Intense Competition From Big Techs Keeps Nordic Payment Firms On Their Toes

Few industries have been unaffected by the ongoing pandemic, and while some businesses have suffered greatly, others have experienced strong growth.

Like many businesses operating mobile wallets, Norway-based mobile payments firm Vipps has seen bumper usage since the onset of the pandemic.

“From the payments side, it really has exploded,” Rune Garborg, Vipps CEO, told PYMNTS in a recent interview. “We’ve exceeded our goals by a lot, especially when it comes to growth in eCommerce, [which] was approximately 100% for Vipps in Norway last year.”

Read more: Visa Teams Up with Norway’s Vipps to Boost Digital Wallets and Mobile Pay in EU

He said their merchant clients have seen their businesses expand rapidly as they’ve found new ways to sell their products and services, adding that from the resurgence of QR codes in the hospitality sector to the continuing expansion of digital payment solutions, the payments industry in the Nordic region has witnessed rapid growth in the last few years.

For Vipps, the bank-backed wallet was already a dominant force in Norway prior to the pandemic, with about 4.2 million users in a country of approximately 5.2 million people.

But in an ecosystem increasingly dominated by Big Techs, Garborg said individual banks are too small to compete alone for long. “We need to build strong brands. If you look at the eCommerce space now and who is going to dominate the eCommerce space, it’s not going to be single banks, it’s going to be the big international brands.”

Unlike just five years ago, users of mobile wallets like Vipps can now pay for their products, services and bills anywhere, he pointed out, highlighting the need to invest heavily in simplifying user experiences and providing solutions that make it easier for merchants to sell their products and services.

Regulation will have to be top-of-mind to achieve this, he said, as the rules that Vipps must comply with are developing regularly and may become even more comprehensive in the future, making it critical to constantly adapt and create innovative solutions.

But despite these hurdles, Garborg remained optimistic that the payment company has what it takes to remain relevant in the market. “Of course we would like a more standardized footprint, but it is still possible for us to deliver simpler solutions than we see in the marketplace today,” he said.

There’s Power In Collaboration

In their constant bid to fight off growing competition from bigger international players, Vipps has found a solution in collaboration.

In June last year, the company agreed to merge with two other leading Nordic mobile wallets — MobilePay in Denmark and Pivo in Finland — to create one of the largest bank-owned digital wallets in the region, serving more than 11 million users and over 330,000 merchants across the three countries.

According to Garborg, the merger, once approved by competition authorities, will enable Vipps to introduce new and simple solutions for customers and merchants much faster than their competitors are able to. That, and having the “strongest wallet in Europe” will enable them to achieve their goal of expanding outside the Nordics more effectively.

Bjørn Skjelbred, senior vice president of international business development at Vipps, added that because the European map of payments of solutions is particularly fragmented, the industry will see more companies collaborating and consolidating in the near future. “[Vipps’ merger] is a very important step in that direction, especially when we recognize that the competition is global and will continue to be increasingly global going forward.”

The European Mobile Payment Systems Association (EMPSA), of which Vipps is a member, is also playing an important role in building an interoperable European payments framework to fight off competition in the industry.

According to information on EMPSA’s website, the 14-member association plans to provide roaming solutions among participating payment systems, bringing together more than 70 million mobile payment users, over a million merchant acceptance points and hundreds of European banks handling several billion transactions per year.

“We actually managed to collaborate in quite a fast way, compared to other kinds of associations and initiatives that have existed before. We’ve also combined strong domestic brands with doing something larger than you can do on your own. [And] of course, it’s very inspiring to talk to companies in the same kind of space that we are in and learn from them as well,” Skjelbred noted.

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