Northern Europe is a world leader in the race to replace notes and coins with digital signatures and electronic signals. It’s a phase of technology and innovation that regulators struggle to keep up-to-date with its fast pace, and occasionally there will be failures.

Yet it’s a trend invading all of Europe, with a report released earlier this year by research and consulting firm Celent, finding European banks will spend £46 billion on IT in 2017, with digital banking now considered a requirement to remain competitive and meet customer needs.

Sweden embraces mobile payments amid failed system

Sweden, like much of Northern Europe, has one of the most advanced payment systems on the planet, and will be one of the first nations to switch to a truly cashless society.

But the path to an empty wallet has not been entirely successful.

In 2011 Sweden’s largest retail bank, Swedbank, announced its new mobile payment system, ‘Bart’.

Under the system, transfers and payments were directly linked to customers’ bank accounts, and credit cards issued by other banks could also be registered.

In late 2012 the third largest retail chain in Sweden, Axfood, began a pilot program using Bart in three shops in Stockholm. Within six months the service was installed in 400 Axfood stores across Sweden.

Shattered dreams

But within two years of its rollout Swedbank shut Bart down, even though service users had reached 20,000 by the time the service closed in January 2014.

Researchers at KTH Royal Institute of Technology undertook a study into mobile payments systems in 2013-14, including interviews with executives from Axfood and Swedbank. The results give an insight into the misplaced expectations of the corporates and their customers, and how Bart failed to live up to expectations.

Out of its comfort zone

Swedbank had taken on the roles of bank and mobile service provider, and it expected ease of use and low barriers to entry, would deliver both strong relations with their own customers, and those of other banks, as well as direct relations with retailers and restaurants.

Despite initial expectations, which led to the further rollout of the service, not many customers used the service, so expectations of market share growth were wrong.

The number of mobile payments was also low, and because the only merchant to deploy the service was Axfood, it took nearly three years to complete the rollout.

The research found that the lengthy deployment period caused many retailers to adopt a “wait and see” approach, which meant expectations on the growth of the network were wrong.

Bart had the potential to allow Swedbank to develop its own merchant and consumer network, but again, that expectation was misplaced.

Merchants eager for advantage

Axfood’s expectation that the network would grow, and lead to increasing numbers of users and a competitive advantage by being in at the ground floor, were not met.

The improved purchasing experience and ease of use expectations were never realised.

For the consumer, the research found the service, effectively a bank card embedded in a phone, did not provide an improved purchasing experience.

There are a number of other mobile payment systems in Sweden, principally the SEQR service developed by Seamless and introduced in 2012, and a mobile payment system introduced in 2013 by Payair, that uses quick response (QR)-codes for payment transfers.

All three systems, including the defunct Bart, delivered low cost transactions, but Bart was the only service to require merchant investment in new point-of-sale (POS) technology.

SEQR, which also used QR codes, is not affiliated with a bank, and there is no cost to the consumer. It is a growing network that has been integrated with leading cashier system LS Retail, and after a trial period in 2013, McDonalds began rolling out the service across in network in Sweden.

Payair was integrated with the Cash IT cashier system, and is proving popular with online merchants.

Meeting expectations and the path to ROI

Unlike Bart, the research found expectations by Payair have remained consistent since rollout began, with projections the network will continue to grow as more merchants are added, and ROI will continue to improve.
The SEQR rollout is still too small to determine its eventual success or failure, but as it has no cost to the merchant, it can evolve as one of multiple solutions for consumer payment.

The research found banks have a wrong expectation about possible value and benefits of mobile payment solutions in the retail industry.

Keeping it simple, and low cost

But it found mobile payment systems do mostly meet merchant expectations by delivering low transaction costs, technology compatibility, and in most cases, easy to use solutions that do not require installation and maintenance costs.

For the consumer, there is still considerable work for providers to meet expectations.

The research found that while the payment function was sound, the consumer experience was not enhanced by value added services like loyalty programs, enhanced customer guidance in shops, or shopping advice or similar services.


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