Retail payments are for relatively small amounts but entail a very large number of payments. These can be made in two ways: directly, for example by paying in cash, using a means of payment, or through a bank account, for example by paying by card, using a payment instrument.
These two types of payment differ in that cash has an inherent value while a card is only a way of initiating a transfer between accounts. If one uses a means of payment, which apart from cash also include different types of prepaid card, no financial infrastructure is needed at the time of the actual transaction. Such an infrastructure is required, however, when using a payment instrument. A payment can only be made using a payment instrument if the financial infrastructure works. Payment instruments include a wide range of retail payments such as credit transfers, direct debits, various forms of card and cheques.
New payment instruments and means of payment have appeared in recent years, for example electronic money (e-money), mobile payment (payment using mobile phones) and new types of prepaid card. The different ways that retail payments can be made are outlined in the figure below.
Use of means of payment and payment instruments
The use of cards has increased rapidly in Sweden in recent years. Between 1999 and 2009, the number of card payments increased by almost a factor of seven, from 255 million transactions in 1999 to 1 697 million in 2009. The value of these transactions has increased almost fourfold, from SEK 174 billion in 1999 to 735 billion 2009.
Previously, cards were used more often to withdraw cash from ATMs than to make payments. In recent years, however, there has been a marked change. In 2005, the transaction value in card payment terminals exceeded the transaction value of cash withdrawals from ATMs. According to statistics from 2009, the number of card transactions in point of sale (POS) terminals was almost six times higher than the number of cash withdrawals from ATMs. In terms of the number of payments, cards are the most widely used payment instrument.
In 2009, the transaction value of credit transfers and direct debits amounted to SEK 11 621 billion, and the total number of such transactions was 1 149 million. Payments of this type are relatively few in number compared, for example, with card payments, but in terms of value credit transfers and direct debits account for 94 per cent of the total transaction value of the account-based payment instruments.
Most credit transfers and account-to-account transfers are now initiated electronically. Usually they are initiated using an online bank or via data files that can be used by companies. A few credit transfers are still paper-based and are mainly initiated by households using credit transfer forms that are posted, or over the counter at a bank.
