Sweden’s Cards and Payments Industry

Monday 27 January 2014, Amsterdam

Sweden is moving fast towards being an electronic and cashless economy. As banking customers become more
sophisticated, banks are looking to differentiate their product offerings, and card customization is gaining attention.

The Swedish card payments channel grew marginally in value terms during the review period. The channel posted a review-period CAGR of 3.47%, from SEK739.0 billion (US$112.1 billion) in 2008 to SEK846.9 billion (US$124.2 billion) in 2012. It is expected to register a forecast-period CAGR of 3.88%, from SEK888.2 billion (US$128.2 billion) in 2013 to SEK1,034.2 billion (US$148.8 billion) in 2017.

The increasing capabilities of smartphone devices, an exponential rise in apps and lower prices have been instrumental in driving mobile commerce (m-commerce). Other factors driving the growth of m-commerce are improved search engine functionality, price comparison sites and the rising penetration of smartphones.

Contactless and NFC payments are being rolled out extensively across Sweden. In 2012, Scandinavian Airlines launched SAS Smart Pass  stickers to its EuroBonus Gold frequent fliers, enabling passengers to check in without traditional paper boarding passes.

Consumer preferences such as price, convenience and associated services play an important role in customer decisions with regards to card choice. Despite card payments being cost-efficient, banks in Sweden charge an annual fee for debit cards. Banks and card providers are making efforts to enhance product features and added benefits, such as rewards points, discounts and cashback offers. Almost all leading banks in Sweden offer supplementary insurance cover for travel and card theft.

A number of factors act as business drivers for the cards and payments industry in Sweden, such as growth in the retail industry and e commerce in the country. Retail industry expansion was caused by multiple factors including improved annual disposable income, rising consumer demand for high-quality products and urbanization.

According to the US Census Bureau, young people aged 13-28 accounted for 19.0% of the Swedish population in 2012, and major banks are therefore targeting this demographic. This age group is attractive to card providers due to its consumerist lifestyle, technological literacy and a growing demand for sophisticated banking products. Key consumer groups are high-school and undergraduate students, graduates and postgraduates.  

Banks in Sweden have adopted a number of marketing and product strategies to attract this segment. Danske Bank offers the MasterCard Direct Young card. The card provides a credit limit of SEK25,000 (US$3,6019.3) and a weekly withdrawal limit of SEK15,000 (US$2,165.6) with no annual fee. Growing financial awareness among young individuals is expected to drive card payments over the forecast period.