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Q. Denmark already has a successful instant payment experience. Can you tell us more about it?
Instant payments were introduced in Denmark in November 2014 with the implementation of ‘Straksclearing’. This is an instant payment solution, which enables instant credit transfers 24/7/365 up to a limit of five hundred thousand Danish kroners (equal to approximately sixty-seven thousand euros). The solution is targeted at both citizens and firms.
Straksclearing is based on prefunding, where banks provide liquidity at the Danish National Bank in advance. The actual settlement in the Danish National Bank happens in six cycles during the day.
The customer will experience a transfer of funds from account to account within a few seconds. Many online banking solutions offer instant transfers as default for credit transfers, while other payment service providers (PSPs) charge a small fee. Most online banking solutions are available both on a computer and a mobile device. But most Danes will make their instant payment using the MobilePay app hosted by Danske Bank with the participation of most of the Danish banking sector.
Q. Based on this experience, what advice could you give European PSPs who are getting ready for the SCT Inst scheme? When does Denmark plan to adhere to it?
First, you have to understand that instant does mean instant. The transfer has to take place within seconds, and the banks need to be able to process this in their systems. Also 24/7/365 means no closing for bank holidays or long maintenance windows.
Second, be prepared to start providing your customers with instant services that are user friendly and (virtually) free of charge, as they will quickly expect this to be the new norm. And there will be a whole range of uses that you haven’t anticipated.
Third, if you cooperate within the sector in providing user-friendly products you will get widespread usage very fast. And if you are not ready to provide this kind of service to your customers, they might look for other providers.
Q. Finally, a broader question. In Europe, Danes are seen as the frontrunners for anything digital, including payments, but more generally in the use of digital technologies, especially in the public sector. What is Denmark’s secret for succeeding in these areas when many other European countries appear less advanced?
The very basic foundation for the widespread trust in digital technologies in Denmark is the CPR number introduced in 1968, a unique identification for all residents of Denmark. It is operated and supervised by the Ministry of the Interior.
The CPR number is used for all dealings with the public sector (e.g. tax, land registry, health and social benefits) as well as a number of commercial companies, including banks and telephone firms, where unique and safe identification is needed.
Using the CPR number, which guarantees the identity of any Danish resident, a digital signature, NemID, was developed and introduced in July 2010 as a public–private partnership. The financial section was behind the introduction of the digital signature from the very beginning, having for some time worked to develop a common secure sign-on mechanism for e-banking solutions. The banks use the NemID as identification in their online banking solutions, and a new version called MitID developed as a public–private partnerships is on its way.