2019 J.P. Morgan Global Payment Trends

2019 Global Payment Trends Report - Norway Country Insights

NORWAY INSIGHTS REPORT

 


Norway stands out as a nation with a sophisticated payments industry, and a mature e-commerce market which nevertheless remains poised for continued double-digit growth. As a nation of shoppers with an appetite for buying from abroad, there could be opportunities to be had by offering fast cross-border deliveries and simple returns. To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.

Introduction

 

Norway’s growth has suffered in recent years after the global decline in oil prices, as the economy is highly dependent on the energy sector.1 But the pace of activity has since rebounded and Norway is set to grow strongly in 2018 and beyond.2

Household confidence is now much higher than it was two years ago, which has contributed to a considerable rise in family spending over recent quarters.3 The strong growth in Norwegian expenditure has contributed to reducing the level of unemployment (which was, at one point, under four percent in 2018) and underlying inflation has also increased recently.4 These trends are broadly positive for e-commerce, which is growing at one of the highest rates out of the countries studied in this report series,* at a compound annual growth rate  of 13 percent.5 Norway is also one of the best countries to do business in, which is providing impetus for the private sector. According to the World Bank Doing Business Report, Norway has ranked between sixth and eighth position for about 10 years.6

This document is based on projected figures and is subject to change at any time.

A wealthy nation searching for overseas shopping opportunities

 

Norway is an affluent nation, happy to spend its wealth online: basket spends are among the highest in Europe, and the Norwegian penchant for online shopping is beaten only by the Danes. The average annual basket spend online in Norway is €2,789, some 28 percent higher than the European average annual spend of €2,186.17 This makes the country potentially one to target for e-commerce merchants in search of customers willing and able to purchase high-value items.

The country has one of the highest internet penetration rates in Europe, at 99.2 percent.18 It follows that e-commerce should be a success story in Norway, which in recent years has proven to be true: sales have followed a double-digit growth trajectory, jumping 18 percent between 2016 and 2017 alone.19 The business to consumer e-commerce market is now worth €10.9 billion,20 and is projected to increase at a compound annual growth rate of 13 percent up to 2021, the third-highest predicted growth rate out of the European countries included in our report series. Only Italy and Spain’s e-commerce markets are expected to expand at a faster rate.21

As with the other Nordic countries, e-commerce growth has been supported by a strong logistics infrastructure in Norway, which allows merchants to provide reliable, fast and low-cost deliveries. Groceries have been the fastest-growing category,22 although in Norway only 18 percent of e-shoppers buy these items online,23 which is relatively low for Europe.

Online shopping is now a part of life for the majority of Norwegians, with millennials particularly likely to shop online. During 2017, 63 percent of Norwegians purchased products online and 23.5 percent of them were within the 25 to 34-year-old age group.24 For e-commerce merchants hoping to raise their profile with keen Norwegian shoppers, it may be worth marketing brands via online media: 91 percent of Norwegians use the internet to read the newspaper and to access banking services.25

Cross-border spending is high, with 43 percent of shoppers having already made a foreign purchase26 – far higher than the European e-commerce forerunners the UK, Germany and France.27 This could be reflective of the retail market’s smaller size in Norway, and consequential appetite for a wider range of goods. There is also a consumer perception across the Nordics that the pricing of domestic products is high,28 with cheaper goods being available in other countries. Goods from Sweden are also in demand, with over an eighth of Norwegian e-shoppers surveyed stating that they had purchased goods from Sweden in the previous month.29 China, the US and the UK are also popular shopping destinations.30

International e-commerce providers should note that, as a non-EU member, Norway has its own set of rules regarding VAT, which equates to a standard rate of 25 percent.31 Food, clothing and shoes incur VAT, currently applied to all imported products in these categories with a value over NOK 350 (€36.62), at the time of writing, inclusive of shipping charges. Sellers of high-value items should provide clear guidance to prospective shoppers on the likely VAT charges.32

The market is considered to have low complexity for new market entrants, with no requirement to have a local entity and no restrictions on currency or foreign exchange.33 One major challenge, however, is the return of goods. As Norway is not in the EU, it can take a long time for purchased items that have been returned to get sent back across the border and reach the merchant.34 As a result, Norwegian customers often feel they have to wait too long for a refund.35 Merchants looking to expand in the country must make a point of providing a clear and easy return process, which should be communicated on their respective websites.36

Advanced mobile commerce shoppers, particularly among the young

 

Thanks to its high smartphone penetration rates (76.1 percent),37 Norway is a mobile commerce forerunner, in line with its Nordic neighbors. The Norwegian mobile commerce market is worth €4.26 billion,38 and accounts for 39 percent39of all e-commerce sales. Underpinned by this strong base, mobile commerce growth up to 2021 is expected to be high, at a compound annual growth rate of 18 percent,40 by which point it is forecast to be worth €8.3 billion a year, or around 47 percent of the e-commerce market.41

Norwegians tend to be sophisticated mobile commerce users, with 29 percent using their phone to check inventory levels and 25 percent researching products online while physically in a store.42 Merchants operating in the market may want to broaden their service with offerings such as push notifications based on location. This can also be used to good effect in the delivery process. Some 88 percent of Norwegians say that it is important for the tracking status of goods to be communicated consistently from order to delivery.43

Apps are a popular shopping channel, taking a 43.9 percent share of completed mobile commerce transactions.44 There is a clear generational gap between mobile commerce users: 15 to 24 year olds are the heaviest users of mobile commerce, with 61 percent of online purchases being made via a mobile device.45 This is closely followed by 25 to 34 year olds, at 59 percent, and falls into a downward curve to the oldest demographic, 65 to 74 year olds, for whom smartphones are used for 27 percent of purchases – still not an insignificant number.46 Across the Nordics, there is a trend that men are more likely to use smartphones to shop. In Norway, however, the difference is considerable, at 10 percent.47

Europe’s biggest card users but digital payments are growing

 

Norway has the highest penetration of e-commerce-enabled debit and credit cards (2.92 per person) out of the countries studied.48 In fact, along with Iceland, Norway has the highest card usage rates in the world.49 As a result, cards dominate the payments landscape, accounting for 51.3 percent of the market and €5.6 billion in transactions.50 Going forward, cards are expected to grow at a compound annual growth rate of 23 percent to 2021.51

This love of cards is also helping to drive digital payment methods such as digital wallets. In Norway, payment app Vipps – which is linked to a customer’s domestic bank card – is used by seven percent of the population and has a 95 percent brand recognition.52 Developed by the country’s largest bank, DNB, it is an open application that can be used by customers from any Norwegian bank. The service allows users to send payments to a receiver’s telephone number. If they have an account and a card at one of the banks in the network, then the money is transferred in seconds. Vipps has expanded beyond person to person payments and is now offered by business to consumer merchants and within the business to business e-commerce market.53 Digital wallets currently make up 17.1 percent of the payment market and are growing at a compound annual growth rate of 20 percent.54

Bank transfers are the fastest-growing payment method and are expected to increase at a compound annual growth rate of 30 percent up to 2021,55 where they should take a 20.1 percent market share.56 This growth will likely be due to the growing digitalization of the banking sector. DNB ASA recently announced it was closing half of its branches as almost all of its users are now digital.57 In fact, nine out of 10 Norwegians now do their banking online.58 Norway also has a well-developed payment infrastructure allowing for real-time online transfers.  Straksbetalinger is a domestic instant payments scheme, which was launched by a consortium of banks in 2012. However, the incumbents are planning to introduce an improved version by 2020, based on the single euro payments area credit transfer standards that will enable real-time capability for all payment types and amounts.59

As in Sweden, open invoicing ­– where payment is made after the goods are received – remains popular in Norway. Swedish digital payment company Klarna is the leading operator in this space.60

Meanwhile, Norway has the lowest cash usage in Europe, primarily due to its enthusiastic card usage.61 The country has a good shot at becoming the first cash-free country in Europe, but this method still exists in the e-commerce space where it accounts for three percent of transactions, as cash on delivery payment options remain available.62

Room for improvement with approvals

 

According to figures from Eurostat, e-commerce fraud in Norway is relatively high, with 4 percent of online shoppers facing fraud each year, compared with a European average of two percent.63 It is likely that this threat will continue to grow across the Nordic region in the short term. Indeed, even though Norway is not obligated to implement the EU’s revised Payment Services Directive, it has chosen to transport the regulation into Norwegian law,64 highlighting the seriousness that the country gives to areas such as Strong Customer Authentication. To fight this problem, bank-operated digital identity schemes are increasing in prominence and have been adopted by millions of users. A number of these schemes offer smartphone-based services to further increase the ease of use, which in turn has helped to expand their adoption.65

Key takeaways

 

  • The average annual basket spend online in Norway is €2,789, some 28 percent higher than the European average annual spend of €2,18666
  • The Norwegian mobile commerce market is worth €4.26 billion,67 and accounts for 39 percent68 of all e-commerce sales
  • Cards dominate the payments landscape, accounting for 51.3 percent of the market and €5.6 billion in transactions69

 

Data may vary from historical figures, due to certain categories being re-stated as new information sources have become available.

* J.P. Morgan 2019 Payments Trends – Global Insights Report series includes the following European countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Spain, Sweden, Switzerland, The Netherlands, UK.

 

About J.P. Morgan

 

J.P. Morgan offers a full suite of payments services to enable a seamless connection across the payments continuum for clients. We bring our consultative expertise, data-driven insights, and local service around the globe to provide a more unified view of payables, receivables and cash management. Merchant Services is the payment acceptance and merchant acquiring business of JPMorgan Chase & Co. (NYSE: JPM) – a global financial services firm with assets of $2.6 trillion and operations worldwide.i According to The Nilson Report, it is also the top merchant acquirer of e-commerce transactions in Europe.ii

 

i JPMorgan Chase & Co. Q4 2018 Earnings Report 2018.

ii The Nilson Report, #1132 May 2018.

 

Global Payments Trends Reports

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Information contained in this document has been prepared by third parties or obtained from sources which are believed to be reliable; but neither Chase Paymentech Europe Limited nor any of its affiliates warrant the completeness or accuracy of the information contained herein. Chase Paymentech Europe Limited and any of its affiliates shall have no liability to the user or to third parties, for the quality, accuracy, timeliness, or for any special, indirect, incidental or consequential damages which may be experienced because of the use of or reliance on the data or statements made available herein. Third party trademarks, brand names, products and services are only referential and Chase Paymentech Europe Limited and its affiliates disclaims any sponsorship, affiliation or endorsement of or by any such third party.

 

Chase Paymentech Europe Limited, trading as J.P. Morgan, is regulated by the Central Bank of Ireland. Registered Office: J.P. Morgan, 200 Capital Dock, 79 Sir John Rogerson’s Quay, Dublin 2 D02 RK57, Ireland. Registered in Ireland with the CRO under the Registration No. 474128.

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Copyright© 2019

1 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

2 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

3 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

4 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.

5 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

6 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided by J.P. Morgan via World Bank.

7 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

8 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via CIA, 2017.

9 World Bank Open Data. ‘Norway’ Accessed December 2018.

10 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

11 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

12 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

13 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Internet World Stats (2017).

14 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Newzoo, 2018.

15 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via World Bank, 2017.

15 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Norges Bank, 2018.

17 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

18 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Internet Live Stats (2015 & 2016) and Internet World Stats (2017).

19 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via E-Commerce Europe, 2017.

20 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via E-Commerce Europe, 2017.

21 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

22 Postnord, E-Commerce in the Nordics 2018, 2018

23 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

24 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista and World Bank, 2017.

25 E-commerce Foundation, B2C E-commerce Report Norway 2017, 2017.

26 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

27 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

28 Postnord, E-Commerce in the Nordics 2018, 2018.

29 Postnord, E-Commerce in the Nordics 2018, 2018.

30 Postnord, E-Commerce in the Nordics 2018, 2018.

31J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via VAT Live, 2018.

32 Postnord, E-Commerce in the Nordics 2018, 2018.

33J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company 2018.

34 Postnord, E-Commerce in the Nordics 2018, 2018.

35 Postnord, E-Commerce in the Nordics 2018, 2018.

36 Postnord, E-Commerce in the Nordics 2018, 2018.

37 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Newzoo, 2018.

38 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

39 Postnord, E-Commerce in the Nordics 2018, 2018.

40 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

41J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

42 Postnord, E-Commerce in the Nordics 2018, 2018

43 Postnord, E-Commerce in the Nordics 2018, 2018.

44 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

45 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista and World Bank, 2017.

46 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista and World Bank, 2017.

47 Postnord, E-Commerce in the Nordics 2018, 2018.

48 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Norges Bank, 2018.

49 European Payments Council, October 2018. ‘Taking a closer look at Norway's payment landscape.’ Accessed November 2018.

50 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

51 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

52 European Payments Council, October 2018. ‘Taking a closer look at Norway's payment landscape.’ Accessed November 2018.

53 Finextra.com, December 2018. ‘Norway prefers Alipay to Apple Pay.’ Accessed February 2019.

54 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

55 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

56 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

57 Nets, June 2016. ‘Payments in the Nordics.’ Accessed November 2018.

58 Nets, June 2016. ‘Payments in the Nordics.’ Accessed November 2018.

59 European Payments Council, October 2018. ‘Taking a closer look at Norway's payment landscape.’ Accessed November 2018.

60 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

61 European Payments Council, October 2018. ‘Taking a closer look at Norway's payment landscape.’ Accessed November 2018.

62 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

63 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Eurostat, 2017.

64 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided by Edgar, Dunn and Company via EBA, 2018.

65 Finextra, December 2018. ‘Why banks can be the driving force behind digital identity schemes.’ Accessed December 2018.

66 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

67J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

68 Postnord, E-Commerce in the Nordics 2018, 2018.

69 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

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