Payment instruments

Today, payment instruments, such as payment cards, are used for most consumer and retail payment transactions. The most frequently used payment instruments in Denmark are described below.

When goods and services are bought from retailers or online, money must be transferred from the consumer to the store. This can be done in cash, i.e. using banknotes and coins, or via a bank deposit. Both are financial claims – cash is a claim on a central bank, such as Danmarks Nationalbank, while a bank deposit is a claim on a bank. 

Transfer of a bank deposit takes place using a payment instrument, e.g. a payment card. A payment instrument is used to initiate a payment and is typically linked to an account with a payment service provider. In other words, it can be seen as the account holder's access key to the account.

Today, payment instruments are used for most private-sector payment transactions in Denmark. The payment instruments most frequently used are described below. They are all cleared and settled via the Sum Clearing, the Intraday Clearing and the Express Clearing retail payment systems. In addition, a number of new types of payment instruments are described in the Payments Council's report on new payment solutions (in Danish).

On behalf of the Payments Council, Danmarks Nationalbank publishes statistics of the use of the payment instruments listed below in Denmark. The statistics can be found here (in Danish).

Debit card
A payment card can be used for withdrawing cash and buying goods and services. The amount is debited directly from the cardholder's bank account. The Dankort is an example of a debit card.

Credit card
A payment card that can be used for buying goods and services and possibly for cash withdrawals on the basis of an approved credit line. For payments by credit card, the money is not withdrawn from the card holder's account until some time after the payment, typically once a month.

Betalingsservice (direct debit)
Direct debit is a way for the consumer to pay recurring bills. Once the consumer has registered a bill for payment via direct debit, the creditor always initiates the future payments of the same bill.

Credit transfer
A payment initiated by the payer (debtor) whereby money is transferred from the payer's to the payee's (creditor's) bank account.
Inpayment form
The joint inpayment form can be used to pay bills at the post office, at the bank and via online banking. The inpayment form makes it possible to transfer payment directly to the creditor's bank account.

A cheque is a written order via which the issuer of the cheque by his signature instructs his bank to authorise another person to withdraw the face value of the cheque from his account.