Danes Ready for Mobile Payments, but Infrastructure Lags

Danish-flag-smartphoneThe population in Denmark in 2012 was estimated at around 5.5 million. Of that, 90% use the Internet. Danes are progressive when it comes to technology, yet the country lags behind many European countries in terms of mobile payment adoption—not because of a lack of interest—but because of the infrastructure necessary to support it.

The Danes are not conservative
The “Dankort,” the national debit card of Denmark, took a number of years to catch on, and has offered outsiders a false picture of Danes as being “old-school” conservatives when it comes to payment. But a 2014 report conducted by Point, a subsidiary of VeriFone, and the analysis firm Wilke, shows this doesn’t seem to be the case, at least not with the younger generations.

We asked the question: “Many shops have payment terminals, which technically can accept payment from a modern mobile phone. How interesting do you think that it is paying in this way?

Some interesting data from that question:

  • 48.5% of Danes (in total) think paying using your smartphone is “interesting” or “very interesting”

While less than 50 percent doesn’t seem groundbreaking, when we look at the granular data, a truer picture begins to emerge

  • Those age 30-40 were the most interested (68% positive)
  • Those age 18-30 were similarly interested (62% percent
  • Those above age 70 were the least interested at 24%
  • Among those who owned smartphones, 57% were interested in being to pay using your phone, while only 27% of those who didn’t own a smartphone were interested.

Among owners of smartphones, this figure is 27 percent while 57 percent think it is interesting to pay by phone.

Quick Transformation

Point currently supplies more than half the payment terminals found in Danish merchant locations and Point country manager Chris Lund-Hansen said, “It is surprising that the Danes are so ready to pay from their phones, because it is virtually impossible to do it today. Many of the modern payment terminals that we use our credit card in the shops are actually ready for wireless payment by mobile phone. But we are still waiting for the banks, telecommunications companies, or a third player comes with a proper and thorough solution. Once there, the Danes are very clear, and so it’s going to go fast.”

Once the full payment infrastructure catches up, Denmark will be in the enviable position as having unofficially standardized on a contactless payment standard. The devices installed by Point allow a smartphone to communicate the same way the debit card does today, using “tap-to–pay,” where the customer holds the phone near the terminal and it communicates wirelessly to complete the transaction. This form of payment is different though from person-to-person payment applications like MobilePay and Swipp, which are primarily directed towards person-to- person payment, and can effectively replace both cash and physical credit card.

On that note, we also asked the Danish about their use of bank payment apps. They are very widely used, but only 18 percent of Danes use these apps regularly, which is in line with most of Europe where about one-fifth of smartphone owners use a mobile banking application.

The study by Point showed that men are a bit more prepared than women, and people who live in the capital city of Copenhagen are a bit more prepared than the rest of the Danes.

What about Security?
As with other countries, Danes are concerned about the security of mobile payments. In our study, 55 percent indicated they, to some extent, would be worried about the safety of mobile payments using their smartphone.

But like many countries, Denmark has standardized on a chip and PIN payment architecture, which provides a more secure form of payment than the traditional magstripe used in the U.S. and naturally, a mobile payment infrastructure will be based on existing systems, along with the addition of built-in protections common to smartphone payments elsewhere such as secure elements and encryption.

Our study shows a clear and growing interest in alternative forms of payment among the younger and middle-aged demographics in Denmark and as the supporting infrastructure develops, we believe that interest will continue to grow and adopt these new technologies. With that, comes a new world of possibilities around commerce that includes loyalty programs, merchants leveraging both online and offline channels to drive customers towards a purchase (omnichannel) and mobile wallets. It will be very interesting watching this unfold and we are very excited to be part of the driving success in the country.


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