New rules in Sweden to discourage online shoppers from paying with credit could put a dent into the performance of local buy now, pay later company Klarna and other installment-based payment services.
As e-commerce has continued to grow across the Nordics, many online shoppers in Sweden have become used to paying for their purchases with credit by selecting invoices, installments, or any other payment options that allow the consumer to enter into a debt when completing their online payment.
Under the new Swedish Payment Services Act, merchants offering a list of payment options must now present the payment methods that do not put the consumer into debt, such as the bank-backed Swish payment app, first on the list.
Additionally, merchants are no longer able to pre-select paying with invoice or installments in their online checkouts.
William Torsler, senior business developer at Nordea, says: "The Swedish government has seen that shoppers are entering into more debt now when paying online. A lot of research conducted in this area shows that in many instances a consumer just proceeds with whatever payment method is pre-selected for them. Many of the consumers are then falling into debt by default without thinking too much about it. This regulation is designed to restrict the chances of that happening.
"I have a strong belief that this will drive the user penetration even further for Swish if the merchants have or will implement it as a payment option.”