* The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.
The Norwegian payment landscape is characterised by increasingly popular card payments and the well-developed infrastructure that supports them. We wanted to find out more about payment habits in Norway by interviewing Dag-Inge Flatraaker, general manager of the Group Payments Infrastructure at DNB Bank. In addition, our infographic summarises the Norwegian payment landscape.
Q. Cash is becoming less popular as a means of payment in Norway. What is the current estimated share of cash payments versus cashless payments? Can you tell us more about this phenomenon and its likely evolution?
Norway has the lowest cash usage in Europe according to publicly available statistics, only six percent of value and eleven percent of number of transactions at point of sale. Both Norwegian citizens and the retail sector have totally embraced cards for payments in shops, hotels, etc. In fact, we have, together with Iceland, the highest usage of cards per capita in the world. And now we also have mobile payments solutions in place that have revolutionised Person-to-Person ( ) payments so that cash is no longer necessary for any purpose. What’s left is some elderly people keeping old habits and, of course, payments related to the black economy. We have a fair chance of becoming the first cash-free country in Europe.
Q. The use of mobile payments is accelerating very fast in Norway. How would you describe and explain this trend? How broadly and for what instances are mobile payments used?
Yes, since DNB introduced the VIPPS mobile app in the Norwegian market three years ago, we have seen an explosive development in mobile payments. VIPPS started by covering payments and is now covering (or will soon cover) all kind of payments ( , bill payments, mobile commerce, in-store payments, in-app payments, etc., thus aiming to cover a full spectrum of user-cases). VIPPS is now used by two-thirds of the Norwegian population, is one of the best-known brands in Norway and the fastest growing brand ever irrespective of business, with a ninety-five percent brand recognition. Most banks in Norway participate in VIPPS.
Today, VIPPS has merged with the two Norwegian Bank companies BankAxept (the national debit card scheme) and BankID (the national electronic identification or eID scheme) and has thus become a major player in the Nordic and European markets for payments, eID and digital excellence.
Q. It is clear that Norway is among the leaders in the European charge towards electronic payment methods. What major challenges (e.g. cyber-security, inclusiveness) does this transformation raise and how are they being addressed?
Since we have already come a long way towards becoming a cash-free society, it is of the utmost importance and priority that we are able to safeguard electronic payments solutions and have strong business continuity solutions and procedures in place. This includes cybersecurity, and here we also cooperate at the national, Nordic and international levels, including engagement in a common cybersecurity company that helps Nordic banks coordinate defences.
Another challenge we see is that some global players are not as inclusive as we have traditionally been, e.g. Apple not opening their antenna for Near Field Communication (NFC) to others. So far, global platforms and payments providers such as Google and Apple have not made any deep footprints in the Norwegian payments market. This can, of course, change over time. By using new technology we will continue to provide, develop and further improve leading edge digital, eID and payments experiences for our customers, with the ambition of being the first country in the world to end requirements for usernames and passwords.
Q. What are expectations for the development of instant payments (including Single Euro Payments Area ( ) Instant Credit Transfers ( ) for euro payments) in Norway?
Instant payments are already important for facilitating many of the user cases we now see in the digital and mobile app environment. I believe that instant payments will become the ‘new normal’. However, there will still be use-cases that do not have to be in real time, so I expect we will still see a mix of both real-time and batch payments in the future. In Norway, we already have a domestic community real-time solution for payments, called Straksbetalinger. However, we are already planning a new and improved version of this that will follow the standards (ISO 20022, etc.) more closely and enable real-time capability for all types of user cases, payments amounts, etc. The aim is to have this ready early in 2020.
Q. Could you tell us something about ongoing payment developments at the pan-Nordic level, and Norway’s role in and goals related to them?
Norway, like many other banking communities, is now in the planning and implementation phase of upgrading our local payments, clearing and settlement infrastructures. Part of this involves moving from legacy standards towards ISO 20022, improving the faster payments solution and moving further towards -like standards.
The rationale behind this means creating better payments experiences for customers beyond national borders, lowering costs and achieving greater economies of scale. Thus, there is a clear move towards a more integrated look-alike market even for the non-euro countries. Since all the Nordic countries are in a similar situation, seven larger Nordic banks from Denmark, Finland, Norway and Sweden decided to work together with the aim of creating a common infrastructure for instant payments and clearing for all banks in this region. DNB is part of this initiative. This initiative will be the first of its kind covering instant payments, clearing and settlements infrastructure across different currencies and countries at the same time.
Infographic: The Norwegian payment landscape (October 2018)
(Click to enlarge and download)
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Dag-Inge Flatraaker
Dag-Inge Flatraaker is the Senior Vice President at DNB Bank. His academic background includes a masters in economics (University of Oslo) and a mid-career programme at Harvard University in Public and Business Administration. He has held key positions both in the Norwegian, European and international payments landscape, including the European Payments Council ( ) where he is a member of the board and also chairs the Mobile Payments Working Group. His professional background also includes time at Norges Bank (the Central Bank of Norway).