Ken research announced recent publication on, “Consumer Payments Country Snapshot: Sweden 2016“. This report examines the consumer payments market in Sweden, considering payment cards, online payments, P2P payments, and newer payment technologies such as mobile wallets and contactless. This report also examines the regulations in force in the market that players must comply with, and how these have changed in recent years. Analyses of the major payment card types in terms of both card holding and usage are reported. The study analysis the major competitors in card issuing and how their positions in the market have changed over the last five years and considers consumer attitudes towards prepaid cards, P2P tools, mobile payment tools, and contact less cards, and how companies in Sweden are deploying these tools to meet customer needs. It explores the online payment market in Sweden by merchant type and payment tool, as well as providing a five-year forecast for the development of the market and considers the regulations affecting the payments market and how they are likely to affect both incumbents and disruptors.
Sweden has the potential to become the world’s first cashless society. The use of cash is declining quickly in Sweden and over half of all bank branches no longer deal with cash-based transactions. Payment cards are widely held and widely used in Sweden, and it has a strong alternative payments market. Credit cards remain one of the least frequently used card types in Sweden. Fast internet and a high smart phone penetration rate have resulted in billion dollars online spend in 2015.
With the awareness of contact less increasing and all new POS terminals from the beginning of 2017 having to be NFC-enabled, the popularity of the technology among both merchants and consumers will increase greatly over the next few years.
Payments made by means other than cash are made via services offered by payment service providers, traditionally banks, and consumed by households, companies and the public sector. Examples of such payment services include card payments, credit transfers and direct debits. Suppliers of payment services are commercial enterprises competing with each other on the retail payment market. The country has witnessed broad usage of debit cards for retail payments. Further movement away from cash continues to come slowly through erosion of cash share of low value payments, through uptake of products like PayPass and emerging solutions for transit payments using smart phone applications. As Sweden has long set out to reduce cash usage, Swedish governments have strived to make electronic payments available, affordable and ubiquitous. Contact less payments represent a €9.5 billion opportunity in Sweden. Top Swedish mobile operators such as Telia, Tele2, Telenor and Three had launched WyWallet, a mobile payments offering that provides mobile wallet services to 97% of Swedish mobile phone users and includes support for NFC. Major structural changes are now taking place in the Swedish payment market. Increasing numbers of payments are being made electronically, sometimes with the use of new technology. At the same time, cash usage is declining and it is also becoming more difficult to deposit or obtain cash. The widespread availability of the Internet, tablets and smart phones is changing households’ purchasing patterns and payment requirements. The banks, which long dominated the payment market, are now facing competition from new players. Even if the overall development is positive, some households, associations and companies perceive it as negative. In this article, we first describe how the Swedish payment market looks today and emphasise a couple of its characteristics that are of central importance for understanding current developments. Following this, we describe the most important parts of the structural transformation and the challenges this entails. We discuss the advantages and disadvantages as well as what can and should be done to mitigate the negative effects on certain groups. We also conduct a discussion of the responsibilities of the market and authorities. In summary, we can observe that the development of the payment market is positive overall and continued development should not be hindered. However, we also note the existence of problems that must be solved or at least eased. Tools for solving these problems exist but require cooperation between market participants and between market and government. Ultimately, however, it is the government that must act as a safety net for users who would otherwise risk finding themselves outside the payment market.
The development of the payment market is proceeding rapidly as new, innovative ways of making payments are launched. These are often based on mobile telephones or require an Internet connection. We can also see increased competition for the banks from new players making an entrance on the payment market thanks to new technology or new processes. Users are quick to adopt new payment services, making cash and paper-based payments decrease rapidly. This structural transformation could give us better, cheaper and more secure payment services in the future but it will also bring challenges for society. Before we discuss the consequences of the structural transformation, it would be helpful to understand the forces driving the structural transformation and why it seems to have progressed so far in Sweden.
New technology often needs to mature and become widely used before it can be used to construct new payment solutions. This is because there would otherwise only be a few potential users, which would prevent network effects and economies of scale from being utilised. For example, a sufficiently large proportion of households must have access to the Internet for it to be worthwhile constructing an Internet bank, and a mobile bank can only be profitable if enough of the bank’s customers have smart phones. Exactly how wide the distribution of a technology must be varies from case to case, along with the other business considerations the payment service suppliers must make.
Mastercard, Visa, American Express, Diner’s Club, Swedbank, Nordea, ICA, ICA Banken, Svenska Handelsbank, IKANO Banken, Coop, Moneypolo, Swish, SEQR, Danske Bank, Lansgforsakringar Bank, Sparbankerna, iZettle, PayEx, WyWallet, 4T Sverige, Epicenter, Klarna, Bankomat, nets, Bambora, Kungsaengen
Topics Covered in the Report
- Sweden Ecommerce payment industry
- Sweden payment industry
- Wallet payment market Sweden
- Plastic Card Money Sweden
- P2P payments Market Sweden
- Online Payment channels Sweden
- Sweden Payment industry Future Outlook
- Sweden payment sector technology
- Sweden payment Market Share
- Sweden payment Market Trends
- Sweden payment Market Growth
- Sweden payment Market future
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Ankur Gupta, Head Marketing & Communications