EPI sits down with Ketil Fridheim – MD of Elavon for Northern Europe and president for Europe to discuss the changing payments market in Norway and the surrounding area
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What are main developments in the cardacquiring industry in Norway?
Norway is not in the EU but it is implementing all EU legislation, including SEPA and potentially also the Payments Services Directive 2. The markets have been dominated by a homogenous infrastructure, which was built mainly for supporting the popular national debit scheme, BankAxept. In 2008 card payments in Norway were around 1180 m, which is equal to 240 transactions per capita. If you look at 2012, this has grown to 1630 m, which is equal to 326 transactions per capita, an increase of about 31%.
Card usage is relatively high in the region. International cards (i.e. Visa, MaterCard, Amerx and Diners) have increased from 150 to 188 m in the same period, an increase of 63%. This is interesting; we see a higher growth in international cards due to their higher profitability (for issuers and acquirers). The national debit scheme dominates the traditional pointof- sale, card-present environment, while international cards dominate e-commerce, mobile and also emerging contactless, which are all gaining importance in the Nordics. The lack of new products associated with the BankAxept has also lead to increased investment in this new infrastructure.
We see a similar thing happening in Denmark with their national debit scheme, the Dankort (Elavon’s competitor, Nets, has a monopoly on merchant acquiring and processing for both the BankAxept and the Dankort). On the other hand, Sweden and Finland have both moved to international cards.
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Is Norway gaining ground in new technology such as contactless cards and mobile wallets?
Regarding contactless payments the infrastructure is there, it is ready, but the issuers are reluctant to issue because of the low interchange fees associated with these products. With regards to mobile payments, we are also seeing some initiatives between telcos and banks; telcos may have a stronger presence in the industry.
How does the Norwegian market compare with the rest of Europe?
In Europe in general, there are some changes happening to the market. If you look at the largest players in the US they represent a high % of total volume; my estimate is that the top 5 players represent 80 to 90% of total volume. If you look at the 5 largest players in Europe, from my estimates, they represent between 20 and 30%. My point is that there is a gap here that will be closed by consolidation. In the future we will see a concentration of European players, who will cover more regions. As a consequence, acquiring companies with a global or European presence, capable of following their costumers into multiple countries, will have an advantage. The market will favor big players with large volumes and low margins. In the Nordics this is already starting to take effect with the sale of Nets (recently got acquired by Advent International, ATP and Bain Capital).
