2019 J.P. Morgan Global Payment Trends
2019 Global Payment Trends Report - Sweden Country Insights
SWEDEN INSIGHTS REPORT
SWEDEN INSIGHTS REPORT
As a highly-banked nation ready and willing to accept digital-only methods, Sweden is a country to monitor when it comes to emerging e-commerce payment trends. Despite its high gross domestic product per capita, online spending remains modest – a factor newcomers to the market can capitalize upon. 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
Economic growth in Sweden has been high over the past five years, averaging close to three percent, with consumer spending topping two percent.1 Growth should moderate slightly going forward with gross domestic product expected to expand by 2.1 percent in 2019.2 The e-commerce market, however, is expected to continue posting strong growth rates, driven by the enthusiastic adoption of mobile commerce.3 The impressive pace of economic growth has contributed to reduce the unemployment rate to close to seven percent,4 and has boosted underlying inflation when compared with recent years.5 Sweden also stands out in the World Bank ‘ease of doing business’ survey and has been ranked in the top 10 countries since 2014.6
This document is based on projected figures and is subject to change at any time.
An advanced e-commerce market with opportunities to raise average spends
Sweden, alongside its Scandinavian neighbors, is an advanced e-commerce arena marked by fast internet speeds, a thriving digital payments market, and a solid underlying economy. Sweden’s business to consumer e-commerce market is worth €12 billion17 and has posted healthy double-digit growth each year since 2015.18
Perhaps because of several years of double-digit gains, growth is projected to slow slightly in the years leading up to 2021, at a compound annual growth rate of nine percent.19 Nevertheless, multiple elements make Sweden an attractive destination for international e-commerce players. Firstly, significant opportunity exists: Sweden is a wealthy nation, but its citizens spend less relative to their European peers. Despite enjoying one of the highest gross domestic product ratings per capita in Europe,20 the average annual online spend of €1,477 is significantly lower than the European average of €2,186.*21 Secondly, Sweden’s underlying frameworks support e-commerce growth. The country has some of the best fixed-line internet infrastructure in the world and is ranked number one globally for internet inclusivity and access, suggesting all age and social demographics should have ready access to e-commerce sites.22
A nation of enthusiastic overseas shoppers seeking toys, DIY items and food
E-commerce businesses catering to parents may find particular success in Sweden. Toys and baby products are among the fastest-growing categories, with a 23 percent rise.23 Sales of DIY products and food are also ramping up with 21 percent and 19 percent growth respectively.24
High English-language fluency also enables e-commerce merchants to swiftly adapt sites for the Swedish market and communicate easily with shoppers. The country is ranked number one in the world for English-speaking proficiency as a second language.25
Despite this, the percentage of consumers who have shopped cross-border is relatively low for Europe at 32 percent.26 Part of the reason for this are the recent changes to foreign online shopping rules and VAT charges (25 percent standard), which have proved a major point of contention in the past year for Swedish shoppers.27 To claw back unpaid VAT on low-value items bought from international sellers, the Swedish customs agency enacted a new regulation in March 2018. Delivery partner PostNord agreed to charge consumers the VAT and a 75 kronor administration fee before being able to receive any goods worth less than €22 purchased from outside the EU.28
This move resulted in a high volume of items not collected by Swedish shoppers in 2018. PostNord was forced to eventually return the parcels to their senders. It is believed that since the fee was enforced, around half of all non-EU parcels have been left abandoned with PostNord – a figure estimated to be close to 400,000.29
Local delivery partners working to navigate VAT issues
The impact on international e-commerce merchants is thought to have been severe. China, Germany and the UK are the most popular international e-commerce destinations and it is estimated that the number of parcels delivered from China alone dropped from 150,000 per day at the start of 2018 to less than 15,000 per day by mid-2018.30
PostNord is beginning to work in tandem with e-commerce merchants to improve the situation. In mid-2018, PostNord provided an arrangement with one of Sweden’s most popular e-commerce platforms, Wish, to allow the VAT on low-value items to be paid at the point of purchase. It is also in discussions with other international e-commerce providers to provide similar arrangements.31
Strong app use drives demand for status updates
Sweden is one of the leading markets for mobile commerce, which is in part, driven by the country’s early adoption of smartphones. It has one of the highest rates of smartphone penetration in Europe, at 74 percent.32 The rate is higher than the UK, an e-commerce frontrunner, not to mention other larger markets such as France and Germany. Mobile commerce is a popular online shopping method as a result, with 40 percent of Swedish e-shoppers opting to make at least one purchase via their smartphone per month.33
As a consequence, the Swedish mobile commerce market is forecast to grow at a compound annual growth rate of 12 percent up to 2021, becoming a €7.8 billion market.34 App use is strong in Sweden, with 37.7 percent of transactions made in-app.35 Wish is the most popular shopping app in Sweden in terms of the number of downloads.36 The platform allows businesses to sell directly to consumers and might be a route in for international firms to gain greater visibility with Swedish shoppers.
Smartphones and app-based shopping also help meet a desire from Swedish consumers to be kept informed about the status and journey of their order. Some 71 percent of Swedes will check the status of their purchase at least once, with 23 percent checking at least three times.37
When it comes to social media, Swedes are keen Facebook users, with 68.3 percent of the population using the site in 2018.38 However, social media sites that are rapidly becoming e-commerce platforms in other countries are seldom-used in Sweden. For example, only 8.6 percent of Swedes use Pinterest, while just 5.4 percent engage on Instagram, bucking existing trends in other highly developed European markets such as the UK.39
An almost-cashless society seeks seamless card and digital wallet payments
Cards are the primary way to pay online in Sweden, taking a 41.5 percent share of online transactions.40 In fact, the Scandinavian state is rapidly moving towards becoming a cashless society, as evidenced by cash on delivery accounting for just one percent of all e-commerce transactions.41 And there would appear to be no going back – cash use is predicted to plummet at a compound annual growth rate of -35.1 percent to 2021.42
As physical cash becomes almost obsolete, Sweden is developing a government-created cryptocurrency, the world’s first. A pilot scheme to create the state-backed ‘e-krona’ is expected to be launched in 201943 in a bid to ensure that this type of payment is not left entirely in the hands of the private sector.
Despite Sweden’s groundbreaking digital currency developments, in other areas payment preferences remain traditional. Long-established bank transfers are predicted to be the fastest-growing payment method up until 2021, when they will account for 33 percent of the payments market – at present they make up 23 percent of sales.44 Sweden is a highly banked nation, with 99.7 percent of the population holding a bank account.45 This helps to explain the receptiveness to bank transfer-based payments and also the popularity of Swish, a bank-transfer-based payment app used by 6.2 million Swedes which is increasingly incorporating business to consumer payments.46
Another bank account-based payment method, open invoicing, is popular, taking a 22.8 percent share of the e-commerce payments market.47 Sales via this method are expected to grow at a compound annual growth rate of 13.6 percent up until 2021, marginally faster than digital wallets at 13.4 percent.48 A desire for deferred payment has extended into online payment options. Sweden is the home of Klarna, a highly popular buy-now-pay-later online payment option that has spread across Europe.49 It offers instant payment via cards, an interest and fee-free option to pay 14 or 30 days after receipt of a product, or an interest-free option to pay for a product in monthly installments. It accounts for 25 percent of Sweden’s additional payments market.50
The increasing use of digital wallets is to be expected for a nation enamored with smartphones and recognizing the opportunity, Google Pay launched in Sweden in October 2018.51 However, PayPal® still dominates in this area, accounting for around six percent of the payment market.52
Making payments as smooth and as swift as possible is critical in order to convert baskets into completed sales. An estimated 59 percent of Swedes say it is important that they do not have to register before shopping,53 therefore creating a guest checkout option should help drive spending.
High approval rates and a low perception of corruption
Sweden’s e-commerce fraud levels are in line with the European average.54 The country has, however, seen rising levels of scams including ‘invoice fraud’ and ‘push-payments fraud’.55 Push payments fraud involves fraudsters pretending to be a business and then tricking consumers into sending them money.56 As funds transferred using real-time payment schemes are instant and often irreversible, the victims of the scam are not able to reverse the transaction once completed. Invoice fraud occurs when fake invoices are paid by consumers and the funds are directed to the fraudster’s bank account. This is a particular area of vulnerability in Sweden due to the high use of open invoices as a payment method.
In June 2018, the Swedish regulator confirmed that liability for some of these digital scams will lie with the banks.57 As a result, both Swedish card issuers and banks will likely have to put in place extra controls to prevent enterprise fraud.58 In general, across the European region, chargebacks have been in decline due to new regulations and fraud controls coming into place and there is expected to be a similar positive trend in Sweden over the long term.59
Key takeaways
- Sweden’s business to consumer e-commerce market is worth €12 billion60 and has posted healthy double-digit growth each year since 201561
- The mobile commerce market is forecast to grow at a compound annual growth rate of 12 percent up to 2021, becoming a €7.8 billion market62
- Cards are the primary way to pay online in Sweden, taking a 41.5 percent share of online transactions63
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.
Global Payments Trends Reports
International e-commerce success can hinge upon understanding the needs, nuances and growth patterns of individual nations. J.P. Morgan’s Global Payments Trends Reports aims to offer merchants the knowledge they need for global success through in-depth, country-by-country analysis.
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.
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Your J.P. Morgan Relationship Manager or visit: https://www.jpmorgan.com/europe/merchant-services/payment-insights
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.
Directors: Catherine Moore (UK), Carin Bryans, Dara Quinn, Steven Beasty (US), Eilish Finan
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1 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.
2 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.
3 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.
4 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.
5 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.
6 Western Europe Economic Research, JPMorgan Chase Bank, October 2018.
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. ‘Sweden.’ 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 via E-Commerce Europe, 2017.
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 PostNord, E-Commerce in the Nordics 2018, 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.
16 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 ECB Statistical Data Warehouse, 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 via E-Commerce Europe, 2017.
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 E-Commerce Europe, 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, 2018.
20 Sweden.se. ‘How Sweden Created a Model Economy.’ Accessed November 2018.
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 Theinclusiveinternet.eiu.com, February 2018. ‘The Inclusive Internet Index: Measuring Success 2018.’ Accessed November 2018.
23 E-commercenews.eu, February 2018. ‘E-commerce in Sweden was worth €6.7 billion in 2017.’ Accessed March 2019.
24 E-commercenews.eu, February 2018. ‘E-commerce in Sweden was worth €6.7 billion in 2017.’ Accessed March 2019.
25 EF.co.uk, 2018. ‘EF English Proficiency Index: Sweden.’ Accessed November 2018.
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 Postnord.se. ‘Changes that come into force on March 1.’ Accessed November 2018.
28 Postnord.se. ‘Changes that come into force on March 1.’ Accessed November 2018.
29 TheLocal.se, April 2018. ‘Sweden forced to return 400,000 packages to China and other non-EU countries.’ Accessed November 2018.
30 TheLocal.se, June 2018. ‘Why your international imports could be about to get cheaper.’ Accessed November 2018.
31 Postnord.com, June 2018. ‘PostNord and Wish in cooperation for smoother e-commerce.’ Accessed November 2018.
32 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.
33 Postnord, E-Commerce in the Nordics 2018, 2018.
34 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.
35 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.
36 E-commercewiki.org, March 2018. E-commerce Foundation, ‘E-commerce Report Sweden 2018.’ Accessed November 2018.
37 E-commercewiki.org, March 2018. E-commerce Foundation, ‘E-commerce Report Sweden 2018.’ Accessed November 2018.
38 E-commercewiki.org, March 2018. E-commerce Foundation, ‘E-commerce Report Sweden 2018.’ Accessed November 2018.
39 E-commercewiki.org, March 2018. E-commerce Foundation, ‘E-commerce Report Sweden 2018.’ Accessed November 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.
41 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.
42 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.
43 Riksbank.se, October 2018. ‘E-krona project, report 2.’ Accessed November 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 World Bank, 2017.
46 TheGuardian.com, February 2018. ‘Cashing out? Why notes and coins may become a thing of the past in Sweden.’ Accessed November 2018.
47 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.
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, 2018.
49 Klarna.com, 2019. ‘About Us.’ Accessed March 2019.
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.
51 9to5Google.com, October 2018. ‘Google Pay now officially available in Norway, Denmark, Sweden and Finland.’ Accessed November 2018.
52 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company.
53 Linnworks.com. ‘e-commerce In Sweden: A Mature Market Ready For International Sales.’ Accessed November 2018.
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 via Eurostat, 2017.
55 Fico, June 2018. ‘Authorised Push Payment Fraud – The Liability Challenge.’ Accessed December 2018.
56 Fico, December 2017. ‘What Is Authorised Push Payment Fraud?’ Accessed December 2018.
57 Fico, December 2017. ‘What Is Authorised Push Payment Fraud?’ Accessed December 2018.
58 Fico, 2018. ‘Evolution of card fraud in Europe 2017.’ Accessed December 2018.
59 J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Kount, 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 via E-Commerce Europe, 2017.
61 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.
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, 2018.
