobile devices, which launched in Switzerland in 2015. Twint uses a deferred net settlement model, allowing customers a CHF1,000 (€890) monthly transaction limit and a CHF5,000 (€4,454) yearly limit.49 Twint is relevant to e-commerce providers due to its widespread use and the fact that it also supports online payments. SwissWallet is a joint venture between credit card firm Aduno and Credit Suisse’s Swisscard.

 

‘Consumer tourism’ still a factor in the market

 

International e-commerce payment providers should ensure they offer seamless conversion estimates and multi-currency payment services to make the most of what has been dubbed ‘consumer tourism’ after the Swiss National Bank ended the fixed exchange rate between the Swiss franc and the Euro in 2015.50 Credit Suisse estimates the price difference can now reach up to 38 percent for clothing and 26 percent for furniture for the same product, driving Swiss e-shoppers to international e-commerce sites using the Euro, as a result.51

As a non-EU member, Switzerland is not obliged to implement the open banking measures, which form part of the revised Payment Services Directive. Nevertheless, there are a number of innovative open banking examples already active in the Swiss market. For instance, Electronic Banking Internet Communication Standard is a system that enables corporates to connect with banks and initiate payments, and is offered by a number of Swiss banks.52

Low fraud rates in this secure market

 

Fraud rates are relatively low in Switzerland, with one percent of online buyers experiencing fraud compared with a European average of two percent.53 One reason is that the small size of the country means it is not a major target for cybercriminals. Switzerland’s card chargeback rate is also one of the lowest in Europe at 0.01 percent.54  Accepting payment via open invoicing in Switzerland can increase the risk of fraud for international merchants, as there is always the chance that customers order goods with no means of paying for them, or claim not to have received them when they have. However, Swiss authorities are taking measures to increase banking transparency. In 2018, the Federal Tax Administration began automatically sharing client data with tax authorities in other countries for the first time in an effort to cut down on tax evasion and fraud.

Key takeaways

 

  • The Swiss business to consumer e-commerce market is worth €10.1 billion,55 representing just 1.9 percent of the overall European market56* 
  • But, the mobile commerce market is forecast to increase at a compound annual growth rate of 15 percent up to 2021,57 double the pace of overall e-commerce growth, to reach a value of €4.76 billion58
  • Bank transfers are popular and are used for the majority of online payments, at 53 percent59 or €5.3 billion of sales60
  • Card payments are also well used, accounting for 24 percent of sales61

 

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.

 

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.

 

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.

 

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, ‘Autumn Economic Forecast – Switzerland.’ Accessed January 2018.

2 European Commission, ‘Autumn Economic Forecast – Switzerland.’ Accessed January 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 via World Bank, 2017.

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 CIA, 2017.

5 World Bank Open Data. ‘Switzerland.’ Accessed January 2018.

6 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 VSV ASVAD, 2017.

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, 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 Y&R Group Switzerland, E-Commerce Studie, 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 via Internet World Stats, 2017.

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, 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 VSV ASVAD, 2017.

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 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 VSV ASVAD, 2017.

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 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.

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 E-commercewiki.org, April 2018. E-commerce Foundation, ‘E-commerce Report Switzerland 2018.’ Accessed November 2018.

20 E-commercewiki.org, April 2018. E-commerce Foundation, ‘E-commerce Report Switzerland 2018.’ Accessed November 2018.

21 Datatrans.com, 2018. ‘E-Commerce Report Switzerland 2018.’ Accessed November 2018.

22 E-commercenews.eu, June 2018. ‘E-commerce in Switzerland increasingly influenced by foreign retailers.’ Accessed November 2018.

23 IPC, Cross-Border E-Commerce Shopper Survey 2017, 2018.

24 NZZ.ch, January 2018. ‘Einkaufstourismus ist im Schweizer Detailhandel eine feste Grösse.’ Accessed November 2018.

25 Galaxus.ch, August 2016. ‘The merchant programme – we’ve got the platform, you’ve got the products – seize new opportunities for your business.’ Accessed November 2018.

26 Galaxus.ch, September 2017. ‘Now, robots are handling your orders.’ Accessed November 2018.

27 E-commercenews.eu, June 2018. ‘Galaxus launches in Germany.’ Accessed November 2018.

28 Carpathia.ch, November 2017. ‘Re-Commerce – Gebrauchte Produkte auf Digitec Galaxus wiederverkaufen.’ Accessed November 2018.

29 Datatrans.com, 2018. ‘E-Commerce Report Switzerland 2018.’ Accessed November 2018.

30 Swissinfo.ch, August 2018. ‘VAT on online purchases from abroad from 2019.’ Accessed November 2018.

31 Datatrans.com, 2018. ‘E-Commerce Report Switzerland 2018.’ Accessed November 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 via Y&R Group Switzerland, E-Commerce Studie 2018, 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, 2018.

36 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.

37 E-commercewiki.org, April 2018. E-commerce Foundation, ‘E-commerce Report Switzerland 2018.’ Accessed November 2018.

38 E-commercewiki.org, April 2018. E-commerce Foundation, ‘E-commerce Report Switzerland 2018.’ Accessed November 2018.

39 SimilarWeb.com, November 2018. ‘Mobile App Ranking.’ Accessed November 2018.

40 DeutscheLieferaddresse.com. ‘IHR Postfach’. Accessed November 2018.

41 E-commercenews.eu, September 2018. ‘DHL competes with Swiss Post in Switzerland.’ 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.

43 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.

44 Ascendia.co.uk, 2018. ‘The secrets of e-commerce success in Switzerland.’ Accessed November 2018.

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 via BIS, TWINT, 2017.

50 Swissinfo.ch, August 2017. ‘Swiss border towns to combat ‘shopping tourism’.’ Accessed November 2018.

51 Ascendia.co.uk, 2018. ‘The secrets of e-commerce success in Switzerland.’ Accessed November 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 Swiss Banking, 2018.

53 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.

54 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Kount, 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 VSV ASVAD, 2017.

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.

57 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.

58 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.

59 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.

60 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.

61 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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