The European Union's borderless single market is expanding only sluggishly into cyberspace, amid consumer concerns about security and whether it's possible to return unwanted purchases, according to a new report published Monday.

The EU strives to create a seamless market across the bloc's 28 countries. But while 53 percent of European citizens now shop online, only 16 percent buy goods or services from another country, the European Digital Progress Report said.

The report also showed smaller companies lagging behind their larger competitors. Only 7.5 percent of smaller companies in the EU sell online to other countries, an increase of just 1 percentage point since 2013. Larger companies are doing better, with 38 percent now selling online, seven percentage points higher than five years ago.

According to the report, the most common reason for avoiding e-commerce was that people still want to shop in person in stores, but just over a quarter of shoppers cited payment security concerns and 19 percent fretted about getting their purchase or being able to return them.

The European Commission's vice president for the digital single market, Andrus Ansip, said the EU's executive arm is developing proposals to tackle the issue.

"We will soon present a set of proposals which will boost e-commerce in the EU," Ansip said. "That means no more barriers that discourage companies from cross-border trading and prevent people from getting the most competitive offers online."