Nets Shares Drop as Nordea Teams Up With Danske on Payment App

  • Nets stock declines as much as 6.5% to lowest since IPO
  • Danske invites other Nordic banks to join MobilePay network

Nordea Bank AB has dropped the electronic payment system it was developing with Danish banks and will instead team up with its main rival in Scandinavia, Danske Bank A/S, to use its more popular MobilePay product.

The development is a blow to Nets A/S, a Nordic payment systems provider that did an initial public offering last month. Its shares sank as much as 6.5 percent on Thursday, the most since its IPO, to trade 16 percent below the Sept. 23 price when trading started. At no point since the public sale have Nets shares traded lower.

Nordea’s customers in Denmark and Norway will be offered MobilePay and the bank has pledged to invest in the system, the two lenders said in a joint statement on Thursday. Nordea clients can, for now, continue using Swipp, a system Nordea had developed with more than 70 local banks.

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“MobilePay is known today for its user friendliness, and we want to contribute to making the solution even more widely used and to continuing the development of MobilePay as an innovative digital payment platform,” Peter Lybecker, chief executive officer of Nordea’s Danish unit, said in the statement.

With Thursday’s deal, Danske can all but remove the payments it makes to Nets for Nordea’s current customers who use MobilePay because those transactions no longer have to go via the payment provider, Peter Kjaergaard, a spokesman for Danske, said by phone.

“Nets will lose some transactions as Nordea leaves Swipp and joins MobilePay,” Michael Friis, an analyst at Alm. Brand Markets in Copenhagen, said by phone. “The immediate financial impact will be limited for Nets, but the negative signal value is strong and it creates some uncertainty in the longer run on how Nets will perform amid the success of MobilePay.”

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Nets itself says its main takeaway is that the technology is in demand, meaning the company still has plenty of opportunities to grow.

“The partnership between Nordea and Danske Bank on MobilePay shows that peer-to-peer payment solutions are on the advance,” Karsten Anker Petersen, a spokesman for Nets, said in an e-mailed reply to questions. “It makes the overall market for digital payments larger, and Nets is providing part of that infrastructure.”

Danske said it expects other banks in Denmark as well as in Norway and Finland to join the MobilePay partnership “in the coming quarters.” The lender is converting MobilePay into a subsidiary that will no longer carry the Danske Bank brand.

MobilePay is the third-most used app in Denmark and has been downloaded on 9 of 10 smartphones. Danske expects MobilePay will reach 180 million transactions this year with a volume of 40 billion kroner ($6 billion).

Danske and Nordea were previously among the owners of Nets before a consortium that included private equity funds Advent International Corp. and Bain Capital paid 17 billion kroner to buy the payment provider in March 2014. The IPO last month gave Nets a market capitalization of 30 billion kroner, of which about 4.5 billion kroner now is lost.

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