Running a business in Sweden means entering one of the most advanced payment environments in the world. It’s expected that businesses in Sweden will accept digital payments, which are made possible by an agreement called a merchant bank contract. Below, we’ll explain how these agreements work in Sweden, what they cover, why they matter, and what to look out for before you sign.

What’s in this article?

• What is a merchant bank contract in Sweden?
  
• Why do Swedish businesses need a merchant bank contract?
  
• What terms and conditions are typically included in a Swedish merchant bank contract?
  
• What can you negotiate when you set up a merchant bank agreement?
  
• What legal protections do businesses have under Swedish financial regulations?
  

What is a merchant bank contract in Sweden?

In Sweden, a merchant bank contract – often called a merchant agreement – is the formal, legal document that makes it possible for your business to accept digital payments. It’s an agreement between a merchant (your business) and a licensed acquiring bank or payments service provider (PSP) that outlines the terms under which your business can accept and process electronic payments. This connects your payment flow to Sweden’s financial infrastructure, including the Swedish payment system RIX.

Once active, the contract allows you to accept the following payment methods:

• Credit and debit cards

• Mobile payment apps such as Swish

• Digital wallets such as Apple Pay

• Settlement of funds to your Swedish bank account

A merchant bank contract also requires you to meet regulatory obligations such as:

• Know Your Customer (KYC) checks

• Adherence to Anti-Money Laundering (AML) regulations

• Support for Strong Customer Authentication (SCA) as mandated by the revised Payment Services Directive (PSD2)

• Compliance with consumer protection rules

In practice, almost all transactions in Sweden happen digitally. Without a merchant agreement, your business cannot access the dominant payment methods. Even traditionally cash-based businesses, such as cafés and taxis, have largely migrated to Swish or card-based systems.

Why do Swedish businesses need a merchant bank contract?

Sweden has moved faster than almost any other economy towards eliminating cash. Cash acceptance has become so rare that many physical retailers no longer accept it. At this point, refusing to accept digital payments severely limits your customer base and excludes you from mainstream commerce. A merchant contract connects your business to the payment methods that move money in Sweden today: card networks, Bankgirot, and Swish.

Under Swedish law, any entity that provides payments services with a turnover of €3 million per month or more needs authorisation from Sweden’s financial regulator, Finansinspektionen (FI), to operate as a payment institution. Companies at that threshold have to either become a payment institution or work with one through a merchant bank contract. Businesses typically don’t have the infrastructure to process payments on their own, which means the only path to accepting card, digital wallet, or Swish payments is through a licensed acquirer or PSP.

What terms and conditions are typically included in a Swedish merchant bank contract?

The merchant contract formalises your business’s relationship with the payment institution and documents your responsibilities as a participant in Sweden’s regulated financial system. When you sign a merchant contract, you’re entering a regulated relationship. Your acquirer or PSP is legally responsible for enforcing a wide array of compliance rules, and they will pass on many of those obligations to you.

Specifically, the contract:

• Defines what payment methods you’re allowed to accept (e.g., credit and debit cards, Swish, direct debit)

• Specifies how fees are calculated, including interchange fees, network fees, chargeback fees, and acquirer markups

• Sets your fund settlement schedule and currency

• Assigns responsibilities regarding compliance with the Payment Card Industry Data Security Standard (PCI DSS), dispute handling, and fraud prevention

• Establishes your obligations under Swedish and EU law, including PSD2 and the General Data Protection Regulation (GDPR)

• Describes termination rights for both parties

Banks are required to continually monitor your activity and might periodically revisit your KYC profile or transaction data. These are legally mandated reviews under AML and Countering the Financing of Terrorism (CFT) frameworks.

Once you apply for a merchant account, banks and PSPs must perform customer due diligence before they activate your service. This involves:

• Verifying the identities of your company and its owners

• Reviewing your business model, transaction volumes, and source of funds

• Conducting ongoing monitoring for suspicious activity, including unusually large payments, high chargeback rates, and transactions linked to sanctioned jurisdictions

The merchant bank contract signals to your acquirer or PSP that you are opting in to a framework of regulated financial conduct.

What can you negotiate when you set up a merchant bank agreement?

Merchant agreements in Sweden are fairly standardised, especially regarding legal and compliance terms. But there is some room to negotiate in the following areas.

Fee structure

You might be quoted a flat rate up front, but high-volume businesses can often negotiate lower processing fees or get volume-based discounts. It’s worth asking for a detailed list of exactly what fees you’ll be charged so you can see where there’s room to negotiate.

Settlement timing

If you’re processing at scale or need better cash flow timing, some providers will offer faster settlements – sometimes even within the same day – especially if you have a good risk profile.

Rolling reserves

Some acquirers hold back a percentage of your funds as a buffer against chargebacks or fraud. If you have a stable transaction history, you can often negotiate down that percentage or get it removed altogether after a review period.

Hardware and integration terms

If your contract includes card terminals, point-of-sale (POS) hardware, or custom integrations for application programming interfaces (APIs), you can negotiate terms for equipment replacement, support availability, and onboarding assistance. These can impact both cost and downtime for your business.

Multi-currency handling

If you sell internationally, clarify how foreign currencies are processed. Some acquirers charge steep conversion fees or use unfavourable rates. Ask whether you can settle in multiple currencies or lock in foreign exchange margins.

What legal protections do businesses have under Swedish financial regulations?

Swedish businesses operate within a tightly regulated payment environment, which shapes how acquirers and PSPs are allowed to treat them. If you’re doing business in Sweden, it’s worth understanding the specific legal and structural protections available to you.

PSD2 obligations

Your acquirer must clearly disclose all fees, including interchange, currency conversion, and acquirer markup. If you process payments in multiple currencies, you’re entitled to know the exact rates and costs.

Before you sign a merchant contract, the provider must give you detailed terms, including termination conditions and settlement timelines.

AML regulations and provider due diligence

Your acquirer is required to maintain accurate records of your business and conduct ongoing monitoring. This protects you from being pooled with high-risk or non-compliant businesses, which could lead to scrutiny from regulators or card networks. If you’re operating within a clean, compliant business model, the AML framework helps insulate your funds from risk-based interruptions caused by association with bad actors.

Oversight from Finansinspektionen

FI regulates all licensed acquirers and PSPs in Sweden. Licensed institutions are subject to regular audits, capital requirements, and operational risk assessments. If they mishandle settlements, impose unfair fees, or breach PSD2 obligations, FI can sanction them or revoke their licences.

If your provider fails to follow its own contractual terms or breaches Swedish financial law, you can file a formal complaint with FI.