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A peer-to-peer payment service from Norway’s DNB bank has shot to the top of the app stores of both Apple and Google.
Headquartered in Oslo, DNB ASA is Norway’s largest financial services group with total combined assets of more than NOK1.9tn.
With the launch of the app Vipps, DNB has taken clear direction from the success of Danske Bank’s MobilePay, which is used regularly by more than three million Danish residents.
Like the Danish app, Vipps allows customers of any Norwegian bank to use the service. Once they have downloaded the app, users are required to link together a Norwegian mobile number, debit card, bank account and their national identity number to use the service.
The Vipps launch marketing claims the app allows users to simply send money to a phone number, without needing to know the recipient’s bank account details. The launch targets groups of friends who wish to easily split costs, such as restaurant bills and taxi fares.
In reality, unless the recipient has the Vipps app installed and setup, they receive a text message informing them of the waiting payment.
Payment limits complicate the process. Once users send more than NOK22,000 (£1,800) or receive more than NOK8,000 (£650), they are required to login using the national BankID system. There is an annual limit of NOK100,000 (£8,150) for sending and receiving money.
“Use of our mobile banking service has increased by 100% over the past two years, so we know our customers are keen to use digital services,” said DNB’s marketing director Rune Garborg.
“As we move into this space it’s very important for us to enable easier payment systems for our customers to remain a market leader. We see what MobilePay has done for Danske Bank and clearly that's a big inspiration for us. Danske Bank’s app cemented its market position in a short space of time,” he said.
There is nothing new about Vipps from a technology point of view, but up until now no company has managed to get such technology in the hands of enough Norwegians to keep pace with Denmark. The biggest domestic competition – at least until Apple and Google put down roots – is mCash.
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Oslo startup mCash has supported peer-to-peer payments for years, and also offers mobile payments at a limited number of merchants. Despite an agreement to implement support for mCash into IT company Evry’s core banking system, they have struggled to gain the critical mass of users necessary to attract merchants onto the system. Just a handful of bricks-and-mortar stores in Norway support the app.
The early signs are positive that DNB will succeed where others have struggled.
More than 270,000 people downloaded Vipps since its launch at the beginning of June 2015, with around 180,000 of those going on to register for the service. The priority for DNB is to reach a critical mass of users as quickly as possible, so the intensive marketing campaign will continue over the summer.
The Vipps development team includes DNB’s lead outsourcing partner Tata Consultancy Services (TCS), with design support from Nordic consultancy firms KnowIT and Anti. The future direction of the app will be determined over the coming year, but some functionality is already in the pipeline.
“This summer we will add the ability for users to request payment from others. In the near future, we expect to make the service available to merchants too,” says Garborg.