The Norwegian cards and payments market is expected to grow rapidly over the next few years, largely on the back of increased usage in the younger demographic. A level of internet penetration suggests the e-commerce market will also grow quickly but raises questions why in to why it is not larger already. CI reports
The Norwegian card payments channel registered significant growth during the review period (2009-2013). In terms of number of cards in circulation, the card payments channel grew at a CAGR of 2.86% to reach 18.6 M cards by the end of 2013. In value terms, the channel valued NOK647.9 Bn (US$108.9 Bn) in 2013. Changing lifestyle demographics, the increased popularity of online shopping and higher disposable per capita incomes supported the growth of the number of cards in circulation.
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Credit and prepaid card categories expected to display highest growth
Over the forecast period (2014-2018), the credit card category expected to register a CAGR of 2.82% in terms of the number of cards in circulation, from 5.6 M in 2014 to 6.3 M in 2018. In terms of transaction value, the category registered a CAGR of 8.30% during review period and is expected to record a forecast-period CAGR of 5.10%. Enhanced payment infrastructure such as point of sale (POS) terminals and automatic teller machines (ATMs), and benefits provided by card issuers such as discounts, loyalty points, reward programs and value-added services on cards are encouraging the use of credit cards.
The number of cards in circulation in the prepaid card category is expected to record a forecast-period CAGR of 2.94%, increasing from 5.8 M to 6.6 M. The category registered a review-period CAGR of 3.47%, increasing from 4.9 M cards in 2009 to 5.7 M in 2013. The debit cards category is expected to register a forecast-period CAGR of 0.46% in terms of the number of cards in circulation, from 7.0 M in 2014 to 7.2 M in 2018. The charge cards category is expected to decline at a CAGR of -1.63% over the forecast period, decreasing from 524,939 cards in 2014 to 491,450 in 2018.
Age-based segmentation adopted by key industry operators
The younger generation is a considerable and growing target group in terms of card spending. To tap into this younger population, SpareBank 1 SR-Bank in Norway offers a Visa card for children under 13 years old. Amounts in the accounts linked to these cards can be controlled by parents, there is no issuance fee and it is free to use in stores and at SpareBank 1s ATMs. The bank also offers a Visa Electron credit card for people aged 13-18 years, with no annual fees and free use for retail payments in Norway and abroad.
SpareBanken Vest also offers the Vestavinn 13-17 client program for teenagers to manage spending and savings. The program includes a Visa Electron 10-17 card with benefits such as no annual fees, fee-free purchases around the world and 24-hour withdrawal facilities at Union Bank Vest ATMs, and reduced-cost withdrawals in foreign countries.
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By GlobalDataCard fraud to decline further in Norway
Despite the increase in use of card payments, card fraud in Norway has declined since 2009, with technically enhanced payment systems and more secure transactions. During the review period, the total number of cards increased from 16.6 M in 2009 to 20.5 M in 2013, at a CAGR of 2.86%. However, total card fraud transaction values recorded a CAGR of -9.68%, falling from NOK214.7 M in 2009 to NOK142.9 M in 2013. The adoption of EMV cards remains the major driving factor in reducing the instances of card fraud, as it has replaced traditional magnetic strip cards with chip-based security. The number of EMV cards in circulation increased from 6.5 M in 2009 to 12.5 M in 2013.
Banks are also making significant efforts to make the payment system secure and reduce card fraud. In March 2013, EnterCard, in collaboration with Encap, integrated a two-factor user-authentication process into its re:member card. Card services can be access using this application with no need for any other security such as one-time or SMS passwords. The bank also implemented a new fraud management solution in 2013 developed by predictive analytics company Fico. The solution is capable of integrating with mobile communications, enabling EnterCard to carry out safe communication by mobile phones.
