A hero from zero. The rapid growth of alternative payments in the Nordic countries

Tech-savvy Nordic consumers actively embrace change. This also extends to online payments, as many e-shoppers in the region now prefer Alternative Payment Methods (APMs) over traditional cards.

Let’s dive deep into the Nordic payments market and find out what’s driving this disruptive trend.


Source: Scandinavian Embassy

The Nordic countries of Denmark, Finland, Norway, Sweden and Iceland may be relatively small, but combined they represent the world’s 10:00th the largest economy. Its consumers also have great spending power, with the continent’s highest per capita spending at 78%. above the EU average.

The region’s businesses and consumers are hungry for fresh ideas and technological innovationconsistently setting it to global top ten for digital competitiveness.

This, along with high internet and mobile phone penetration, has helped make it one of the most mature e-commerce markets in the world. In 2021, Nordic e-commerce estimated approx one fourth from the total revenues of Nordic enterprises.

Nordic consumers are actively embracing the change in payments

The region is banking, mobile and fintech innovation. While other countries struggle with financial underservicing, the Nordic countries have enjoyed extensive banking services for decades, and Norway boasts: 100% inclusivity.

Unlike many Western markets that are resistant to change, Nordic consumers are very receptive to new ways of paying. As a result, his consumers accepted digital payments and: untouchable much faster and widely than in other mature markets. So much so that it takes the global push into full swing cashless economyy:.

All of this has created an ecosystem that has seen the explosive growth of APMs

APMs are payment methods that fall in cash or global card schemes(Visa, MasterCard, American Express) and includes prepaid cards, mobile payments, e-wallets, bank transfers and Buy Now Pay Later (BNPL) instant financing.

For many years, Nordic governments and banks have been promotion of digital and mobile payments as an alternative to cash, collaborating on initiatives such as debit card schemes; digital banking IDsand shared payment infrastructure. Their success means that the adoption of mobile payments now exceeds much of the EU, including larger economies such as Germany and France.

Regular payments are disrupted

Traditionally, payment cards have dominated Nordic consumer preferences. Adults in Norway carry an average of four cards (2.7: debit cards and 1.6: credit cards) – the highest number in Europe.

Global card schemes in the region have 22 million credit cards with Mastercard as a major player. High interest rates, low loss rates and revolving balances support the profitability of credit cards in Norway. In Sweden, however, consumers have many other options for short-term borrowing, while elsewhere exchange limits mean issuers continue to struggle to raise debt. margins .

in Finland debit cards now holds the largest share of card volume. Both here and in Denmark, dual-function debit/credit cards help discourage consumers from relying on credit. Debit cards also have deep penetration, particularly with domestic schemes such as BankAxept in Norway and Dankort in Denmark.

Move away from physical retail to online and mobile waves – and a new pattern emerges. Card usage is lagging behind and APMs are starting to be pushed out the front.

Nordics changing box office mix

Nordic consumers, used to the ease and convenience of banking and shopping on their phones, are now opting for the new alternative payment options that better suit their needs for accessibility, convenience, price and speed.

In Denmark, Finland and Sweden, APMs now dominate the share of online payments. In most cases, volumes are transferred to credit/debit linked digital wallets. In addition, new methods, including interest-free loans BNPL:are starting to make larger chunk transactions at the cash register.


Source: Flagship

Meanwhile, payment preferences in Norway are shifting from cash and credit cards to digital wallets and buy now pay later options (BNPL). Its neighbor Denmark is a leader in mobile payments, with two out of ten Danes now using this method to pay for their online purchases. InvoicingAlso popular especially in countries like Sweden where about 30% of Swedes use it.

Mobile apps take APMs to the masses

Nordic has many homegrown mobile apps that have become popular in the region, helping to fend off the dominance of global players like PayPal. The big three are Swish: in sweden Vipps in Norway and MobilePay: in Denmark and Finland.


*Source: Statista **Source: Riksbank ***Source: JP Morgan **** Source: Statista

Use of digital and mobile payment application



Source: JP Morgan

How do external and other economic factors affect the demand for ATMs?

Although the Nordics saw a major shift from brick-and-mortar stores to e-commerce by 2020, a report. PostNord: reveals that COVID has significantly driven the region’s mass migration to online shopping, with a quarter more consumers using it than before the pandemic. By mid-2021, Nordic consumers were poised to make a comeback with increased online spending on leisure and lifestyle.

However, the recent global economic crisis, fueled by booming growth inflation , rising energy prices and the conflict in Ukraine have derailed this somewhat. One in four (25%) Nordic consumers no longer feel their households are financially secure. As a result, many are looking to cut their expenses.

Consequently, merchants have to work harder to grow their Nordic business. Making changes to their checkouts to offer users more flexible payment options that give them better visibility into their budgets and control of their funds can help them get ahead.

Many are turning to BNPL as a quick fix to the cost of living crisis. BNPL is expected to grow in double digits across all Nordic markets. Forecasts for 2022-28 predict BNPL CAGR to increase 33.8% in sweden 18.6% in Finland 14.2% in Sweden and 13.4% in Norway.

It’s not just about the choice, it’s about the right choice

The best payment options for any merchant paymentare those that match their customers’ preferences, experiences and purchasing decisions.

For example, the ability to offer deferred payments for large seasonal baskets, installments on big-ticket luxury items, one-click mobile payments for spontaneous social shoppers, and advance payments for budget-conscious students and risk-averse travelers.

It’s also about improving UX. Many APMs provide faster payment processes and are more seamless and diverse customer experience helping to provide higher conversion and encourage greater loyalty.

The right APM can also provide new sellers in the market with greater sales and business security, allowing them to build more credibility around their brand through association. For example, small and unknown retailers can increase their credibility by offering a globally recognized and established BNPL brand such as Klarna or trusted banking solutions such as MobilePay.

The new initiatives will pave the way for smoother cross-border APMs

Nordic countries are looking for new ways to deliver real-time paymentsacross borders and at scale. The P27 initiative, led by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank, aims to harmonize payments between member countries by providing an open access infrastructure that complies with ISO in 20022.

Nutrition real time paymentsinternal and cross-border multiple currencies , P27 will also be SEPA compliant to smooth payments with the rest of the EU. It can also become a key catalyst for APMs, allowing them to ensure smooth, seamless experiences Nordic consumers want when shopping online from foreign sites and help further turbo boost growthand competition in the region.

Navigating Nordic APM Success

Nordics eCommerce represents a key marketplace for both local and international brands looking to promote domestically and cross-border sale .

It’s clear that offering basic card payments for online and mobile payments is no longer enough. While debit/credit cards still dominate in-store, APMs are the rising stars in the digital space, be it Swish in Sweden, MobilePay in Denmark, Vipps in Norway or Verkkopankki in Finland.

To be successful, merchants need to optimize themselves payment mixfor the Nordic markets. Not only that, but they must fit locally, regionally and internationally payment regulations requirements and tax laws to stay compliant and protect Nordic customers.

Having the right online payment partners like 2Checkout (now Verifone) can help make this process smoother. Leveraging their regional expertise, collective industry data and consumer knowledge can keep merchants with Nordic growth ambitions on track, ensuring they have the right APM heroes to acquire and thrive.

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