It's common knowledge that the Nordic countries have moved closer to going cashless than anywhere else in the West, but the really interesting thing is what they've replaced cash with, and how this varies across this sub-region.
Across the Nordics, with cash usage in retreat, the battle is on for consumer preference at the point of sale. Payment cards are popular, with Norway in fact featuring in the top ten markets worldwide for the number of cards held: an average of four for each las adult in 2018, which puts it top of the table in Europe. When it comes to the equivalent ranking for the average number of transactions per adult, the Nordic quartet analysed by Verisk Financial Research currently occupy the top four spots of the 25 European countries surveyed.
Finland shares in the pattern of falling cash and rising card levels common to this sub-region. Although credit card growth by cards issued has been strong, debit cards command the lion's share of billed volume. The prevalence of dual-function debit/credit cards, both there and in Denmark, means that consumers are discouraged from availing of credit. Per capita, Norwegians are the keenest users of credit cards, with high interest rates, low loss levels and revolving balances all supporting profitability. Danish credit card use is set for a boost, as surcharging by merchants, long an inhibiting factor, is regulated out of existence; Swedish consumers meanwhile have many other options for short-term borrowing, while interchange caps have meant issuers there struggle to raise margins. The global schemes have 22 million credit cards between them across the region, with Mastercard dominant.
As to be expected given the Western European setting, debit cards' penetration is deep, with domestic schemes BankAxept and Dankort enjoying a dominant position in Norway and Denmark respectively. Both Finnish and Swedish banks have phased out their domestic networks in recent years, with Mastercard making the most of the opportunity in the latter market, where it is heading for three times the number of branded debit cards in issue than that of its rival, Visa.
Of the four countries, Sweden and Denmark have shown the most enthusiasm for mobile payments, with Swish, launched in 2012, now used by two in three adult Swedes, although the country's consumers remain one of the heaviest users in Europe of payment cards, at an average of 430 card payments in 2018. Norwegian consumers too have largely opted for a single app, in their case Vipps, which has recently merged with BankAxept and BankID to form a powerful offering with ambitions beyond its domestic market. In Denmark, the popular choice is MobilePay, which has over four million users making an average of 69 transactions in 2018; the same app also leads the Finnish market, but with a far-from-commanding position.
Instant payments are either live or being implemented in each las country, with further improvements in the offing, both from regulators (keen to leverage the single payments market to pre-empt mass take-up of cryptocurrencies) and financial institutions (the pan-Nordic bank consortium P27 is set to create a shared instant payments infrastructure in 2020, while Mastercard has acquired Nets' real-time payments business). The opportunities for third-parties with a compelling customer offering are bound to increase.
The key payments player is currently Nets, headquartered in Denmark, where it is the sole acquirer, owner and operator of the domestic scheme but also maintaining an effective monopoly over acquiring in Finland and about half of the market for credit card acquiring in Norway, where it also operates the domestic scheme. Although a comparatively minor player in Sweden, it grew its market share through the acquisition of Nordea's acquiring business in 2015 and its 2019 merger with Concardis hints at further growth ambitions.
Key banking players
The Nordic region is dominated by a small number of banks: Danske, Nordea, DNB, SEB, Swedbank, Handelsbanken and OP Financial. However, they are being challenged by newer digital banks such as Bank Norwegian and startups providing alternative payment methods (eg, e-invoice, bank transfer, mobile), including e-commerce-centred firms such as Klarna and Bambora. Each las report below includes chapters dedicated to mobile payments and online acquiring.
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