Payments and e-commerce in Portugal

Portugal: an e-commerce & payments primer

Portugal isn’t as developed as some other European markets but it’s growing strongly — over the four years from 2022, the e-commerce market will expand by 13% a year [1] — and Portuguese consumers are banked and willing to spend. For merchants willing to invest in localisation, Portugal can be a lucrative market.

The Portuguese use credit and debit cards to pay for less than a quarter of all online purchases [1]. In the remaining three quarters of transactions, the shopper uses an alternative or local payment method, such as bank transfer or an e-wallet [1]. For a Western European market, cash is still surprisingly important — online shoppers use it in around 10% of all their transactions [1]. Any merchant entering the Portuguese market must support alternative payment methods. 

Like everywhere else in the world, Portugal shopped online during the pandemic. But by the end of 2022, e-commerce volumes had settled back to more or less their pre-pandemic levels [2]. Nevertheless, the e-commerce market continues to grow and is set to reach a value of almost US$23 billion by 2026 (up from US$14 billion in 2022) [1]. The average Portuguese online shopper spends US$1,108, a year with e-commerce merchants. The most popular online purchase categories are fashion (bought by 32% of online shoppers), electronics (26%) and toys (21%) [1].

Almost two thirds of online shoppers buy from merchants based outside of Portugal [1]. Unsurprisingly, neighbouring Spain is a popular online shopping destination, with 32% saying they have bought items from Spanish websites [1]. But even more, 40%, have bought from China [1]. Proximity may lower the barriers to trying new merchants but the hunt for a bargain, it would seem, will take the Portuguese to other side of the world, at least if it is good enough.

Portuguese e-commerce: enabling and limiting factors

Seventy-two percent of Portuguese have an Internet-enabled smartphone [1], There almost 90 mobile broadband connections for everyone hundred inhabitants of the country [3] and Portuguese shoppers complete nearly 40% of all online-shopping transactions on a mobile device [1]. Any e-commerce strategy that hopes to succeed in Portugal must be mobile first. 

Credit cards are relatively popular in Portugal. Thirty-seven percent of the country’s adult population has one [1]. But that still leaves 63% unreachable unless your payment strategy includes alternative and local payments. In a notable achievement for a country with a per capita income just 57% of the eurozone average, all Portuguese adults have a bank account [1].

Portugal is 23 out of 160 countries in the World Bank Global Logistical Performance Index [4]. The Portuguese parcel delivery sector, having grown by an average of 1% a year for the last eight years, is now capable of delivering more than 100 million parcels a year [5].

Seventy-eight percent of Portuguese have an Internet connection of some kind [1]. But according to the International Telecoms Union (ITU), just 42% of households have a fixed-line Internet connection. Again, this underlines the importance of supporting a mobile first e-commerce strategy and a mobile payment experience. Without optimising for both, merchants will struggle to gain acceptance with Portuguese consumers.

Footnotes

1. Original PPRO research 
2. https://www.esmmagazine.com/retail/online-shopping-in-portugal-drops-to-pre-pandemic-levels-227138 
3. https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx 
4. https://lpi.worldbank.org/international/global 
5. https://www.statista.com/statistics/1219816/courier-express-parcel-market-volume-portugal