Card Notes
PAYMENTS PROCESSING
Swedish banks continue their
drive for economies of scale
The restructuring of payments processing in Sweden, which reflects the country’s open economy and banking links around the Nordic and Baltic region, just as much as the SEPA process, has continued with a partnership between VocaLink and Bankgirocentralen (BGC).
At heart it is a strategic move by BGC, owned by the main Swedish banks, to outsource its processing, though the term ‘outsourcing’ is not used in the official announcement. “We will also be able to efficiently meet the new EU requirements and future-proof the Swedish bankgiro system,” says BGC CEO Eva Gidlöf.
BGC currently processes about half Sweden’s direct debit and credit transfer payments. The other half are handled by PlusGirot, formerly Postgirot, a Nordea subsidiary which it acquired in 2001 with the purchase of the state-owned Postgirot Bank. As a shareholder in BGC, Nordea also supported the partnership with VocaLink.
The partnership is expected to generate economies of scale and enable more cost effective payment services for BGC customers. BGC will also be able to offer a broader range of products, faster delivery of new products at lower prices, and an increased range of currencies. The collaboration will cover the entire bankgiro system and its payment products, including Autogirot. BGC will retain its current role and responsibilities to Swedish banks, companies and public agencies.
“We believe that our experience to date processing in excess of 8 billion transactions per year and already handling 15% of Europe’s automated payments demonstrates our suitability for an organization with the scale of BGC,” says VocaLink CEO Marion King.
Gareth Lodge, analyst, European banking and payments (previously at VocaLink), says: “This is a very significant step in the evolution of payments processing in Europe,” for the following reasons:
• BGC has made the key strategic decision that managing payment schemes is not the same as doing the actual payment processing – in other words, separating scheme management (BGC) from payment processing (VocaLink), as the UK did in 2005;
• BGC has avoided the cost of future-proofing its existing systems, and the political complexities of a merger;
• VocaLink has a state-of-the-art, currency-agnostic system, which will allow BGC to benefit from significant economies of scale, as well as from VocaLink’s investments in value-added services around processing.
“We anticipate that there will be further partnerships with VocaLink, as Swedish banks are active across the region, and this may lead other countries to adopt a similar arrangement,” Lodge adds.
Earlier this year, the Swedish banks sold their communally-owned card processor, Cekab, to Oslo-based EDP Business Partner, while some also participated through subsidiaries in the merger of BBS of Norway and PBS of Denmark to form NETS – Northern European Transaction Services (ECR, March/April, p6).
In April, Visa Europe, which has cleared and settled domestic
POS transactions for all the Swedish banks since 1995, said it
would in addition process authorizations of ATM and POS transactions
later this year on Visa cards issued by Swedbank and Nordea, which
between them account for the majority of debit card transactions
in Sweden (ECR, May/June, p5). 
