Scared of the financial crisis and reminded by the pandemic that the world is an uncertain place, Iceland’s central bank wants new domestic retail payment instruments that will reduce its reliance on the global card giant.
The virtual disappearance of cash in many Nordic countries has emerged from a wave of innovation in retail payments. In Iceland, the effort is primarily driven by national security, as the country’s financial meltdown in the wake of the 2008 financial crisis exposed the risk that the global credit card giant could block credit cards issued by Icelandic banks.
Deputy governor Gunnar Jakobson said in an interview that Reykjavik-based Sedlabanki wants to add a solution to the interbank system so that banks can provide customers with retail payment instruments for seamless transactions with shops and service providers. He gave the model name to Swedish mobile payment app Swish.
“The primary driver is national security so that we have a domestic instant payment solution in case Visa and MasterCard for some reason cannot or do not want to serve the Icelandic market,” Jacobson said.