A guide to bank payments in Denmark

Denmark is a payments frontrunner, launching one of the first instant payment systems in 2014. More real-time payments are made per capita in Denmark than anywhere else in Europe with adoption rising fast, despite the pan-Nordic real-time scheme P27 having stalled.

Key facts

• Currency: Danish krone (kr)
• ISO currency code: DKK
• ISO country code: DK
• IBAN example: DK50 0040 0440 1162 43
• Key local schemes: A2A payments, MobilePay, Betalingsservice, Leverandørservice
  
• Settlement agent: Danmarks Nationalbank

Payment infrastructure

Like its Nordic neighbours, Denmark has been quietly innovating both its bank infrastructure and payment methods for decades. The result is a strong ecosystem of local schemes and several options for moving money, both push- and pull-based.

Danes have been making use of instant account-to-account transfers since the launch of Express Clearing (‘Straksclearing’) in 2014 and the mobile bank payment app MobilePay is today used by 92% of the population. Older payment methods like the OCR-based FIK and direct debit schemes Betalingsservice (B2C) and Leverandørservice (B2B) are still widely used though, despite being launched over 40 years ago.

All retail payments in Denmark are settled in the central bank’s Kronos2 system, and cleared in one of three systems: Sum Clearing (‘Sumclearing’), Intraday Clearing (‘Intradagclearing’), and Express Clearing (‘Straksclearing’). These systems, owned by Finance Denmark and operated by Mastercard Payment Services, dictate the settlement capabilities of the main schemes and payment methods available in Denmark.

In early 2023, Danmarks Nationalbank dealt a blow to the proposed real-time, cross-border scheme P27 by opting to prioritise its own modernisation plans instead. Read more on that here.

In order to use one of Denmark’s domestic schemes, payments must be sent in DKK between bank accounts domiciled in Denmark. To move money locally businesses will need to open a DKK account with a bank that operates a Danish branch. Get in touch with us here for recommendations and introductions to bank partners.

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Push-based payments

The main push-based payment types available in Denmark for retail use cases are account-to-account payments, like online bank transfers, and MobilePay. The launch of Express Clearing in 2014 made it possible to execute credit transfers in real time either as an instant account-to-account payment or via other services like MobilePay.

Two older push-based payment types are FIK/GIK and NemKonto payments. FIK/GIK is an OCR-based payment type used mainly for one-off invoices. NemKonto is used mainly for payments made by Danish public institutions in Denmark, such as tax credits or state benefits, but businesses can use it to send money too.

Pull-based payments

Pull-based payments in Denmark are facilitated through the Betalingsservice and Leverandørservice direct debit schemes, both of which rely on the Sum Clearing settlement system.

Betalingsservice is used for B2C direct debit collections and Leverandørservice is essentially its B2B equivalent, used for regular supplier payments.

Bank account numbers in Denmark

• BBAN format: AAAA YYYY YYYY YY
• IBAN format: DKDD AAAA YYYY YYYY YY
• Country code: DK
• Check digits (D): 50
• Bank code example (A): 0040
• Account number example (Y): 0440 1162 43
• BBAN example: 0040 0440 1162 43
• IBAN example: DK50 0040 0440 1162 43

In Denmark, the Basic Bank Account Number (BBAN) – which forms the domestic part of the IBAN – are fourteen digits long and formatted as AAAA YYYY YYYY YY. The first four digits denote the bank code or registration number (A) and the remaining ten digits denote the account number (Y). If the bank code or account number is shorter than the prescribed length, the BBAN is padded with leading zeroes to ensure it remains fourteen digits long.

Danish IBANs include the BBAN supplemented with a four-character header. This header includes 'DK', which stands for the two-letter national bank code from ISO 3166 for Denmark, along with two check digits (D).

Clearing and settlement

All retail payments in Denmark, whether credit transfers or direct debits, are processed through one of three clearing systems: Sum Clearing, Intraday Clearing, or Express Clearing. These systems enable next-day, same-day, and instant settlement respectively. Settlement and the final transfer of money is executed through the real-time gross settlement (RTGS) system for Danish kroner, Kronos2.

These three systems are owned by Finance Denmark, currently operated by Mastercard Payment Services, and ultimately overseen by Danmarks Nationalbank. Denmark-based PSP Nets operated most of this infrastructure until its A2A clearing services were sold to Mastercard in 2021, including Betalingsservice and Leverandørservice

The infrastructure that underpins these core systems is actually set to be phased out in the coming years as part of a project called TARGET DKK. Payments in Danish kroner will migrate to the pan-European platform TARGET Services as early as 2025 and a new system, known as TIPS, will replace Straksclearing as the country’s instant payment settlement scheme. The decision to move ahead with this modernisation program, announced in early 2023, dealt a major blow to the P27 Nordic Payments initiative.

Payment methods

Account-to-account payments

When an individual or business in Denmark makes an account-to-account (A2A) payment, such as an online bank transfer, they can typically choose a desired transfer speed based on the clearing system used: Express Clearing, Intraday Clearing, or Sum Clearing. A2A payments have surged in popularity in Denmark thanks to the introduction of instant transfers in 2014 and the country is a global leader in terms of A2A payment adoption and volume.

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Instant transfers (Express Clearing)

Express Clearing enables credit transfers to be executed between Danish bank accounts as an instant account-to-account (A2A) payment. Mastercard refers to this system on its website as RealTime24/7. 

Individuals and businesses can make an instant transfer from their online banking interface and increasingly in other services too, thanks to the rise of open banking and mobile wallets like MobilePay, which uses Express Clearing for settlement.

Instant transfers were introduced to Denmark with the launch of Express Clearing (‘Straksclearing’) in 2014, a full three years before the unified SEPA scheme (SCT Inst) emerged in 2017, and their usage has increased rapidly in recent years. Four years after its launch, in 2018, the average Dane made around 60 instant transfers per year compared to 10 per capita in Sweden and the UK.

Today, instant transfers make up two-thirds of all person-to-person (P2P) transactions in Denmark. In fact, the number of instant transfers has more than quadrupled since 2016, far surpassing the adoption of equivalent systems in other markets like the UK’s Faster Payments (source: Danmarks Nationalbank).

Express Clearing is an immediate credit transfer system available 24/7, 365 days a year. Clearing and settlement relies on the banks prefunding each transfer by providing liquidity to the central bank ahead of time. There is a maximum limit for instant transfers of 500,000 DKK for both individuals and companies.

Same-day transfers (Intraday Clearing)

Intraday Clearing enables same-day bank transfers with payments settled four times a day at 01:30, 09:00, 12:00, and 14:00. It typically takes a few hours for the amounts settled to be available in the payee’s bank account. Transfers made via Intraday Clearing are made from one account to another and include online banking transfers, salary payments, and disbursements from the public sector.

Intraday Clearing is a net settlement system – meaning the banks settle the difference between payments to and from their customers at fixed times of the day – and is used today for standard credit transfers, including online bank transfers, salaries, and public sector payments. Prior to its introduction in 2013, all credit transfers in Denmark took at least one business day to settle.

Next-day or standard transfers (Sum Clearing)

Sum Clearing enables next-day bank transfers, traditionally known as standard credit transfers, with payments settled overnight at 01:30. Several payment methods in Denmark are settled in Sum Clearing,  including the direct debit schemes Betalingsservice and Leverandørservice and FIK/GIK payments. It’s also used for debit card payments and ATM withdrawals.

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MobilePay

• Year introduced: 2013
• ‍Operated by: Vipps MobilePay
• ‍Max. amount: kr. 10,000 per transfer, kr. 15,000 per in-store payment
• ‍Availability: 24/7, 365 days a year
• ‍Settlement: Real time
• ‍Clearing: Express Clearing
• ‍Fee per payment: kr. 9.00 (approx.)

MobilePay is a mobile payment app launched in 2013 by Danske Bank that today is by far the most popular digital wallet in Denmark. It’s used by 92% of the population and remains free for consumers to use.

MobilePay merged with the Norwegian mobile wallet Vipps in 2022 to form Vipps MobilePay with ownership shared between a consortium of Norwegian banks and Danske Bank.

To use MobilePay in Denmark you must be at least 13 years old, reside in Denmark, have a Danish phone number and bank account, and have a CPR number. Transferring money to someone else with MobilePay requires only their mobile phone number and payments are processed in real time.

MobilePay is used most commonly by individuals to send and receive money. Other use cases include subscriptions, invoices, and paying online or in-store.

• Pros: MobilePay offers real-time settlement, available 24/7. It's relatively easy to administer, plus remittance and reconciliation can be automated.
• Cons: MobilePay transaction amount limits are relatively low, and there's an additional fee charged on top of clearing and bank fees.

FIK/GIK payments

• Year introduced: Pre-2000
• ‍Operated by: Mastercard Payment Services, Danske Bank
• ‍Max. amount: No upper limit per payment
• ‍Availability: Monday to Friday
• ‍Settlement: One business day
• ‍Clearing: Sum Clearing
• ‍Fee per payment: kr. 1.00-1.50

Also called OCR payments, FIK/GIK payments are a paper-based invoice format with a unique payment reference. They enable direct transfers from local banks and are used for supplier invoices in Danish kroner.

A creditor number identifies the recipient. The creditor number is connected to an underlying account number and remains the same even if the account is moved to another bank.

The FIK/GIK code is typically displayed at the bottom of a vendor's invoice. It's a unique string that identifies both the vendor and the invoice in relation to the payment. This code is the only information required in order to make such a payment. An example of a FIK code is +71<000000000000000+00000000< where 71+ denotes the payment type, followed by the creditor identifier and invoice number.

The FIK system is operated by Mastercard Payment Services and there are three types of FIK payment forms with different reference string formats:

• 71 (15-digit OCR)
• 73 (no OCR, free text)
• 75 (16-digit OCR, free text optional)

The GIK Giro system is part of Danske Bank and uses the form types below:

• 01 (no OCR, free text)
• 04 and 15 (both 16-digit OCR numbers)

FIK/GIK payments must be submitted by 18.30 to be credited to the beneficiary’s bank account on the following business day.

• Pros: FIK/GIK payments are a low-cost option relative to credit transfers. Next-day settlement is guaranteed if the payment is sent before 18.30.
• Cons: It requires some manual work to pay through a FIK payment form, making it more susceptible to human error. FIK/GIK transactions may also need to be reconciled manually.

NemKonto payments

• Year introduced: 2003
• ‍Operated by: KMD (on behalf of Digitaliseringsstyrelsen)
• ‍Max. amount: No upper limit per payment
• ‍Availability: Monday to Friday
• ‍Settlement: Same day or one business day
• ‍Clearing: Intraday Clearing or Sum Clearing
• ‍Fee per payment: kr. 1.00-1.50

NemKonto, meaning ‘easy account’ in English, is a system used mainly for transactions between the public sector and citizens or businesses in Denmark. The Danish authorities use NemKonto payments to make tax or VAT refunds, disburse state benefits, and so on.

A NemKonto is a regular bank account that an individual or a business in Denmark designates as their primary account for receiving payments from the state or other registered senders. Every individual and business resident or domiciled in Denmark must have an assigned NemKonto.

The benefit of NemKonto is that it allows participants to use identifiers like civil registration number (CPR) or business registration number (CVR) to process payments instead of having to store bank account information for individuals or businesses in Denmark.

Private businesses have been able to send payments to a NemKonto account since 2008, enabling businesses to pay out money without maintaining payee account information – as long as they submit a valid identifier with the payment. Insurance and pension companies tend to use NemKonto for this purpose. Businesses are limited to sending a maximum of 80 files containing 10,000 payment messages per hour through NemKonto.

NemKonto payments are usually executed as next-day credit transfers using Sum Clearing but some banks also support same-day credit transfers. Note that actual settlement may be delayed since the identifier (CPR, CVR, etc.) is first validated before the payment can be processed.

• Pros: NemKonto is a relatively low-cost option that does not require knowledge of an individual’s or company’s account number.
• Cons: The payee must be notified and have given consent to their data being used in advance of receiving a NemKonto payment. There is a large one-time fee required to connect to the service and an upper limit of 10,000 payment messages per hour.‍

Betalingsservice

• Year introduced: 1974
• ‍Operated by: Mastercard Payment Services
• ‍Max. amount: No upper limit per payment
• ‍Availability: Monday to Friday
• ‍Settlement: One business day
• ‍Clearing: Sum Clearing
• ‍Fee per payment: kr. 2.50-5.00

Betalingsservice is the main direct debit scheme in Denmark used by consumers with more than 95% of Danes using it annually to make recurring payments for things like utility bills, subscriptions, and instalments.

In addition to the transaction cost, which ranges from 2.50 to 5.00 DKK depending on the bill size, businesses must pay a subscription fee of 149 DKK per month to collect direct debit payments through Betalingsservice.

Prior to collecting direct debits, a Betalingsservice mandate (or a ‘betalingsaftale’) must be signed by the customer that includes the full details of the direct debit. Customers can cancel their mandate at any time by contacting the bank. After three days from the cancellation request, no further payments can be collected from the customer’s account. The mandate will automatically expire if no collections have been made for 15 months.

Customers can request a refund no later than on the 7th day of the month when the collection was debited from their account. If a rejection or reversal is initiated after the payment has been made, the funds will be automatically debited from the merchant's account and returned to the customer. However, if the collection has not yet been made, it will be cancelled, and no funds will move between accounts.

Processing cycle

The cut-off for submitting Betalingsservice collections is 09.00 CET, six business days before the first day of the month in which the collection is scheduled. Collections can be made up to three business days before the first day of the next month if a ‘late’ fee is paid.

For example, to collect a payment in May you would need to submit it no later than six business days before the end of April. This makes Betalingsservice impractical for ad-hoc collections.

• Pros: Betalingsservice is a low-cost way of collecting direct debits at scale with a long-lasting recurring payment mandate.
• Cons: The Betalingsservice cut-off times make it unsuited for ad-hoc collections and the payer must sign a mandate in advance.

Leverandørservice

• Year introduced: 1974
• ‍Operated by: Mastercard Payment Services
• ‍Max. amount: No upper limit per payment
• ‍Availability: Monday to Friday
• ‍Settlement: Up to two business days
• ‍Clearing: Sum Clearing
• ‍Fee per payment: kr. 3.00 (approx.)

Similar to Betalingsservice, Leverandørservice enables the automatic collection of recurring payments between Danish bank accounts except it’s used exclusively for business-to-business (B2B) direct debit collections. 

To enter into a Leverandørservice creditor agreement, the creditor must have an active Danish CVR number or tax registration number. Prior to collecting any direct debits, the debtor must give authorization in the form of a mandate.

The debtor can refuse a payment by sending a request in writing for the non-execution of the payment to the debtor’s bank. This applies only to the specific payment without disabling the mandate. 

A refund can be requested for a payment already executed with a written request. The creditor cannot contest this refund request.

Processing cycle

The cut-off for Leverandørservice collections is 16.30, one business day before the desired execution date. When a payment is made before the cut-off, funds are made available to the creditor the following business day.

• Pros: Leverandørservice is a low-cost way of collecting recurring payments from businesses and is easier to manage and reconcile than many other B2B payment types.
• Cons: Leverandørservice is not suitable for immediate or same-day payments and it requires a mandate to be created and signed in advance. Importantly, refund requests cannot be contested.

Looking ahead

Denmark and P27

P27 Nordic Payments (P27) is a joint initiative between six of the largest banks in the Nordic countries aiming to create one of the first fully cross-border instant payment systems in the world. Its stated long-term ambition is to unite all Nordic mobile payment systems into one single cross-border platform, taking over and replacing existing infrastructure and national clearing house responsibilities.

At least that was its ambition at one time. In April 2023, P27 withdrew its clearing licence application from the Swedish Financial Supervisory Authority, leaving the project’s future in doubt. This followed a decision by Danmarks Nationalbank to move ahead with its own modernisation project, TARGET DKK, outside the P27 framework.

While the future of P27 remains unclear, it seems likely that the national banking sectors across the Nordics will follow Denmark’s lead and continue to pursue their own digitisation initiatives for the time being.

Instant payments on the rise

Denmark prides itself on its well-adopted real-time settlement infrastructure and instant account-to-account transfers are increasingly the norm for Danish consumers and businesses. The shift away from batch-based payments is set to accelerate, even without P27, with implications for any business or platform that still relies on manual workflows and legacy infrastructure.

Real-time, continuous settlement requires a greater level of automation for both initiation and reconciliation plus live tracking and new workflows for automated retries and faster approvals. The Atlar platform is built to support real-time payments in Denmark and elsewhere in Europe out of the box. To learn how we can help shift your payment flows to real time, get in touch with us here.

How Atlar can help

With Atlar, you can access all local Danish schemes through a single API and manage payments across all banks from one dashboard. This lets you automate both credit transfers and direct debits from initiation to reconciliation – saving tons of hours that would otherwise be spent manually initiating and tracking payments. 

The Danish payments landscape is undergoing major change. At Atlar we help businesses avoid the costs of building and maintaining integrations to Danish banks with support for real-time payments built-in, making it easy to take advantage of the latest infrastructure developments.

Get in touch 

If you're a company looking to access local schemes and automate payments in Denmark or elsewhere, we'd love to speak with you. Book a demo here.