January 11, 2014
Back in 2001, while all of us in the US or otherwise were still talking about Y2k stories and the Tech bubble burst, somewhere in the 'less talked about world, Mobile Payments were being conceptualized. It was in this corner of the world, which is marked by high per capita incomes, that companies such as Nokia and Seamless were putting the pieces together to disrupt Money. In September 2001, Nokia launched a dual-chip solution in collaboration with payment networks & banks and called it EMPS (Electronic Mobile Payment Services). One chip was a usual SIM (subscriber identity module) card and the other was a WIM (WAP identity module) card issued by the Finnish bank Nordea for making Visa Electron payments.
Next year in 2002, Sonera, a mobile operator launched the Sonera Shopper service. In this system, the customer opens a Shopper account and transfers money to it from his or her bank account (it also allowed credit card loads). It could be used to pay for purchases at merchants – so, here's a shout out for proximity payments as way back in time as 2002!
Nordic countries have always stood out in the hi-tech industry, especially in the field of telecommunications. Sweden, Finland and Denmark are renowned for their highly developed telecommunications equipment and handsets manufacturing industries. Global telecom companies like Ericsson (Sweden), Nokia (Finland) are from Nordic countries, also sometimes referred to as Scandinavian countries. The king who inspired the name, Bluetooth, was also from the same region. The Nordic telecommunications equipment/device manufacturers became global market leaders by the 1990's. As early as 2000, they were experimenting with services built on top of telecom networks. And payments was one such area.
So there should be no surprise now that the mobile payment adoption benchmarks actually come from that region. One of the main contributors to the rise of mobile payments in these countries is the increase in Mobile penetration and Mobile Internet penetration. Of course the relevant backdrop is the high per capita income and investments in R&D made by public units, the private sector as well as academia.
Internet Penetration – In Sweden, 94% of the population has access to the Internet. Across the world, the highest internet penetration is found in Nordic countries. Sweden, Norway and Iceland are the top three countries where Internet penetration is found to be the highest.
Mobile Penetration – The mobile penetration in Sweden is 150%, and its a heaven for experimenting in apps and services.
Mobile Internet Penetration – The mobile internet penetration in Sweden is 92.7%, which probably also means heavy usage of internet and connected apps on mobile devices. Sweden is the most active market for app downloads with an average of five downloads per Smartphone user per month.
What is really interesting is that Sweden and other Nordic countries are rewriting history again with the mobile payments revolution. There are no adoption issues and it's a norm to use mobile for transit tickets, buying online or paying at stores. From telecom carriers to retailers and even banks are not leaving any stone unturned. Finally, even the Technology sector is not behind and there are a number of solutions in the market. Even solutions like Paybox (http://www.paybox.net) from other countries (Germany) are finding great acceptance in this region (especially Finland).
Illustrative list of solutions in the market:
Example of Telecom led Programs – Swedish mobile phone operators Telia, Tele2 & Telenor jointly started a service in 2013 called WyWallet, their own payment system which opened the gates for 97% of Swedish mobile-phone users to pay for goods at participating businesses.
Example of Retailer led Programs – Swedish retail chain ICA has launched an NFC loyalty program at the Kista, Stockholm branch of ICA To Go, a food service concept aimed at health conscious city dwellers. For every lunch purchased, customers receive a stamp in their loyalty card. After six stamps have been collected, they get their seventh lunch for free.
Examples of Bank and Third Party Led Programs – Swedish mobile payment specialist, Seamless, in partnership with various banks in the region, is doing a lot of good work. SEQR added NFC tag based payments in April 2013 which will provide users with the option of making payments through NFC enabled Smartphones. How does it work?
Seamless installs its proprietary system at the point of sale that comes with a sticker containing both a QR code and NFC capability. Shoppers need to install a Smartphone app called SEQR, It supports QR code and NFC based technology whereby the user can execute any transaction by simply holding their phone against the sticker. The customer’s phone sends a small packet of data containing a user record and location to Seamless’ system, where card details and account numbers are stored.
In 2011, Seamless announced that its transaction switch does over 2.4 billion transactions per year at over 525,000 points of sales worldwide.
Did you know when this company got started and why it's important to know? In 1999, visionary technologist Mikael Signarsson came up with the idea of letting people perform top-ups from wherever they are – internet or otherwise. With a team of 5 developers, an intense product development process began. In November that year, the first transaction in Sweden was performed for Brightpoint. And in 2001, the company Seamless was formed. Major mobile operators and some retail chains such as 7-11, a petrol station and popular food joint like Mc Donald’s joined in. The platform was developed in close co-operation with them.
There is another set of companies from the Nordic region that are enabling payments solution launches across the globe. Accumulate (provides gears for mobile banking and payment solutions) and Valimo (authentication, Mobile ID) are classic examples of such firms. So, Ladies and Gentlemen, this is the inspiring story of mobile payments success from the Nordic region. And what makes them one of the world leaders in mobile payments today!