New rules in Sweden to discourage online shoppers from paying with credit
New rules in Sweden to discourage online shoppers from paying with credit

New rules in Sweden to discourage online shoppers from paying with credit

An update to the Swedish Payment Services Act from the 1st July has been introduced to provide clearer guidance on the way different payment options can be presented at the online checkout. The changes to online shopping and payments may result in more consumers using Swish as a payment method for their online purchases in the future.

The new change to the law in Sweden relates to anyone buying goods or services online. As e-commerce has continued to grow across the Nordics, many online shoppers in Sweden have become used to paying for their purchases with credit by selecting invoices, instalments, or any other payment options that allow the consumer to enter into a debt when completing their online payment.

In an effort to reduce the amount of online Swedish shoppers currently paying with credit, merchants offering a list of payment options must now present the payment methods that do not put the consumer into debt, such as Swish, first on the list. Merchants will still be able to offer all of the payment methods such as invoices and instalments and if paying by credit is their only method of choice, they are still able to present this first. If any other non-credit options are available, they must come first and merchants are no longer able to pre-select paying with invoice or installments in their online checkouts.

William Torsler, Senior Business Developer at Nordea, says: “This new initiative in Sweden is related to how you are able to display different payment methods. It has become commonplace for PSPs (Payment Service Providers) to present invoice and instalments as pre-selected payment methods in their payment solutions. The Swedish government has seen that shoppers are entering into more debt now when paying online. The result is that both the PSPs and online merchants are no longer permitted to have any payment methods that may place the consumer into debt pre-selected or presented first in the fields in the payment solution. Furthermore I have a strong belief that this will drive the user penetration even further for Swish if the merchants have or will implement it as a payment option.”

First in the offering

Many online merchants in Sweden now offer checkouts that include a range of payment options, such as cards, Swish, invoices and instalments. It is hoped that by making a small adjustment to the order in which these payment options are offered, the result will  be a big change to the amount of debt being taken on by Swedish consumers.

William adds: “A lot of research conducted in this area shows that in many instances a consumer just proceeds with whatever payment method is pre-selected for them. Many of the consumers are then falling into debt by default without thinking too much about it. This regulation is designed to restrict the chances of that happening. Paying with invoices or instalments will continue to be offered to consumers though so that they can actively choose a way to pay if they don’t have the cash up front.”

A lot of research conducted in this area shows that in many instances a consumer just proceeds with whatever payment method is pre-selected for them. Many of the consumers are then falling into debt by default without thinking too much about it. This regulation is designed to restrict the chances of that happening.

William Torsler, Senior Business Developer at Nordea

The new regulations are designed to tread a careful path between allowing merchants to be free to choose the payment methods they want to offer in order for  their business models to thrive, whilst creating a clearer path for the consumer to gain a more transparent understanding of where their chosen payment method may lead.

William says: “I think this will make both the online stores and the payment providers innovate around new ways of presenting payment options in the checkout. A lot of payment providers are trying to educate the market on what these changes mean and why they are being introduced. There is still quite a lot of uncertainty on where the market will go in the long term.”

Swish on the rise

For Nordea’s own e-commerce checkout solution Nordea Connect, there is already an expectation that the new regulation will further enhance the role of Swish as the payment method of choice for online shopping in Sweden.

A lot of payment providers are trying to educate the market on what these changes mean and why they are being introduced. There is still quite a lot of uncertainty on where the market will go in the long term.

William Torsler, Senior Business Developer at Nordea

William continues: “Nordea Connect continues to offer a mix of all sorts of payment methods but we have made sure that as an online merchant, you can’t offer invoices, instalments or any other credit payment methods as a pre-selected option or first in the checkout.”

“Nordea Connect offers Swish as a payment option and we see that this is growing very fast. There are still a lot of online stores out there that don’t offer Swish but now it makes even more sense for them to do it. One real benefit for an online merchant of using Nordea Connect to offer Swish is that they are able to have a Swish agreement with Nordea that connects directly into Nordea Connect, enabling one integration,” concludes William.

 

For more information on Nordea Connect write to William at william.torsler@nordea.com.

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