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E-commerce Payments Trends

2020 E-commerce Payments Trends Report: Finland


Finland is marked by excellent digital infrastructure, but spending in some sectors has abated in 2020 in the face of a global pandemic

Key Takeaways

Finland has an excellent digital infrastructure, making it easy for international merchants to set up shop and attract shoppers.

Finnish consumers are comfortable shopping with international merchants. However, appetite for spending has dampened in 2020 as a result of the COVID-19 pandemic. 

Offer excellent card payment capabilities to meet consumers’ online payment needs. Local bank transfer methods are also a feature of the market. 

 

Finland 2020

Finland’s EUR9.8 billion (US$11 billion) e-commerce market is backed by excellent digital, banking and mobile infrastructure, smoothing the path for new merchants hoping to do business here.1 Banking penetration is almost total, at 99.8 percent.2 Smartphone penetration and internet penetration are also very high, at 85 percent and 95 percent respectively.3, 4

A high proportion of the nation has already shopped online—73 percent,5 with e-commerce now taking an 11.5 percent share of the total Finnish retail market.6 Internet use is frequent, particularly among under-45s, with 90 percent of this age group online multiple times a day.7

Finnish consumer behavior changed online in 2020 as a result of the COVID-19 pandemic, and suggested that citizens have a cautious approach to spending at present. Local commerce association Kauppa and Statista reported visits to key e-commerce sites zalando.fi and hm.com dropped in the first half of 2020. At the start of the pandemic, 68 percent of Finns still indicated willingness to buy clothes, but this number had dropped by April to just 51 percent. In comparison, in Germany numbers held steady at 73 percent for the same period.8

Use of social commerce also changed in 2020. At the start of the pandemic, 41 percent of Finnish consumers were inspired to buy new products from social media channels. This figure fell to 33 percent as the year progressed.9

 

Food, Fashion and Electronics Lead as Popular Online Shopping Categories

  • The Finnish e-commerce market’s growth has slowed over the past two years, from 13 percent in 2017 to 9 percent in 2019. Looking ahead, growth is expected to continue at a compound annual growth rate (CAGR) of 6 percent to 2023.10
  • The most popular online spending categories are travel and accommodation (23 percent market share), clothing and shoes (13 percent) and food and drink (12 percent). Online travel sales will contract during 2020 as a result of travel restrictions imposed by COVID-19.11
  • Food and drink is the fastest-growing product category, and sales will have been boosted by necessity during the first half of 2020 lockdown restrictions. Consumer electronics is the second-fastest growing category—in 2019, four out of 10 consumer electronic purchases were made online. This figure is expected to become six out of 10 by 2023.12

 

Younger Generations Choose Smartphones as
E-commerce Device of Choice

  • Finland’s EUR4.6 billion mobile commerce market is expanding faster than overall e-commerce.13 It is set to grow at a compound annual growth rate of 12.9 percent to 2023, to a become a EUR7.2 billion market.14
  • Mobile commerce is preferred by younger Finns. Smartphones are the primary device for online shopping among millennials and Generation Z. Desktops are preferred by the older generation.15

  • Groceries and fashion are the leading product categories in Finnish mobile commerce. Omnichannel retailers may benefit from synergizing their physical and mobile commerce offerings: 14 percent of Finnish shoppers take photos in physical stores to make a potential online purchase later.16

 

Offer Excellent Mobile Shopping Experience on Both Apps and Browsers

  • Mobile commerce takes 45 percent of completed e-commerce transactions in Finland. Browsers are preferred to apps at present, accounting for 56 percent of sales.17
  • Uptake is rising: mobile commerce’s share of overall e-commerce rose from 27 percent in 2016 to 45 percent by 2019. Finland's Commerce Association encourages domestic merchants to provide shopping apps, warning failure to offer apps might make it hard to compete with international merchants.18
  • Finland is slowly migrating to biometric authentication. Use is supported by the country's high smartphone penetration and the rise of digital wallets as a payment method.19

 

Local Networks Lead to Dominance of Bank Transfers for Online Payment 

  • Millennials and Generation Z consumers are adopting cards and digital wallets. Cards are expected to rise in use to take just under a third (31 percent) of payments by 2023.20 Card penetration is strong, with 1.69 debit cards and 0.84 credit cards per capita.21
  • Bank transfers account for half of all completed online transactions.22 This is due to the prevalence of domestic online bank transfer system Verkkopankki, which operates across a network of local banks. However, Verkkopankki's market share is declining slightly as card use rises.
  • Digital wallets are expected to have a 16 percent share of the online payments market by 2023.23 Popular digital wallet brands include market leader PayPalä and MobilePay.24

 

China Leads as Key International E-commerce Destination  

  • Cross-border e-commerce accounts for 22.3 percent of all online purchases made in Finland.25 Approximately 61 percent of online shoppers in Finland have already made a purchase from abroad.26
  • China is the most popular country to shop online from, followed by Germany and the UK. All are advanced e-commerce markets offering a wide range of products and brands.27
  • Finnish consumers are more receptive to cross-border shopping than neighboring Sweden. Finns are more likely than any other nationality in the Nordic region to buy clothes and shoes from foreign sites.28

 

A World-Class Climate to do Business Online

 
  • Regulation/trends
    Business-to-consumer e-commerce sales are usually subject to Finnish VAT, and international merchants must register for VAT in Finland. Some sales from fellow EU states are exempted from VAT if the company’s total annual sales turnover is lower than EUR35,000.29
  • Barriers or benefits to e-commerce market entry
    No local entity is required, and there are no currency or foreign exchange limitations.30

Finland has a welcoming business climate coupled with excellent digital infrastructure. The nation takes first place in the European Commission's 2019 Digital Economy and Society Index.31

  • Factors driving the cost of payment acceptance
    The interchange on consumer debit and credit cards is capped at 0.2 percent and 0.3 percent respectively. Verkkopankki carries a fixed fee of EUR0.55. PayPal’s fees are typically higher than both cards and Verkkopankki.32

 

J.P. Morgan has analyzed 34 e-commerce markets to decipher the trends and challenges driving global e-commerce in 2020. To access our insights on a country-by-country basis, click here.

 

1. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Kauppa.fi and WPL, 2020.
2. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via WorldBank, 2017.
3. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company via Statista, 2020.
4. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company via Eurostat, 2020.
5. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company via Eurostat, 2020.
6. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company via Statista, 2020.
7. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company via Statistics Finland, 2020.
8. kauppa.fi, June 2020. ‘Consumer buying behaviour has changed during the COVID-19 crisis – some businesses also benefit from it.’ Accessed August 2020.
9. kauppa.fi, June 2020. ‘Consumer buying behaviour has changed during the COVID-19 crisis – some businesses also benefit from it.’ Accessed August 2020.
10. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Kauppa.fi and WPL, 2020.
11. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company, 2020.
12. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Kauppa.fi, 2019.
13. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020.
14. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020.
15. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Kauppa.fi, 2020.
16. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Postnord, E-commerce in the Nordics - Summary 2018, 2019.
17. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Kauppa.fi, 2020.
18. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Kauppa.fi, 2019.
19. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company via EveryPay, PayPal and Masterpass, 2020.
20. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020.
21. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Bank of Finland, 2019. 
22. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020.
23. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020.
24. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Postnord, E-commerce in the Nordics - Summary 2018, 2019.
25. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020.
26. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via Eurostat, 2020.
27. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via IPC 2018, 2019.
28. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via PostNord, 2018, E-commerce in the Nordics. Six-month report 2018. Accessed November 2018.
29. practicallaw.thomsonreuters.com, June 2020. ‘Digital business in Finland: overview.’ Accessed August 2020. 
30. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company, 2020.
31. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn and Company via the European Commission, The Digital Economy and Society Index (DESI) 2019, 2019
32. J.P Morgan 2020 E-commerce Payments Trends Report: Data has been provided to J.P. Morgan by Edgar, Dunn & Company, 2020.

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Existing Merchant Service Customers

If you have a technical issue or a question about your merchant account, please call your Relationship Manager directly.
Alternatively, call our merchant support team on:

For Europe: +353 1 726 2909     UK: 0845 399 1130

Further information is available at any time through your Paymentech Online account.

 

Out of Courts Complaints and Redress Procedures

  1. J.P.Morgan has in place complaint resolution procedures to settle complaints of Merchants arising from their rights and obligations under Parts 3 and 4 of the Payment Services Regulations 2018.
  2. If you have a complaint, please contact your Relationship Manager. Your complaint will be addressed in accordance with J.P.Morgan complaint policy, which we are happy to provide upon request.
  3. In the event of a complaint, a Merchant may refer the matter to the Irish Financial Services and Pensions Ombudsman (FSPO) or such relevant out-of-court complaint body or to such other competent out-of-court complaint body applicable to you in the country where you are established.
  4. Details on complainant eligibility are available on the FSPO website.

                   You can contact the FSPO at:

Irish Financial Services and Pensions Ombudsman
Lincoln House
Lincoln Place
Dublin 2
D02 VH29
Ireland
Tel: + 353 1 567 7000
Email: info@fspo.ie
Website: https://www.fspo.ie

 

Merchants domiciled in the UK

  1. From 1st January 2021, J.P.Morgan will enter into the UK's Temporary Permissions Regime (TPR).
  2. The TPR has been established by the UK regulators to allow firms such as J.P.Morgan to continue to operate in the UK following the end of the Brexit transition period.
  3. During the TPR, a UK-based merchant that is not satisfied with our response to a complaint and that qualifies as an eligible complainant may refer the matter to the UK's Financial Ombudsman Service. Details on complainant eligibility are available on the Financial Ombudsman Service website.

                   You can contact the Financial Ombudsman Service at:

Financial Ombudsman Service
Exchange Tower
London
E14 9SR
Free phone: 0800 023 4567
Email: complaint.info@financial-ombudsman.org.uk
Website: www.financial-ombudsman.org.uk