The proposed merger of three mobile payment platforms in Scandinavia suggests that further consolidation of the fast-growing payments industry could be underway as smaller local players beef up their businesses to better compete with global giants.
Danske Bank’s MobilePay will join forces with Pivo, owned by Finland’s OP Financial Group, and Vipps, owned by a consortium of Norwegian banks and Copenhagen-headquartered DNB. They also invited collaboration with other banks and payment platforms to help them build a more robust European mobile wallet provider. Swedish digital wallet provider Swish, which had almost 8 million users of its own in July 2020, is not part of the alliance but is reported to be following the situation closely.[i]
MobilePay, Pivo, and Vipps combined have over 11 million registered users and 330,000 physical and online merchants accepting these payment methods. The three companies allow users to send money to merchants and individuals using their smartphones, often by typing in their mobile phone number or a shortcode to facilitate the bank transfer. By pooling their respective resources, including Vipps cloud-hosted technology platform, they expect to drive further product development and innovation and reduce operational expenditure.
Danske Bank executives have stated that while MobilePay had been successful, it proved too “expensive” to compete with the global competitors. That is almost certainly a reference to the OEM-led Google Pay, Apple Pay and Samsung Pay, which were relatively late to offer services in Scandinavia but which have seen rapid early adoption from a small base since launch. Google Pay was launched in Denmark, Finland, Norway, and Sweden as recently as October 2018.
eWallets popular with Scandinavians
Scandinavians are the most enthusiastic users of mobile payments in Europe, according to Statista, with penetration of proximity-based mobile payment apps in 2019 highest in Denmark (41%), Sweden (36%) and Norway (26%). Despite high levels of credit card ownership in the region – 70% in Norway, 45% in Denmark and 63% in Finland – with almost the entire adult population in each country having a bank account.
Almost half (46%) of Internet users aged 16 to 64 in Denmark use banking and financial services apps, and 36% mobile payment services like Google Pay, Apple Pay and Samsung Pay. MobilePay was ranked the second most popular app by monthly active users in Denmark by App Annie in January 2021 and 7th in terms of downloads. The Copenhagen-headquartered platform was also ranked 5th by downloads in Finland. VIPPs was ranked the second most popular app in Norway by monthly active users in January 2021, according to App Annie, and fourth by the number of downloads.
High smartphone penetration rates and fast mobile network connections have undoubtedly helped drive eWallet adoption. In Demark, 96% of Internet users aged between 16 and 64 have a smartphone, according to GlobalWebIndex statistics compiled in the third quarter of 2020. Around 88% also access the Internet through their smartphones, supported by average mobile download speeds over 77Mbit/s as measured by Ookla.
Participation in mobile commerce is also well advanced, with 43% of adult Internet users in Denmark using a shopping app on a mobile phone or tablet in the third quarter of 2020, and 34% purchasing a product online using their mobile phone. Consumer eCommerce sales in all three Scandinavian countries grew by around 18% in 2020, according to Statista’s Market Outlook for eCommerce, with total values reaching US$5.2bn in Denmark, US$6.4bn in Norway, and US$5.7bn in Finland.
European fintechs and regulators fighting for equality
The comparatively fast adoption of eWallets in Scandinavia is also partly down to government initiatives designed to foster the creation of cashless societies in individual countries (read our blog The Nordics: The Move Towards Cashless Societies and the Role of Mobile Payments here). A survey conducted by Norges Bank published in November 2020 estimated that less than 4% of all spending in Norway used cash in the autumn of that year.[ii]
State intervention could help local mobile payments companies maintain and grow their market share in other ways. Apple Pay is the subject of an ongoing antitrust investigation by the European Union and regulators in the Netherlands.[iii] A similar enquiry into Google Pay is underway by the Competition Commission of India (CCI) after complaints from three different, unidentified companies. In both cases, regulators are concerned that the close integration of the two mobile payment apps with their respective owners mobile operating systems make it difficult for other players to compete.
The MobilePay/Vipps/Pivo merger is not yet a done deal, subject to the approval of both national regulators and the European Union in late 2021/early 2022. But its eventual formation could signal the beginning of a fightback which will prevent Google, Apple and Samsung from holding too much sway in the European payments market going forwards.
[i] Nordic payment groups merge to take on big tech, Financial Times, 30th June 2021
[ii] Norway has lowest physical cash use in the world, says report, ComputerWeekly.com, 11th November 2020
[iii] EU Apple Pay probe moves forward as antitrust issues pile up, iMore, 18th May 2021