From Norway’s Vipps and MobilePay in Denmark to Swedish mobile payment system Swish and the Pivo mobile payment app in Finland, payment methods that facilitate fast and convenient ways to pay are gaining traction in the Nordics, a region renowned for its innovative payments and digital banking services.
Read more: Klarna’s Global Merchandise Volume Jumps 42% in '21 as US Users Grow 71%
The adoption of deferred payment options across countries in the region has also contributed to the rapid growth of global firms like Swedish buy now, pay later (BNPL) giant Klarna, which recorded a 42% increase in global transaction volume and a 38% jump in global net operating income in 2021 over 2020 figures.
“What we see is that the invoice and the deferred payment options are [still] not losing out because consumers like that it’s very flexible and [offers] a secure way to pay. You can get your goods first and then pay [later],” Mikael Johansson, managing director at Stockholm-based FinTech Avarda, told PYMNTS in a recent interview.
Avarda, which considers itself a Klarna challenger, is also well-known in the region for its white-label checkout solutions — Pay-by-bank and Purchase Now, Pay Later options — used by multiple merchants in Sweden, Norway, Denmark, Finland, Estonia, Latvia, Lithuania and Poland where the firm has operations.
“Our offering is somewhat different from most of our competitors in the Nordics. We’re not only a payment company, [we] have built a model based on micro services [so] we can tailor the customer journey and the flows in a different way than our competitors can,” Johansson said. “We work with the merchant to build a checkout and customer journey that fits the individual merchant and the type of products that they sell.”
Since launching in 2015, the FinTech firm, which is fully owned by Sweden’s TF Bank AB, has grown significantly, with revenue jumping 38% in 2021. And given that local Swedish retailers like online fashion marketplace Boozt have ditched Klarna for Avarda’s payment solution, it appears that the company might be well-equipped to take on the global giant.
Open Banking Payment
To improve its offering for retailers and merchants, the Nordic-based payment service provider recently partnered with European open banking player Aiia, a Mastercard company, to enable open banking payments through its white-label payment solutions.
As part of the deal, Aiia will empower Avarda’s BNPL solution based on account-to-account payments, enabling consumers to make deferred payments without having to separately log into an external banking login or app. This, according to Johansson, goes a long way toward boosting conversion rates and reducing friction in the payment process.
Read also: Mastercard’s Aiia Powers New Platform to Bring Open Banking to the Masses in Denmark
“In the old days when you paid an invoice, you needed to punch in a lot of numbers and bank details. It was not very convenient. [With] this service, paying the deferred payment or the invoice is extremely fast and convenient, and you don't need to have a lot of data on your phone,” he explained.
In addition to that, customers can use Pay-by-bank to pay their BNPL invoices or installments using a new invoice functionality that updates customers’ invoice balance in real-time when a payment is made or refund is received, Eeva-Liisa Marjomaa, Avarda’s development manager, added.
Customers can also authenticate and authorize the payment with just a few clicks without having to share any confidential information with a third party. “Avarda believes that making payments should be easy, fast and secure regardless of whether you’re making a payment in checkout or if you have chosen to make the payment at a future date,” Marjomaa said.
Moving forward, Johansson said the company has aggressive growth targets to continue the growth path that it’s on while continuing to develop products and services that help merchants build customer and brand loyalty as well as increase their repurchase rates.
“Day by day we are seeing that more merchants are interested in our products, so we have plenty of growth opportunities with our current products,” Johansson said. “We are very positive towards the future and we’re going to continue with very strong growth going forward.”
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