Denmark

ACI’s Take

Danes’ shopping habits have seesawed between eCommerce and card payments in 2021, depending on the curfews implemented in response to COVID. While Q1 was dominated by eCommerce transactions, Q2 and Q3 saw card transactions quickly rebound to pre-pandemic levels.1 In the background, contactless payments continue to rise and fraud with them. However, deployments by card issuers of increased monitoring and AI technology have had an observable impact.

Denmark is also in the process of refreshing the domestic real-time settlement rails (RTGS). This is aligned with similar projects underway in neighboring Nordic markets, with four RTGS refreshes all moving through a single supplier. One of the primary goals is to synchronize their modernization on the ISO 20022 standard, so each is working towards similar timelines. Arguably, this potentially introduces risks and challenges for the participants and trade bodies to navigate.

In terms of the regional picture, a good level of harmony between the payment rulebooks of the NPC and those found in the European Union hasn’t stopped strong lobbying for more streamlined transactions between local currencies and the euro. While the regulating bodies work to find some common ground, the region’s financial institutions are innovating around least-cost routing. The result is a high level of sophisticated thinking at banks around taking advantage of different payment rails to deliver a better quality of service, all at a lower cost to their corporate customers.

Developments such as this and the ongoing P27 cross-border initiative will ensure that Danish banks and payment players benefit from greater interoperability between domestic, regional and international schemes. But each market must balance the need to deliver choices to drive innovation, increase competition and lower costs today, while keeping an eye on the future costs of maintaining and operating compliance with multiple schemes. The ideal state is a common and uniform set of gateway services that can provide multi-scheme access, which would substantially extend the reach of current interoperability capabilities and make future changes much easier to onboard.