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Finance and payment in the Nordics

Payments overview

For many international merchants, accepting payments online means accepting payment cards; debit, credit or pre-paid. The Nordics however have very different preferences between each of them. Norway and Denmark are heavy users of cards for payments online while bank transfer is much more prevalent in Finland.In Sweden, cards and open invoice have very similar market penetration.

Table 10: Highlighting preferred payment methods buy Nordic territory.Source: Postnord; HUI; Worldpay; Redeye and DIBS.

Card fraud is of concern to consumers but 3D Secure (Verified by Visa and MasterCard Securecode) has been widely adopted and the Payment Card Industry Security Standard (PCIDSS) is applied in the Nordics.

Open invoice is a key payment method in Sweden. This process involves a third-party providing the merchant with a facility by which they can receive the money quickly, often at point of purchase. The service provider then provides a credit facility to the consumer. Sometimes this might involve paying in full once the product has arrived, or a variable period over which the credit can be paid off. There is a cost to the customer for this service but it provides them with the confidence that if something is wrong, then they haven’t paid for the product. The third-party also takes the credit and fraud risk, at a cost to the retailer but, unlike with cards, there is no chargeback risk. This is certainly a service worth consideration by international merchants.

In some countries, open invoice can be difficult due to the availability of personal data for credit scoring purposes. Denmark has some challenges in this area.

Bank transfer is a popular method in Finland and Sweden. This service sees the consumer making a ‘push’ payment from their bank account to that of the merchant. Again, this provides consumers with additional confidence as they feel more in control of the transaction. As there are a large banks in Finland and Sweden, it is worth using a partner that can aggregate these services as part of the checkout process.

e-Wallets currently have modest usage in the Nordics although this is increasing as m-commerce grows.

Sales tax (or VAT) and duties

Each of the countries covered in this report have slightly different requirements around registration and charging of sales tax, VAT and duties.

All have mandatory registration requirements for foreign businesses selling into each of the countries, although the sales value (excluding VAT) threshold is different for each:

There may also be a requirement for businesses trading into these countries via distance selling to have a local representative for VAT purposes. In some cases, these local representatives issue the invoices for sales involving VAT.

The four countries in this report each have their own tax authority, the websites for which are listed here:

Norway

Standard rate at 25%

National Tax Authority: www.toll.no

Sweden

Standard rate at 25%

National Tax Authority: www.skatteverket.se

Denmark

Standard rate at 25%

National Tax Authority: http://www.skat.dk

Finland

Standard rate at 24%

National Tax Authority: www.vero.fi

Due to the complexities of complying with this subject area across the four countries, it is advised that merchants looking to trade into one or more of the Nordic countries seek professional advice before trading.

As with most territories, making a range of payment methods available to consumers helps with both confidence and choice. The table below shows how different payment methods are used in the Nordics:

 

Fraud

Security is the biggest concern for online consumers and this fear is heightened when they are looking at a foreign merchant’s website. Introducing local payment methods and joining a trust mark scheme goes a long way to helping the consumer; but what is the risk for merchants looking to trade into these territories?

Often card fraud is perpetrated from other territories and these are known and included in the risk management tools that PSPs and merchants are already running. The Nordics don’t represent a particularly high risk in this area and as the following research by go2checkout.com shows, Norway, Sweden and Denmark score as some of the lowest fraud risk areas globally (by IP address of perpetrators). That’s not to say the risk doesn’t exist, it’s just that the region isn’t seen as a hotbed of card fraud at present.

Figure 39: Countries with most and least fraud levels ranked by buyers IP address. Source: go.2checkout.com/fraudindex

Merchants trading into any country should be aware of the ‘friendly fraud’ risk. For example, denial by customers that a delivery didn’t arrive, it was damaged on arrival or that the wrong number of goods were sent. These activities should be monitored as normal and action taken via delivery agents and payments partners.

 

 

Demographics

Political and socioeconomic environment

Online and mobile usage

Online shopping behaviour

Marketing

Optimising customer experience

Trust and dispute resolution

Legal framework and regulation

Logistics and delivery