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Recent shifts in consumer behaviour and market dynamics have challenged the dominance of Denmark’s domestic payment option, with consumers looking elsewhere and the government considering other options.
The rise of Visa and Mastercard and the increasing adoption of mobile wallets such as Apple Pay and Google Pay have resulted in Dankort’s market share steadily declining, according to new findings from Danmarks Nationalbank.
The central bank plans “to adapt the current regulation to support secure, robust and efficient retail payments in Denmark” and ensure that policy reflects market developments.
Pressure internationally
Dankort, which was first conceived in 1983, has traditionally been Denmark’s dominant payment card, but Visa and Mastercard have rapidly gained market share, largely due to their compatibility with digital wallet solutions.
The convenience of Apple Pay and Google Pay, which primarily support international cards, has been a significant factor in shifting consumer preferences.
The central bank has suggested that many Danish consumers are now opting to default to Visa or Mastercard-linked mobile wallets rather than carry a physical Dankort.
It notes that the extensive global acceptance of international players makes them attractive to consumers who travel frequently or shop online from international retailers.
In addition, economies of scale allow these brands to continuously invest in security, innovation and fraud prevention, reinforcing their competitive edge.
The central bank suggests that the growth of Visa and Mastercard has had mixed implications for Danish merchants.
Although these cards offer broad customer appeal, they also come with higher transaction fees, as they are not subject to the same price regulation as Dankort.
This has led to growing concerns about rising payment costs, particularly for smaller businesses.
The future of Dankort
To strengthen Dankort’s position in Denmark’s evolving payments market, the Danish government is considering several key policy initiatives.
One option is to open Dankort to more acquirers, given that Nets, the Italian owner of Dankort, currently processes 75-80 percent of all card transactions in Denmark.
According to the central bank, this dominance has limited competition, and allowing other acquirers to process Dankort payments could reduce acceptance costs for businesses and encourage wider adoption.
However, this shift would require Nets to open its system to competitors, introducing additional costs that could affect fees.
When approached by Vixio, a spokesperson for Nexi, of which Nets is a subsidiary, criticised the idea of opening up Dankort to more acquirers.
“Opening for more acquirers to Dankort services will immediately lead to increased costs, and thereby higher unit costs, unless these new acquirers actively promote the use of Dankort significantly,” the spokesperson said.
“We believe that the key to reversing the negative trend is new functionalities and commercial terms that allow Dankort to meet the expectations that issuers have, which are crucial,” they continued, adding that it requires some framework conditions that “ensure we can develop Dankort so that it can remain relevant, rather than the gradual phasing out that we are witnessing today”.
Another option touted by the government is to adjust price regulation. The existing framework, established in 2005, applies primarily to in-store payments, but the rise of e-commerce and self-service transactions means there is growing pressure to extend regulation to online payments.
Incorporating development costs into the regulated fee structure could help fund innovation and make Dankort more competitive. However, this would likely lead to higher merchant fees.
“From the Dankort side, we recommend opening for investment and development of Dankort so that it meets the needs of issuers and their customers to a greater extent than today, for example, by offering a card with direct debit, as we know it from international debit cards,” the spokesperson said.
MobilePay
Beyond the competition between Dankort and international card schemes, instant payments are emerging as a potential game-changer, the regulator said.
For example, in 2024, approximately 600m instant payments were made in Denmark, primarily through MobilePay.
These payments are used mostly for peer-to-peer transfers, but the central bank suggests that they have the potential to become a widely accepted alternative for retail transactions.
Instant payments could reduce costs by eliminating intermediaries, provide faster settlement with immediate fund transfers and enhance the resilience of the payment system by diversifying infrastructure.
The central bank was also positive about Apple’s decision to open up near-field communication (NFC) access on its networks, something which has already been utilised by MobilePay and others in the EU market.
Does Dankort have a sustainable path forward?
Complaints about Dankort’s monopoly and its Italian ownership make the provider an occasionally thorny subject matter for Denmark’s payments ecosystem.
Merchants view it as increasingly expensive and regulators, including the central bank, appear to agree.
As a domestic payment scheme, it remains an embedded way for Danes to pay. However, it risks fading into irrelevance, given the innovation being offered by players such as Visa and Mastercard, as well as digital wallet solutions.
To modernise the payment option, Denmark could take inspiration from countries that have successfully developed strong domestic alternatives to Visa and Mastercard.
The Netherlands’ iDEAL, for example, has come to dominate e-commerce payments in the country by offering a direct bank transfer system that is secure, fast and widely accepted.
It is now used by nearly 100 percent of Dutch consumers, and processes more than 1bn transactions each year, with an average 3.5m transactions per day and more than 6m on peak days.
If Dankort could evolve into a similar bank-linked system, it would provide an attractive alternative to international card schemes for online purchases, allowing its success in the Danish market to continue.
Alternatively, Switzerland’s domestic payment solution, Twint, offers a model for integrating mobile payments, QR codes and instant transfers into a unified system.
Since its rollout in 2017, Twint has partnered with banks to enable direct account payments, avoiding the fees associated with card transactions.
If Dankort were to partner with Danish banks in a similar way, it could provide a cost-effective, account-based alternative that reduces merchant fees while maintaining strong consumer adoption.
Of course, there are obstacles to this being achieved.
MobilePay could overshadow any attempt to modernise Dankort, and there may be little incentive for merchants to continue accepting Dankort or for banks to invest in its development.
This could lead to a scenario where Dankort fades into irrelevance, much like local card schemes such as Laser in Ireland, the UK’s Switch and France’s Carte Bleue.
