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Debit choice mandates should be the next big thing in e-commerce

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As many economies around the world turn toward recession, will more regulatory bodies insist on making debit payment options a priority at checkout? We believe the answer to that is a resounding yes.

Sweden is likely the first of many governments to look out for consumers in this way. However, with the increase in usage of bank transfers and e-wallets, we believe consumer payment preferences are headed in this direction.

The Swedish Parliament has approved an amendment to the Swedish Payment Services Act that is designed to increase consumer protection for online shopping and curb rising household debt among Swedish consumers (currently increasing at a rate of 7% per annum).

The provision, which went into effect July 1, requires PSPs to ensure that their online merchants operating in Sweden prioritize debit payment options over credit-based payment options at checkout. As a result, the online merchant’s checkout page must present debit payment options to the shopper first, when available and ensure that credit options are not pre-selected.

These measures are to make sure that consumers don’t automatically use credit payment options without considering debit options as well; the customer must now actively choose to use a credit-based payment option. According to the legislation, debit options include bank transfers and debit cards. Credit options are credit cards, invoices and installment or pay-later payment methods. Interestingly, for payment cards supporting both debit and credit, the debit and credit options either have to be separated or treated altogether as one credit-based payment method.

It’s important to note that consumers in Sweden have welcomed this announcement. Recent research from Trustly, the company behind the popular Swedish payment method of the same name, found that 70% of shoppers are in favor of the new checkout legislation. According to another finding, 60% of Swedes prefer to pay for purchases immediately with existing funds, so it’s pretty clear that consumers in Sweden want more control of their finances and overall payment experience.

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Debit cards Economy Merchant Sweden Payment processing
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