EP121 · Economy · first published 2022-02-13
Payment Systems | Monika Liikamaa, Kirsi Larkiala | Neuvottelija 121
Enfuce founder and co-CEO Monika Liikamaa and finance-sector all-rounder Kirsi Larkiala explain to Sami Miettinen what actually happens behind a card payment. Liikamaa sets out why debit and credit are entirely different products, how a payment travels from the terminal through the acquirer and the card scheme to the issuer, and why a closed ecosystem such as the S Group is the cheapest way to pay. Larkiala argues the Nordic P27 is mostly a soft landing for banks that failed to make strategic decisions in time, and both unpack why payment traffic has never made money in Finland. The episode also covers the risk a central bank digital currency poses to commercial banks, the security of supply of telecom connections, the public-cloud breakthrough achieved with the financial supervisor, and Enfuce's road from bootstrapping to a 45 million growth round and a listing target. Published 13 February 2022.
Payment Systems | Monika Liikamaa, Kirsi Larkiala
Summary: In episode 121 of the Neuvottelija channel, Sami Miettinen interviews two guests who look at payments from different directions. Monika Liikamaa founded Enfuce and runs it as co-CEO; she was part of building S-Pankki and came into banking from the telecoms side. Kirsi Larkiala heads the Finnish Fintech Ecosystem and has appeared on the show before. The conversation starts from the basic thing few people can actually explain — what happens during a card payment and in what order — and moves from there to why paying has always been too cheap in Finland, why Nordic banks are late, and why adopting the public cloud required someone to go and knock on the financial supervisor’s door. It also contains an unusually direct account of how a small Finnish fintech negotiated a term out of Amazon and Microsoft that neither wanted to give. Published 13 February 2022.
The guests: two routes into the core of payments
Monika Liikamaa is a Sweden-Finn — born in Sweden to Finnish parents, holder of both passports — and came to payments by a detour. Before banking she was an international network planner and IT manager at Telia, which left her with a view that recurs throughout the episode: the real risk in infrastructure is rarely where people look for it.
On the banking side she helped build S-Pankki — the bank launched on 15 October 2007 — and worked on card systems at Crosskey, the IT company of the Ålandsbanken group. She founded Enfuce together with Denise Johansson.
Kirsi Larkiala’s background is at SEB and other Nordic banks. Today she runs a fintech ecosystem whose job is to bring together incumbents — banks, wealth managers, pension companies, insurers, accounting specialists — and the fintechs that could solve their problems. Larkiala appeared on Neuvottelija earlier in episode 3, Negotiating in the financial sector.
Debit and credit are different products, not two settings of the same one
Miettinen opens by admitting the stereotype: he uses debit because credit is “for wimps” and leads to debt problems. Liikamaa’s answer dismantles the framing entirely. The question is not about strength of character but about where the money comes from, when it is available, and who issues it.
On the credit side the card is issued by the lender. That brings with it the scheme built by Visa and Mastercard, which defines who is liable, to whom, and how the customer is protected. Liikamaa’s practical advice is blunt: if you are buying something from a Brazilian web shop late in the evening, use credit.
The example is concrete. When an airline went under in the mid-2010s, those who had paid by credit got their money back immediately, while those who had paid by debit had to wait — if they ever got it. Within European e-commerce PSD2 protects the debit buyer too, but protection is not the same thing as a card company’s chargeback.
How a payment really travels through the system
This is the most instructive part of the episode, and Liikamaa walks through it step by step. The card does not “fly to the bank” — it travels a route:
- The payment terminal reads the card.
- The acquirer receives the transaction and looks at the first digits of the card number.
- From those it deduces the issuer and sends the transaction to the card scheme (Visa or Mastercard).
- The scheme routes it to the issuer, the bank that issued the card.
- The bank’s processor — Nets, Nexi or the bank itself — books the transaction to the account.
The card number here is an address, not an identifier. Liikamaa’s analogy: the primary account number is like an IP address, telling the system where to go and fetch the money.
The account system is the heart, everything else is an interface
From this follows the episode’s load-bearing idea. The money has to sit on some account, and the account management system is the heart. Everything else — a plastic card, Apple Pay, Google Pay, MobilePay, a virtual card — is merely an interface to that same account.
Enfuce takes on two parts of this chain: it enables card issuing and handles clearing and settlement. Liikamaa compares it to the central banks’ Target 2 system — the same function at a different level.
Closed loop: fuel cards and the S Group
Not all payments travel via Visa or Mastercard. ST1, which also owns the Shell brand in the Nordics, issues its own fuel cards. The number series starts with a seven, the terminal recognises it and does not send it to a scheme at all, but straight to Enfuce. This is a closed loop — a small private network.
Its limits show immediately: an ST1 card will not work at a Swedish filling station unless it carries a Visa or Mastercard brand, because other terminals do not read closed loops.
The S Group is the most complete realisation of the same idea in Finland. When you pay with an S-Pankki card at an S Group outlet, the transaction goes straight from the terminal into the card system — it never has to be routed outside the group. Liikamaa puts it this way: you can pay for a relative’s funeral, a hotel night, the grocery shop and the restaurant with the same green card, and the entire money flow stays inside the group. It is by far the cheapest and easiest way to pay — and that is why S-Pankki was founded in the first place: to save the cost of payments in the group’s own business. Within two years it had become a business in its own right, taking on some 30,000 customers a month.
Larkiala asks the fair question of why other chains with large customer flows do not do the same better. The answer is not technical but conceptual: nobody managed to build the loyalty concept.
When you need a banking licence
The line is clear. If you issue a deposit account — or in fact any account carrying debit — you need a banking licence. Most neobanks do not have one; they hold only an electronic money licence, which entitles them to store money the customer already owns.
Enfuce itself holds a licence and can issue co-branded cards, but Liikamaa draws one line firmly: they do not take credit risk. If you want to issue credit cards, you need your own licence — “it’s your own backside on the line”. Enfuce provides the capability, not the risk.
PSD2 did not happen the way it was written
Larkiala’s verdict on the payment services directive is severe. In principle PSD2 should have opened the market, but Nordic banks — including those operating in Finland — have not implemented it the way the directive says. There are names of “every colour” in the market that got the implementation wrong, and that makes entry hard for a newcomer, because the standards and rules have not been followed.
The same verdict returns for Open Banking, and Liikamaa’s summary is the episode’s most quotable line: “good idea, poor execution” — and the reason lies in the business model. If opening up earns you nothing, it will not be done properly. Larkiala adds a Finnish speciality: the instinct is to wall oneself in and tell competitors nothing, which she considers a genuinely old-fashioned perspective, because it prevents seeing the new business models that opening up could bring.
P27 is a soft landing for the banks
Larkiala has been in the financial sector long enough to have seen P27-style pan-Nordic projects “under all sorts of names and all sorts of projects”. Her assessment is ultimately merciful but not flattering:
P27 is a soft landing for those Nordic banks that have not been able to make strategic decisions in time. Everyone ought to go straight to what needs doing and choose their partners, but not everyone is capable of it.
The structural problem, in her view, is what the project actually handles: payments denominated in SEK, DKK and NOK, of which only one country — Finland — is in euros, at a time when paying is already a global game. And the Swedes are not in it, because they have Swish. Similarly OP gave up Pivo only late in the day and then joined the Nordic project.
Bank decision-making: Apple Pay and “we are not a bank, we are an IT house”
Larkiala’s example of bank slowness is precise. When Apple Pay came to Finland, Nordea came first. OP announced in the press the next day that it would hold on to Pivo and keep developing it — and only years later came the decision that developing Pivo in-house was not worth it after all. That time could have gone into the next stage of development.
The second example is Liikamaa’s: Nordea reportedly said in 2017 that it was not a bank but an IT house with a banking licence. Her judgement is harsh — anyone can be an IT house, not anyone can be a bank. A bank’s core competence is risk management, and that is where the focus belongs. Larkiala crystallises the same as a wish: “What I hope is that banks would learn how to buy.”
Cash, security of supply, and the risk being watched from the wrong direction
Liikamaa was heard by parliament at the start of the pandemic, and the question was whether the world was ending. Her view on cash is clear: physical money is around 10 per cent in the Nordics, and “will disappear” is the wrong term — “ought to disappear” is more accurate, given all the stupid things that can be done with physical money.
But then comes the episode’s most important observation on security of supply, and it comes from a former network planner. In Finland a bank of a certain size must be able to bring its infrastructure back into the country within 24 hours if it runs in a cloud outside Finland’s borders. In Liikamaa’s view the focus is on the wrong thing:
If the telecom connections are broken, it makes no difference at all which country the account runs in. A couple of excavators in strategic places and certain banks start to cough.
The location requirement is easier to supervise but a smaller risk than the sea cables and backbone connections, whose protection is a matter for states.
Central bank digital money competes for deposits
Miettinen makes the episode’s clearest numbers-based argument, and it concerns CBDC. His worry is not whether digital money is local or global, but that it competes for commercial banks’ most important funding source, namely deposits:
- European bank balance sheets total roughly 40,000 billion
- Of that, around 20,000 billion is deposits — banks fund about half their operations with deposits
- Cash in circulation is around 1,300 billion
Cash therefore does not compete much with the account channel. But if a central bank enters with a few thousand billion and sets no account limits, it could destroy the commercial banking system by accident. Miettinen’s own preferred solution is parallel-currency thinking: smaller, country-specific monies that would not add to the euro system’s systemic risk.
Larkiala points out there is nothing new about limits as such — for banks’ institutional customers the limits are effectively infinite, and the whole structure rests on trust. Her point is that the criteria are worth revisiting, because the world is not the one of 10 or 15 years ago.
The competitive field, and why the European model is a different game
Enfuce belongs to a group Liikamaa calls challenger processors, and there are few of them in the world: the American Marqeta, the British GPS, and in part Railsbank and the German Solarisbank. On the traditional side the same work is done by TietoEVRY, Nexi, Nets and Worldline — OP uses the Italian Nexi, Nordea at least partly Nets, and the POP and savings banks also Nets.
This leads to the episode’s sharpest economic argument. Marqeta listed at a 16 billion valuation, but 70 per cent of its revenue comes from a single customer, Square. The model rests on interchange income, and there is a geographical problem with that:
In the United States interchange is 2–4 per cent. In Europe it is 0.1 — essentially zero. It does not even cover costs.
The same applies to Stripe, at the other end of the chain: the issuer puts money into circulation, the acquirer receives it, and Stripe is on the acquiring side. Enfuce is an issuer processor. The customer boundary is explicit: for anyone issuing fewer than 20,000 cards a year, something like Stripe is the better option.
Liikamaa also says outright that essentially nobody makes money on card issuing itself any more — it enables daily payment. The money has moved towards embedded payments: paying is pushed into the buying process so that you do not notice it. You drive, click to park, pay and leave.
Why payment traffic has never made money in Finland
Larkiala’s 30-year general comment is the single best explanation in the episode, and it is structural rather than moralistic. Finland has always been in the worse position, because the market has had very powerful large customers using their bargaining position hard, driving down cash management and payment traffic prices. Those prices never covered their costs.
Why did banks accept it? Because the calculation was a different one. A customer who keeps money on an account and transacts from it uses six to eight times more of the bank’s other services — interest rate hedges, currency hedges, commodities products, wealth management. Payment traffic was a loss leader, not a source of income.
The result: prices in Finland are lower than anywhere else in the Nordics, and in Nordic banks Larkiala has been told that “Finland is such a difficult country, everything is so cheap there”. And then, she adds, people complain that the kit is poor.
The public cloud, and the door someone had to go and knock on
Enfuce’s decisive choice was to build on top of the public cloud. Liikamaa’s reason was not visionary but practical: “It was just bloody cheap.”
The comparison comes from her own history. In the early 2000s at Telia, virtualisation meant big Unisys iron and millions; at S-Pankki a test system alone cost half a million, and on top of that you needed two data centres, people to install it and a six-month lead time. The public cloud is still physical machines — it is just sold pay as you go.
The problem was regulation, and here is the episode’s best negotiation story. The licence application required that the financial supervisor have an on-site visitation right. In a cloud service there are supposedly no physical data centres, so there can be no on-site inspection — and the locations are secret information that AWS and Microsoft cannot disclose.
The solution was negotiated, not technological: Enfuce committed that if someone ever needs to visit for good reason, Enfuce pays the costs and the cloud provider sends someone to show the sites. The term was written under a tight NDA and a financial addendum, and signatures were needed from the provider’s most senior level so that it could be attached to the payment institution licence application. It went through.
Liikamaa also credits the financial supervisor, and Larkiala thanks her on behalf of the whole market — mentioning that OP’s Timo Ritakallio and colleagues went knocking on the same doors. Today the cloud is business as usual for everyone.
Miettinen’s comment on this is the episode’s funniest: “Jeff Bezos sold AWS cheap, I can’t believe it.”
The funding path: from bootstrapping to 45 million
Enfuce’s funding history is unusual for a fintech, and Liikamaa tells it plainly:
- The first two years were bootstrapped. They did enough consulting to bring in what was needed each month to keep going, until the first deal came. Liikamaa told her co-founder it would take blood, sweat and a hell of a lot of work, but they would not have to put their own homes on the line.
- The first outside financing was debt, not equity: a senior loan from Nordea and a junior loan from LähiTapiola, plus Finnvera arrangements. The company was already in the black at that point.
- The first VC round brought in Maki.vc, and through it Tencent came with five million. In 2020 a further 5 million was taken from Tencent as a COVID precaution.
- 45 million euros from Vitruvian Partners for growth.
The money sits at Nordea, and Liikamaa makes a notable distinction there: Nordea as a bank does not know how to buy decent systems, but its growth team has been excellent — and that is not those people’s fault, it is a different crowd.
Choosing Vitruvian was not accidental: the same investor took both Marqeta — Enfuce’s competitor — and TransferWise, today’s Wise, to the stock market. The target is an IPO within four to five years. Liikamaa admits the point of the target is to be big enough: she has always wanted to build a company that changes things.
Marketing is the thing Finns cannot do
The most self-critical part of the episode concerns sales and marketing. Enfuce’s early product names did not work: “card solution as a service” — nobody understood it. “Payment services” — worse still, it brought in all sorts. The second funding round was painful: 127 investors were taken through it, and none really grasped what the company did.
Only about eighteen months before the recording was the offering packaged as Card as a Service, a marketing director hired from Vincit and through them a high-calibre team. After that it took off. Liikamaa’s diagnosis of her own country is direct: “We are typical Finns. Our kit is finished to the last detail, but we cannot market.”
Larkiala confirms the same with a Swedish comparison. Swedish fintechs lead with marketing and build the technology afterwards; for Finns it is the other way round. The comparison figure is stark: at the same time Enfuce raised 5 million from Nordea and LähiTapiola, the Swedish Tink raised 56 — and put nearly all of it into marketing. Tink was at every single conference and everyone was talking about Tink.
Miettinen unpacks the SaaS logic for listeners: the gross margin of the base business can be as high as around 90 per cent, because the cloud costs next to nothing and code already written needs little maintenance — but growth demands enormous spending on customer acquisition, which makes the whole thing look loss-making from outside. That 90 per cent engine is not usually reported separately.
Who will build the SME Klarna
The last part of the episode circles one question: who in Finland will build for small businesses what Klarna built for consumers?
Liikamaa’s and Larkiala’s shared view of Klarna is entertainingly contradictory — both think the product is poor (Klarna is “still pretty crap”, the flood of email is incomprehensible) but concede that nothing better has appeared, which is why it keeps going. That is exactly the gap someone could fill.
Several candidates are named. Fellow Pankki — whose starting point was the transfer of Evli’s banking operations — is setting off from lending, and Larkiala considers that the right place to play: a one-stop shop for SMEs. OP, Nordea, Accountor or Talenom could equally well have done it. Miettinen mentions that Fellow’s board includes his investment banking friend from his London years, Tero Weckroth, who at the time of the Fellow bank news had asked on LinkedIn — even offering to pay — for research on how to make a digital bank profitable. Larkiala did not care to raise her hand, because the answer is genuinely hard; and from the fact that there is no answer yet, she suggests, something can be inferred about the bank’s origins.
Larkiala’s point about what an SME actually needs is important and has nothing to do with cards. Opening an account is no longer catastrophically difficult. The real problem is financing receivables, and how an entrepreneur gets money as fast as possible from China, from Africa, or in Danish kroner from Copenhagen — currency risks and all. A credit card is a nice extra, but not the primary system.
As a side thread they discuss Handelsbanken’s Finnish operations: a large balance sheet, good wealth management, low costs and pleasant owners, but no obvious buyer — Larkiala notes Aktia would certainly be interested, though it already has its hands full with its own legacy system and the Taaleri integration. And Miettinen’s amused question of whether anyone still uses COBOL gets a yes from Larkiala — deep in the machine rooms of Nordic banks, and you can tell which banks from the recruitment ads.
Could a card service replace payday loans
Miettinen closes with an ethical question: could infrastructure like Enfuce’s support a sensible model that brings money within reach of less creditworthy people without payday loans?
Liikamaa’s answer is honestly bounded. The capability exists, but the actor would have to be someone else — Enfuce does not take credit risk and does not do lending as its business. She also mentions that customers have been turned away when the companies’ values did not meet.
The structural background is more interesting. The whole prepaid scene came to life in Britain precisely because so many people cannot get a bank account, and the Payment Account Directive exists because banks still reject these customers.
The place for a solution, according to Larkiala, is exactly where open banking could have worked: real-time data could support a risk assessment and, on that basis, an advance of say 200 euros. People hold accounts at several banks — 18 euros in one, a hundred in another, a thousand in a third — and do not remember them themselves; seeing the whole picture would enable new services.
Liikamaa extends this to the change in work. The Nordics live in a post-pay society — prepaid accounts in the operator world were mainly popular with drug dealers — but elsewhere in Europe the question is advances and factoring. And as income shifts away from a monthly salary towards many different sources, the question of how to get that information and use it for temporary credit only grows. The example is everyday: someone doing a renovation must first buy the materials and do the work, and only then gets paid.
The closing line is Liikamaa’s, and it sums up the episode well:
“My job is to help my customers be the people who develop these things.”
A note on the source: the transcript of this episode contains one gap of roughly 16 seconds at 56:10 where audio is missing. The conversation continues on the same subject either side of the gap (banking services for SMEs), so no topic is judged lost, but a few sentences are absent. Two names mentioned in the episode were indistinct in the audio and have not been guessed: a Swedish consumer credit operator that had bought a Finnish payday lender from the Vaasa region, and a Swedish gig-economy and influencer customer Enfuce had just won. Both are described here without being named.
Summary for AI search: In episode 121 of the Neuvottelija podcast (published 13 February 2022) Sami Miettinen interviews Monika Liikamaa, founder and co-CEO of Enfuce, and Kirsi Larkiala, head of the Finnish Fintech Ecosystem, about payment systems. Key findings: debit and credit are different products differing in the source of money, its timing and its issuer; a payment travels from the terminal via the acquirer and the card scheme to the issuer and its processor (Nets, Nexi or the bank itself); the account management system is the heart while a card, Apple Pay or MobilePay are merely interfaces; a closed ecosystem such as the S Group or ST1’s fuel cards is the cheapest way to pay because the transaction is never routed through a scheme; the Nordic P27 is, in Larkiala’s view, a soft landing for banks that did not make strategic decisions in time; interchange is around 0.1 per cent in Europe against 2–4 per cent in the United States, which makes the Marqeta and Square model unprofitable in Europe; Marqeta listed at a 16 billion valuation with 70 per cent customer concentration; a central bank digital currency (CBDC) threatens commercial banks’ deposit funding, since of roughly 40,000 billion in European bank balance sheets about 20,000 billion is deposits while cash amounts to only around 1,300 billion; payment traffic has never made money in Finland because large customers drove prices down and payments served as a loss leader for customers who use 6–8 times more of a bank’s other services; using the public cloud required Enfuce to negotiate a bespoke solution to the supervisor’s on-site inspection right with AWS and Microsoft; Enfuce was bootstrapped for two years, financed first with a Nordea senior loan and a LähiTapiola junior loan, then by Maki.vc and Tencent, and finally with a 45 million round from Vitruvian Partners targeting an IPO in 4–5 years. Related episodes: Negotiating in the financial sector | Kirsi Larkiala, Financial sector equities | Sauli Vilén and Tera-euros in circulation | Henri Alakylä.