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Why Smart Merchants Are Moving Beyond Card Payments in Europe

The real cost of card payments isn't just the fees you can see - it's the chargebacks, complexity, and lost revenue hiding underneath.

Card payments have dominated online commerce for decades. Their global reach and familiar checkout flow made them the default infrastructure for most merchants.

But default isn't the same as optimal.

For merchants expanding into Europe, the true cost of card payments is becoming harder to ignore - and a better alternative is gaining serious traction.

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The Hidden Costs of Card Payments

Every card transaction travels through a chain of intermediaries before funds reach a merchant's account. That chain is long - and every link takes a cut.

A typical card payment passes through:

•   The issuing bank (the customer's bank)

•   The acquiring bank (the merchant's bank)

•   The card network (Visa or Mastercard)

•   A payment processor

•   Fraud monitoring and risk systems

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Each layer adds fees. Merchants typically pay a combination of interchange fees, network assessment fees, processor markups, cross-border transaction surcharges, and ongoing fraud prevention costs.

For US merchants selling into Europe, costs increase further: international interchange rates are higher, and currency conversion adds another layer of expense.

Industry benchmark: Card processing fees typically range from 1.5% to 3.5% per transaction - before cross-border and currency costs are added.

For high-volume merchants, card payments can become one of the largest line items in the entire payment stack.

The Chargeback Problem

Beyond transaction fees, card payments introduce a second major challenge: chargebacks.

Customers can dispute transactions weeks - sometimes months - after a purchase. While chargebacks were originally designed as consumer protections, they've evolved into a significant operational burden for merchants.

The consequences of chargebacks include:

•   Lost revenue on the disputed transaction

•   Administrative overhead managing disputes

•   Dispute resolution and representment costs

•   Penalty fees from card networks for excessive chargeback rates

•   In severe cases, loss of the ability to accept card payments entirely

Industry data: The average cost to fight a single chargeback can reach $190 when dispute management, fees, and internal time are factored in.

For merchants in certain industries - digital goods, travel, subscriptions - chargeback rates are structurally higher. Managing them is a constant drain on both revenue and operations.

Pay by Bank: A Fundamentally Different Model

Pay by Bank takes a different approach entirely.

Instead of routing payments through card networks, Pay by Bank uses Open Banking infrastructure - specifically the EU's PSD2 regulation framework, which requires banks to open secure payment initiation to authorised third parties - to initiate direct bank-to-bank transfers from the customer's account.

This removes most of the intermediaries that card payments rely on. For merchants, that translates into three concrete advantages:

Lower transaction costs

Without card network fees and interchange structures, Pay by Bank payments are significantly more cost-efficient. Merchants typically pay a flat fee per transaction rather than a percentage-based structure.

No chargebacks

Customers authenticate payments directly within their own banking environment using existing security credentials. Because the customer explicitly authorises the payment, traditional card-style disputes are eliminated.

Real-time confirmation

Payments are confirmed instantly, allowing merchants to fulfil orders, issue access, or confirm bookings without waiting for settlement cycles.

Why Pay by Bank Is Gaining Ground in Europe

Europe is uniquely positioned for Pay by Bank adoption. Bank-initiated payment methods already account for a large share of digital payments in markets across Europe.

Consumers in these markets are accustomed to authenticating payments through their banking apps. Pay by Bank isn't a new behaviour to learn - it's an extension of how they already pay.

PSD2, the EU's Open Banking regulation, has also created the infrastructure to make this work at scale. By requiring European banks to open secure APIs for payment initiation, PSD2 enables a single, standardized payment flow to connect with thousands of banks across the continent.

For merchants entering European markets, aligning checkout with local payment preferences isn't just good UX - it's a conversion driver.

The Integration Challenge - and How DPMax Solves It

The main complexity with Pay by Bank at scale is bank connectivity. Europe has thousands of banks across dozens of markets, each with its own technical standards and reliability profile.

Connecting to them individually - or managing multiple payment providers - creates fragmentation, maintenance overhead, and gaps in coverage.

DPMax is built to solve this.

DPMax gives merchants access to 10,000+ European banks through a single integration. Rather than relying on a single underlying provider, DPMax uses AI-powered smart routing across multiple banking systems to maximize payment success rates and minimize connectivity failures.

For merchants, this means:

•   Full European bank coverage through one integration

•   Higher success rates through intelligent routing

•   Fewer failed payments at checkout

•   One payment method that works across all major European markets

•   No need to manage multiple local payment providers

Instead of building and maintaining a patchwork of regional payment methods, merchants integrate DPMax once and gain reliable coverage across Europe.

Rethinking What 'Convenient' Really Means

Card payments built their reputation on convenience - for consumers.

But for merchants, convenience needs to mean something broader: cost efficiency, operational simplicity, risk reduction, and payment reliability.

Pay by Bank, deployed through infrastructure like DPMax, delivers on all four. It removes intermediaries, eliminates chargebacks, reduces costs, and aligns with how European consumers already prefer to pay.

As Open Banking matures across Europe, the question for merchants expanding into these markets isn't whether to offer Pay by Bank - it's how quickly they can make it their default.

Ready to reduce payment costs and expand across Europe?

Book a 20-minute discovery call with the payments team to see how DPMax works for your business.

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