The rapid rise of Nordic mobile payments

Our world is getting more mobile every day. Whether you’re clothes shopping, buying plane tickets or booking an appointment—almost all of it can be done on your smartphone. And this is changing consumer demands. We spoke to Nordea’s experts about the biggest mobile payment trends in the Nordics, and what they expect to see in the next five years.

Consumers in the Nordic region are embracing mobile payments. They want to transfer money and make purchases whenever, wherever and however they want. And this demand is rapidly driving the adoption of exciting new mobile payment services, including digital wallets like Apple Pay and Fitbit Pay.

“Just a few years ago, a merchant might have thought you were a magician if you walked into a store and paid with your mobile. Nobody knew digital wallets existed,” says Juha Risikko, Head of Nordea Mobile & Emerging Payments. “But now mobile payment services are common knowledge, even though it’s still early days for adopters. That awareness is the first step for mass market adoption.”

Risikko believes the second step will be the infiltration of digital wallets in e-commerce, as more and more stores adopt the technology. “Right now, it’s still plastic payment cards which dominate in many Nordic stores—but this will change as paying with devices, like your mobile or wearable, becomes mainstream.”

Just a few years ago, a merchant might have thought that you were a magician if you paid with your mobile ... but now mobile payments services are common knowledge... That awareness is the first step for mass market adoption.

Juha Risikko, Head of Nordea Mobile & Emerging Payments, Transaction Banking, Nordea

The rise of mobile P2P

Mobile person-to-person (P2P) payments are already mainstream services. These allow you to pay another person with your smartphone, simply by using their phone number or email address. While P2P technology is already used widely for personal payments, it’s also being adopted by savvy businesses. Mobile apps like Swish in Sweden and Siirto in Finland now offer e-commerce versions designed specifically for B2C merchants.

The overall adoption of P2P payments is growing fast in the Nordics. In Sweden, the popularity of mobile payment app Swish has skyrocketed since its implementation in 2012 and is now used by over 60% of the country. The MobilePay app in Denmark isn’t far behind; today more than 3.7 million Danes are using it—over half the population.

“I think mobile P2P payments have really taken off because they solved a fundamental problem,” says Risikko. “It used to be way too complicated to make a money transfer to a friend. You had to manually copy their bank account number across. Now it can be done in a few seconds on your mobile.”

Risikko believes the growth of second-hand purchasing is also driving this demand. It’s becoming more popular to buy and resell items through P2P marketplaces, like recycled clothing or boot sale apps—disruptive new models which are attractive to environmentally conscious millennials.

Monetising mobile payments

There’s a lot of buzz around these new mobile payment options, but many businesses are being held back by concerns over monetisation. If your business has to pay to implement a mobile payments platform, how will you cover these costs? Charging transaction fees could be problematic, as consumers are growing accustomed to free P2P payments.

Waltteri Karhusaari, Head of Nordea Connect, believes that a mindset shift may be required. “As an industry, I believe we need to turn this from a price-based discussion into a value-based discussion. That’s the immediate challenge we’re facing,” he says. “As a merchant, it’s more valuable if your customer actually makes the purchase. And if you don’t offer the payment methods they want, they’re soon going to look elsewhere.”

As an industry, I believe we need to turn this from a price-based discussion into a value-based discussion. That’s the immediate challenge we’re facing.

Waltteri Karhusaari, Head of Nordea Connect, Transaction Banking, Nordea

Overcoming security concerns

As with any new technology, some consumers are worried about the security of mobile payments. This is partially fuelled by the media, as cybersecurity incidents are never far from news headlines. But Risikko says that cybersecurity concerns must be kept in perspective. “The technology and infrastructure behind mobile payments is continually being upgraded—including built-in measures like tokenisation and encryption,” he says. “In reality, it’s safer than it has ever been.”

It’s also a matter of weighing up convenience versus security. Balancing the two has always been a challenge—but advances in mobile payment technology have enabled secure and convenient payments.

The future of connected payments

In the next five years, the experts expect to see significant changes in the mobile payment landscape.“ With the Internet of Things, more and more devices are going online and becoming connected. And the price of technology is going down all the time,” says Risikko. “In the near future, more of these devices—like your car or fridge—will have their own seamless payment capabilities.”

Within these Internet of Things (IoT) ecosystems, your car might pay a fee as it crosses a toll bridge, or your smart fridge might reorder groceries. “This is going to create a different environment where you don’t really initiate payments, they just happen through various devices around you. You’re notified and can confirm or cancel payments as needed. But the focus will be much more on your overall experience,” he adds.

This is going to create a different environment where you don’t really initiate payments, they just happen through various devices around you ... The focus will be much more on your overall experience.

Juha Risikko, Head of Nordea Mobile & Emerging Payments, Transaction Banking, Nordea

Nordea’s mobile vision

At Nordea we’re committed to supporting a mobile future. Nordea Wallet already turns customers’ smartphones into a payment instrument and a tool they can use to monitor and control their spending. “Our goal with Nordea Wallet is to enrich the customer’s shopping experience,” says Risikko. “So they can make a purchase however they choose—with their credit card, Apple Pay or even a Fitbit—while always being on top of their spending.”

On the merchant side of things, Nordea Connect will give companies the ability to accept a variety of payment methods from customers—including mobile apps like Swish and Siirto—quickly and cost-effectively. This frees up retailers to focus on providing innovative and satisfying customer experiences. It’s already available in Sweden and Finland, and will be expanded to Denmark and Norway later in 2018.

To learn more about Nordea Connect write to Waltteri Karhusaari at waltteri.karhusaari@nordea.com or visit: https://www.nordeaconnect.com/

To learn more about Nordea Wallet write to Juha Risikko at juha.risikko@nordea.com or visit: https://www.nordea.fi/en/personal/our-services/online-mobile-services/nordea-wallet.html

With special thanks to

Juha Risikko, Head of Nordea Mobile & Emerging Payments, Transaction Banking, Nordea

Waltteri Karhusaari, Head of Nordea Connect, Transaction Banking, Nordea

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