Guide To Swedish Payments

Expanding your business into Sweden can be a lucrative venture, given the country’s robust economy, high standard of living, and tech-savvy population. Understanding the Swedish payment landscape is crucial for providing a seamless customer experience and ensuring successful transactions. This guide will help businesses navigate the various payment methods in Sweden, including cash, cards, mobile payments, online banking, and invoicing.

Understanding the Swedish Payment Landscape

Sweden is rapidly moving towards becoming a cashless society, with a significant emphasis on digital payments. To succeed in the Swedish market, businesses must integrate multiple payment options that cater to the preferences of local consumers. Today, the majority of Swedish payments are digital and connected to a bank account.

The primary clearing house for mass retail payments in Sweden is Bankgirot, which is owned by a consortium of banks. It oversees the renowned Bankgiro system, the real-time BiR system, and the Dataclearing account-to-account transfer system.

At Plusius, we ensure all payments in Swedish kronor are efficiently settled through RIX, the settlement system operated by Sveriges Riksbank, Sweden’s central bank. As the central hub of Sweden’s financial infrastructure, RIX plays a crucial role in maintaining the stability and security of financial transactions.

RIX offers two advanced settlement services: RIX-RTGS and RIX-INST. Launched in 2022, RIX-INST represents the next generation of real-time payment systems, and we're excited that Swish is the first service to utilize it, started in 2024.

Pull and Push-Based Payments

Sweden's payment landscape features three primary push-based payment methods: giro payments via Bankgiro or PlusGiro accounts, direct account-to-account transfers, and instant payments through Swish. Giro payments, dominant in non-cash transactions, account for about 90% of transaction value, excluding direct debits and card payments. Most Swedish businesses utilize Bankgiro numbers, directing funds to or from bank accounts or PlusGiro accounts directly linked to Nordea.

Bankgirot's E-faktura service facilitates electronic invoicing, allowing consumers to receive and pay invoices via online banking platforms, with the average person receiving approximately fifteen electronic invoices totalling 155 million in 2020. Account-to-account transfers, managed by Bankgirot's Dataclearing system, offer an alternative to giro payments, supported by standardized formats for account numbers and payment messages to streamline electronic processing.

Swish, launched in 2012 by major Swedish banks, enables instant bank transfers, initially for peer-to-peer transactions and increasingly adopted for business payments, crediting funds to recipients instantly.

In contrast, Sweden's pull-based payment method, Autogiro, owned and operated by Bankgirot, facilitates collections in Swedish kronor through direct debits. It requires a mandate between businesses and customers, with approximately eight out of ten Swedes having at least one active Autogiro mandate.

Bank Account Example in Sweden

In Sweden, bank account numbers vary across institutions, with SEB and Nordea adhering to one standard, while Handelsbanken and Swedbank use a different format. Due to security concerns, bank account details are typically kept private and not shared publicly. Bankgirot's use of routing numbers provides added security by concealing the actual account number from payers.

Swedish IBANs include the BBAN and a four-character header featuring 'SE', Sweden's national bank code, accompanied by two verification digits (D).

In Sweden, the Basic Bank Account Number (BBAN), which forms the domestic part of the IBAN, is up to twenty digits long and formatted as AAAM MMMM MYYY YYYY YYYY. The first three digits represent the bank code (A), the next six digits represent the BBAN check digits (M), and the remaining eleven digits represent the account number (Y).

• BBAN format: AAAM MMMM MYYY YYYY YYYY
• IBAN format: SEDD AAAM MMMM MYYY YYYY YYYY
• Country code: SE
• Check digits (D): 50
• Bank code example (A): 500
• BBAN check digits (M): 0000000
• Account number example (Y): 5839 8257 46
• BBAN example: 5000 0000 0583 9825 7466
• IBAN example: SE45 5000 0000 0583 9825 7466

 

Payment Methods in Sweden

Cash: Rarely Used but Still Accepted

While Sweden is moving rapidly towards becoming a cashless society, cash is still accepted in most places, albeit rarely used. Swedish currency is the Swedish Krona (SEK). You can exchange foreign currency at banks, exchange bureaus, or withdraw SEK from ATMs. However, many establishments prefer card or mobile payments.

Credit and Debit Cards: Widely Accepted

Credit and debit cards are the most common payment method in Sweden. Visa and MasterCard are widely accepted, while American Express and Diners Club are accepted in fewer places. Most Swedes use contactless payments, making transactions quick and easy. Here are a few tips for using cards in Sweden:

1. Chip and PIN: Ensure your card has a chip and you know your PIN. This is the standard method for card payments.
2. Contactless Payments: Most places accept contactless payments for transactions up to a certain limit.
3. Foreign Cards: Foreign credit and debit cards are generally accepted, but inform your bank before travelling to avoid any issues.

Mobile Payments: Leading the Charge

Sweden is at the forefront of mobile payments, with a significant portion of the population using mobile apps for everyday transactions. The most popular app is Swish, which allows instant transfers between bank accounts using just a mobile number. Here's a closer look at mobile payment options:

Swish

• Popularity: Used by over 7 million Swedes.
• Functionality: Connects directly to your bank account for instant transfers.
• Usage: Accepted by most retailers, restaurants, and for peer-to-peer payments.
• Requirements: A Swedish bank account and a mobile number.

Other Mobile Payment Apps

• Apple Pay and Google Pay: Accepted by many retailers, especially larger chains.
• Samsung Pay: Less common but available.

Online Banking: Efficient and Secure

Online banking is another cornerstone of Sweden's payment landscape. Most banks offer robust online banking services, enabling users to manage their finances, pay bills, and transfer money easily. Here are some features of Swedish online banking:

1. BankID: A secure electronic identification system used for logging into bank accounts and verifying transactions.
2. E-invoices: Many companies offer electronic invoices that can be paid directly through online banking platforms.
3. Autogiro: A direct debit service that automatically withdraws payments for recurring bills from your account

Digital Wallets: Growing in Popularity

Digital wallets are also gaining traction in Sweden. These wallets store your payment information securely and allow for quick transactions both online and in-store. Popular digital wallets include:

• PayPal: Widely accepted for online purchases.
• Klarna: Offers a 'buy now, pay later' service and is widely used for online shopping.
• SEQR: A mobile wallet that allows for QR code-based payments.

Invoicing and Bank Transfers

For B2B transactions or high-value purchases, invoicing and direct bank transfers are commonly used.

E-invoicing

• Electronic Invoices: Streamline billing with electronic invoicing through software like Fortnox or Visma.
• Autogiro: A direct debit service that allows automatic bill payments.

Bank Transfers

• IBAN and BIC: Provide these details for international clients to facilitate smooth transactions.
• SEPA Transfers: Use SEPA (Single Euro Payments Area) transfers for European transactions to ensure cost-effective and standardized payments.

 

Bankgirot

• Year Introduced: 1959
• Operated By: Bankgirot
• Availability: Monday to Friday
• Settlement: Same day
• Clearing: Bankgirot
• Fee per Payment: 1.85 kr.

 

Bankgirot, introduced in 1959, serves as a clearing and settlement service providing both the Bankgiro system and the BiR real-time payment system. It requires a Bankgiro number, a routing number directing payments to the correct account regardless of the bank. This system supports structured payment references up to 25 digits (OCR numbers) and unstructured references up to 140 characters. Bankgiro numbers are also essential for supplier payments and e-invoicing.

Cut-Off Times

Bankgirot's settlement cut-off times differ based on the bank. Transfers made before the cut-off are credited to the payee’s account on the same day, while those initiated after are credited the following business day.

• Pros: Low-cost credit transfers, secure via routing numbers.
• Cons: Limited to payments in Swedish kronor.

Plusgirot

• Year Introduced: 2002
• Operated By: Nordea
• Availability: Monday to Friday
• Settlement: Same day
• Clearing: Nordea
• Fee per Payment: 1.85 kr.

 

PlusGirot, rebranded from PostGirot and operated by Nordea, is a transaction account system for domestic and international payments, though PlusGiro payments are only domestic. It allows payments between PlusGiro accounts as internal transfers within Nordea.

Cut-Off Times

Nordea sets the settlement cut-off time for the initiating party. Transfers made before this cut-off are credited to the payee’s account on the same day; those made after are credited the following business day.

• Pros: Cross-border payment capabilities, no transfer cost between PlusGiro accounts.
• Cons: Mainly used for PlusGiro account transfers.

Account to Account (A2A)

• Year Introduced: 1975
• Operated By: Bankgirot
• Availability: Monday to Friday
• Settlement: Same day
• Clearing: Dataclearing (Bankgirot)
• Fee per Payment: 1.85 kr.

 

A2A transfers use the Dataclearing (DCL) system for secure, same-day settlement of credit transfers, commonly used for payouts such as loans and insurance claims. Payments are processed by Bankgirot and settled in RIX.

Cut-Off Times

Transfers made using DCL are processed first by Bankgirot and then settled in RIX. There are four settlement cycles per day and the final cut-off for same-day settlement is 13.30. Payments submitted after this time are settled on the following business day.

• Pros: Secure, low-cost mass payments with same-day settlement.
• Cons: Can require manual processing depending on setup.

Swish

• Year Introduced: 2012
• Operated By: Getswish
• Availability: 24/7, 365 days a year
• Settlement: Real time
• Clearing: BiR Settlement (Bankgirot)
• Fee per Payment: 1-3 kr.

 

Since its launch, Swish has been free for private individuals, and businesses cannot charge customers for using it. Banks set their own pricing for businesses, generally around 2 SEK per transaction plus an annual fee. Businesses can also utilize Swish for making payouts, issuing refunds, and paying other businesses, all for a comparable fee.

• Pros: 24/7 availability, user-friendly, low fees for real-time payments.
• Cons: Limited to payments between Swedish bank accounts.

Autogiro

• Year Introduced: 1967
• Operated By: Bankgirot
• Availability: Monday to Friday
• Settlement: Same day
• Clearing: Bankgirot
• Fee per Payment: 1.85 kr.

 

Autogiro, a direct debit scheme, allows for scheduled pull-based payments for bills, loans, and subscriptions. It requires a signed mandate from the payer, with processing times varying based on the type of payment.

Mandate activation may require up to two business days. Once activated by the bank, the payee is permitted to start an Autogiro collection from the payer’s account following particular timing regulations.

• Pros: Low-cost direct debits at scale with a long-lasting mandate.
• Cons: Not suitable for immediate payments, requires an advance mandate.

 

Clearing and Settlement

Sweden’s central bank, Sveriges Riksbank, operates the RIX payment system for interbank settlements. It includes two services: RIX-RTGS for high-value transactions on weekdays, and RIX-INST, introduced in 2022, available 24/7.

RIX-INST, based on the Eurosystem’s TIPS platform, supports real-time payments across multiple currencies, not just Swedish kronor, aiming to expedite transactions within and outside the eurozone. Originally intended to replace Bankgirot, P27's withdrawal means Bankgirot will remain operational, with instant SEK payments now processed via RIX-INST and the Nordic Payments Council’s new instant credit transfer scheme.

Bankgiro manages all Bankgiro, Autogiro, and e-invoice transactions, while Dataclearing, under Bankgirot, handles direct account-to-account transfers. By early 2024, Swish payments will settle directly through RIX-INST instead of Bankgirot’s BiR system, with PlusGiro account transfers managed internally within PlusGiro.

Retail Bank Payment System in Sweden

Real-Time Payments: P27

In 2019, P27, led by six major banks, launched a cross-border payment initiative across the Nordic region, acquiring Bankgirot in 2020 with plans to unify Sweden, Finland, Denmark, and potentially Norway under one system. However, P27 withdrew its Swedish clearing license application after Swish volume shifted to RIX-INST. Outside P27, the Nordic Payments Council (NPC) continues to enhance regional payment schemes, introducing a new instant credit transfer system in 2023. Sweden's RIX-INST, launched by the central banks, based on the eurozone's TARGET Instant Payment Settlement (TIPS) platform, allows real-time SEK payments like Swish, with banks mandated to transition by November 2024, modernizing Sweden's payment infrastructure and reducing Bankgirot reliance.

Tips for Scaling Your Business in Sweden

Seamless Integration

Ensure that your payment systems integrate seamlessly with your existing business operations, whether it’s your POS system, e-commerce platform, or accounting software. This reduces friction and enhances operational efficiency.

Choosing a Payment Processor, Payment Gateway or Payment Service Provider (PSP)

When selecting a payment processor, consider factors such as transaction fees, customer support, and ease of integration with your existing systems. Using Plusius will solve your problems with transactions and integration and enable you to optimize and streamline your incoming and outgoing funds in Sweden.

Partner with well-established payment service providers that provide customized solutions specifically designed for the Swedish market. Providers such as Plusius offer a unified solution for all payment processing needs. Choosing Plusius as your main partner when entering the Swedish market ensures access to a comprehensive payment infrastructure including payment gateways, various payment services, and strategic partnerships, enabling seamless operation of your business.

How Plusius Can Help?

Plusius was established to streamline payment processing and eliminate the need for direct integrations with tier-one banks, saving companies time and money. Through a unified API, Plusius gives you seamless access to local Swedish clearing network RIX, local BBANs , PlusGiro accounts, and Bankgiro numbers.

The Plusius platform is designed to facilitate real-time payments effortlessly and manages all infrastructure updates seamlessly, requiring no additional effort from the customer. This ensures businesses can swiftly adapt to evolving needs and leverage the latest capabilities.

Contact us if your business requires automated payments across Swedish domestic schemes or effective management of funds held in Swedish bank accounts, Plusius is equipped to assist. Schedule a meeting with our sales team members to understand how Plusius solutions can benefit your financial operations.