Finland Cards And Payments Market

MARKET DRIVERS

High Digital Readiness and Rapid Adoption of Contactless Payments

Finland is among the most digitally advanced countries in the world, and this digital maturity has significantly driven the growth of its cards and payments market. According to Statistics Finland (Tilastokeskus), as of 2023, a large majority of Finns used the internet daily, and smartphone ownership was very high. This widespread digital adoption has enabled a swift transition toward contactless card and mobile payment usage. The Bank of Finland reported that in 2023, contactless transactions accounted for approximately 85% of all domestic card payments under €20, with an average of 150 contactless transactions per person annually. Mobile wallets such as Apple Pay, Google Pay, and local solutions like Nordea’s Mobile Mastercard have seen strong uptake, particularly among urban populations. As cash usage continues to decline—making Finland one of the most cashless societies globally, the cards and payments sector remains on a robust growth trajectory.

Strong Government Support for Financial Innovation and Open Banking

Another key driver of Finland's cards and payments market is the proactive regulatory environment that encourages fintech innovation and open banking. As an early adopter of the EU’s revised Payment Services Directive (PSD2), Finland has facilitated seamless integration between traditional banks and third-party providers, enhancing competition and service diversity. The Finnish Financial Supervisory Authority (FIN-FSA) reported that by the end of 2023, more than 40 licensed fintech firms were actively offering payment initiation or account information services. Leading banks such as OP Financial Group and Handelsbanken have launched open API platforms to support financial startups in developing new digital products.

MARKET RESTRAINTS

Declining Number of Physical ATMs and Cash Acceptance Points

A significant restraint on Finland’s cards and payments market is the rapid decline in physical ATMs and cash acceptance points, which poses challenges for certain segments of the population who still rely on cash. While Finland moves closer to becoming a fully cashless society, this growing divide highlights the need for inclusive policies that ensure equitable access to financial services across all demographics.

Rising Concerns Over Data Privacy and Cybersecurity in Digital Payments

Despite Finland’s advanced digital payment infrastructure, rising concerns over data privacy and cybersecurity are acting as restraints on further expansion of the cards and payments market. A 2023 report by the Finnish Transport and Communications Agency (Traficom) revealed that cyberattacks targeting financial institutions increased by 21% compared to the previous year, with phishing, ransomware, and payment fraud being the most common threats. Meanwhile, the FIN-FSA recorded substantial payment-related fraud losses in 2023. As digital payment channels expand, maintaining consumer trust will require continuous investment in robust encryption technologies, real-time fraud detection systems, and comprehensive consumer education programs.

MARKET OPPORTUNITIES

Expansion of Buy Now, Pay Later (BNPL) Services in E-Commerce

A growing opportunity in Finland’s cards and payments market is the expansion of Buy Now, Pay Later (BNPL) services, particularly within the e-commerce sector. International players like Klarna and (local operators) such as Lainarahasto and Afterpay (before its acquisition) have been expanding their presence in the Finnish market, partnering with major retailers including Stockmann, Elisa, and Verkkokauppa.com. Data from the Financial Supervisory Authority of Finland indicates that BNPL transaction value reached €1.8 billion in 2023, reflecting a 25% annual increase. These services appeal to younger consumers seeking flexible payment options without long-term debt commitments. As regulatory frameworks evolve to accommodate BNPL while ensuring consumer protection, this segment is poised to become a mainstream alternative to traditional credit cards, offering substantial revenue opportunities for payment providers and boosting overall digital transaction volumes.

Integration of Embedded Finance across Non-Financial Platforms

The rise of embedded finance presents a transformative opportunity for Finland’s cards and payments market, allowing non-financial platforms—from ride-hailing apps to real estate portals—to integrate payment and financial services directly into their ecosystems. According to a report by EY Finland, the embedded finance landscape is expected to grow significantly at an annual rate of 15% through 2027, driven by partnerships between fintechs and traditional banks. As demand for seamless, frictionless transactions rises, embedded finance is set to become a key growth driver in Finland’s evolving digital payments landscape.

MARKET CHALLENGES

Increasing Sophistication of Financial Fraud and Identity Theft

Despite Finland’s advanced digital payment infrastructure, the sector faces a growing challenge from increasingly sophisticated financial fraud and identity theft schemes.  Phishing attacks, fake merchant sites, and synthetic identity fraud have become more prevalent, exploiting weaknesses in multi-factor authentication and consumer awareness. The FIN-FSA highlighted in its 2023 annual report that card-not-present (CNP) fraud accounted for over 73% of all digital payment fraud cases. Although major banks like OP Financial Group and Danske Bank Finland have implemented AI-based fraud detection systems, many consumers, especially seniors, are still vulnerable to social engineering tactics.

Regulatory Complexity and Compliance Burden for Fintech Startups

While Finland maintains a progressive regulatory framework for digital finance, emerging fintech startups face challenges related to regulatory complexity and compliance costs. According to a 2023 report by PwC Finland, the average time to obtain a full payment institution license was between 9 to 13 months, with initial setup costs often exceeding €500,000. Startups also face ongoing reporting obligations and capital adequacy rules that can hinder agility and speed to market. While regulation ensures financial stability and consumer protection, streamlining oversight and improving dialogue between regulators and innovators could help accelerate the development of next-generation payment solutions in Finland.