In Sweden, cards (debit and credit cards) have long been the most common means of payment among consumers. The card networks Visa and Mastercard have a dominant position in physical trade due to strong two-sided network effects which limit competition. The networks’ large user base among both buyers and sellers, and the fact that the cards are accepted worldwide, make it convenient for consumers and firms. At the same time, it will be difficult for smaller actors to enter the market. In recent years, however, new payment methods have started to challenge the dominance of the card networks.

Swish has grown rapidly and in recent years has also established itself in physical commerce as a competitor to traditional card networks. Swish has been integrated into many POS systems and the company behind the service, GetSwish, has also started offering a self-scanning service using the Swish app and QR codes. This is to simplify the payment process and reduce queuing times for users.

In addition to Swish, open banking solutions can also play an important role in increasing competition in the payments market. By allowing direct access to bank accounts, open banking can reduce the number of intermediaries, which can lead to lower transaction costs and increased efficiency. Open banking payments with linked bank accounts are mainly used in e-commerce and for digital services, but there is potential for these solutions to move into physical stores as well. Such developments can foster a more diverse and innovative payments market with greater competition, where both consumers and merchants have more choice, more convenient payment solutions and better conditions.

FACT BOX – How different payment solutions work

Cards are the most common method of payment in Sweden for payments between private individuals and companies. A card can be linked to a bank account or credit card account with a bank. A card transaction often involves several parties. The most common model is called the 'four-party model'. The main actors in a four-party model based on the Visa and Mastercard networks are the cardholder, the payment recipient, a card issuer and a card acquirer.

Illustration 2. Simplified view of a card payment

Swish is an increasingly common payment method in Sweden, especially for payments between individuals and from individuals to businesses via e-commerce. All payments made with Swish between two bank accounts in different banks are executed immediately between the sender and recipient banks in RIX-INST, the Riksbank's system for the settlement of instant payments. Swish is currently free for individuals, but retailers and companies pay fees for receiving payments to the bank with which the retailer or company has an agreement. The fees consist of a monthly fee and a fee per transaction.

Illustration 3. Simplified picture of a Swish payment

One payment solution that is becoming increasingly common is account-to-account payment via so-called payment initiation, for example through services from Tink and Trustly. In this solution, a third-party provider enables a consumer to initiate a payment directly from their bank account to the recipient, without having to leave the app or website being used. The payer identifies himself to his bank, chooses the account from which the money is to be withdrawn and then authorises (authenticates) the payment. The payment is then settled between the payer's and payee's banks via their accounts in RIX-RTGS. The payer does not pay a fee to initiate a payment, but merchants and firms typically pay a fee to the third-party provider that makes the initiation possible.

Illustration 4. Simplified view of a payment initiation