New Banking Circle white paper examines potential from improved Danish Krone direct clearing

The latest white paper from tech-first Payments Bank, Banking Circle – Payments without barriers: Focus on Denmark – examines the breakthroughs in clearing and settlement that are set to make payments faster and cheaper for businesses trading with Denmark. However, it also highlights that there are still barriers to overcome. A survey from the Danish Central Bank^[1] put the total cost of payments in the country at around 0.8% of GDP, with business-to-business transactions accounting for 27% of this total, or DKK 4.2 billion. In common with other markets, settlement in and out of DKK can also be time-consuming, taking between two and five days, depending on the currency pair and banking relationships involved.

Other key findings include:

• Denmark has the second highest electronic payments penetration rate in Europe^[2]
• The total volume of digital commerce (through internet and mobile channels) grew by almost 30% in 2020 alone^[3]
• 37% of companies transacting in and out of Denmark are looking to improve their trade settlement times, compared to 27% across Western Europe^[4]

“Our new white paper suggests there are a number of barriers to trading with businesses and consumers in Denmark, despite the obvious potential of the market”, said Anders la Cour, Chief Executive Officer, Banking Circle Group. “And the challenge is not isolated to Denmark alone. Across Europe, many markets are experiencing low cross-border transaction volumes in their domestic currency due to high costs and slow settlement times.

“However, there is a clear opportunity available for organisations that want to tap into the market opportunities in Denmark – the Danish National Intraday Clearing System: Intradagclearing. This enables non-Danish Banks, PSPs and marketplaces looking to do business with Denmark to pay out and collect payments faster and at lower cost.”

Banking Circle joined the scheme in 2021 to help non-Danish Banks, Payment Service Providers and Marketplaces increase access to the Danish market for their e-commerce customers. Transactions occur as if they were local payments, reducing friction and delays. Cutting out the traditional reliance on the slow and costly international correspondent banking network, the new solution is helping cross-border e-commerce businesses to accelerate their growth within Denmark.

“The combination of our Danish Central Bank account and direct clearing access, integrated into our cloud-based payments infrastructure will make payments into and out of Denmark faster and cheaper for all kinds of companies”, continued Anders la Cour.

The Banking Circle Payments on Behalf of (POBO) and Collections on Behalf of (COBO) solutions allow businesses to deliver payouts and collect payments in their own name, offering lower costs than traditional cross-border payments in Danish Krone as well as 24 other key currencies. These products can improve customer relationships for Financial Institutions, processing payments in their name, as well as making it possible to collect funds into virtual bank accounts using their name. They also make it easier for individual businesses to better manage their payments reconciliation and increase payments acceptance.

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Find out more here.