How do the Dutch pay in 2013

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How do the Dutch pay in 2013
HOW DO THE DUTCH PAY IN 2013?
DON’T BELIEVE THE HYPE...........YET
September 2013
CONFIDENTIAL AND PROPRIETARY © Shopping 2020
25 September 2013 – Expert group Transaction - FINAL
Payments in NL anno 2013: cash, ‘pinnen’ and iDEAL
Offline: Maestro
Online: iDEAL
58%
93%
(market share, # electronic transactions)
(Last used online payment)
Remarks:
• In this report we refer to “pinnen” for what is actually a Maestro transaction
Source: DNB, Currence
© Shopping 2020 – Expert group Transaction
1
Agenda
1. Introduction and background
2. Payment contexts
3. How do the Dutch shop anno 2013?
4. How do the Dutch pay anno 2013?
5. Trends and examples
© Shopping 2020 – Expert group Transaction
2
Expert group Transaction is part of a nationwide study
regarding current and future consumer shopping behavior
Shopping2020 study
Future Trends
Demografisch,
Sociaal-Cultureel
Economisch
Technologisch
Future
Touchpoints
Ecologisch
Customer Journey
Orientation
Transaction
Customer Care
Politiek / Juridisch
Key Themes
Selection
Delivery
Customer
Intelligence
Shopping2020
Vision
Actieplan
S2020
Nederland
Travel
Actieplan
Retail
Actieplan
Finance
Actieplan
…
Actieplan
Business
Models
Omnichannel
Organisatie
Veiligheid &
Fraude
De Nieuwe
Winkelstraat
Smarter
Shopping
Supply Chain
Online
Ondernemen
19 Expert Groups
© Shopping 2020 – Expert group Transaction
3
Expert group Transaction: well-grounded with 23 payment
experts from diverse backgrounds (1/2)
Eric van Vuuren (Host)
Business Developer
Equens
Michel Drupsteen
Sr. Business consultant
ING Bank
Shikko Nijland (Chairman)
Managing Partner
Innopay
Wieske Ebben
Policy Advisor Payment
De Nederlandsche Bank
Paul Alfing
Policy Adviser
Thuiswinkel.org
Max Geerling
Director Card Products & iDeal
Currence
Simon Berende
Senior Product Manager Consumer Payments
ABN AMRO Bank
Rene Hodde
Executive Director
Chess Group
Gert Blom
Manager Strategic Alliances
Paysquare
Rob Hoitink
Productmanager iDEAL
Currence
Gijs Boudewijn
Hoofd Betalingsverkeer & Veiligheid
Nederlandse Vereniging van Banken
Rommert Jorritsma
Consultant Payment Systems
Intersolve
© Shopping 2020 – Expert group Transaction
4
Expert group Transaction: well-grounded with 23 payment
experts from diverse backgrounds (2/2)
Marja van Kalveen
Teamleider productmanagement
Toonbankbetaalproducten
Rabobank Nederland Bedrijven
Jaques Parson
Gerben Klop
Strategy and Business Development
xXess360
Noor Pierik
Sr. Marketeer Cards Acquiring
Equens
Jip de Lange
Consultant
Innopay
Marja van Reijn
Regional Manager
Global Blue
Okke Mönking
Business Leader Acceptance
Mastercard
Michel van Westen
Voorzitter
VBIN
Raoul Manten
e-Commerce manager
Maxeda
Dennis Wooning
Sr. Productmanager Debit- & Credit Cards
ABN AMRO Bank
Detailhandel Nederland
Tom Nijenhuis
Head of Strategy & Development
Equens
© Shopping 2020 – Expert group Transaction
5
Expert group Transaction covers the Customer Journey from
Shopping Basket to Check-Out
SCOPE
RESEARCH Q
SHOP PHASE
© Bonsing / Mann
time
ORIENTATION
SELECTION
TRANSACTION
DELIVERY
CUSTOMER CARE
How visible, accessible and user
friendly is the site in all channels and
on all devices.
How attractive, easy or inspiring is it
to select products and services. Does
it enhance your shop experience.
How customer friendly, easy and
trustworthy is the transaction
process. What are the payment,
delivery and personalisation options
offered.
How is the process after the
transaction structured. Is the delivery
process adequate and a pleasant and
convenient experience.
How is the customer care and
personal follow-up after the purchase
and what is the level of customer
centricity during all 5 steps of the
process.
Visibility
Accessibility
Look & feel
User experience
Performance
Functional elements
Shop entrance
Shop interface
Product search
Product information
Price & delivery details
Selection enhancement
Selection flows
Shopping basket
Check-out entry
Opt-in
Check-out-flow flow
Delivery details
Payment flow
Policies & services
Order confirmation
Track & trace
Deliverance
Unboxing
Returns
Follow up
Feedback options
Review options
Customer care
Customer profile mgmt.
EXPERT GROUPS
Expert group
ORIENTATION
Expert group
SELECTION
Expert group
TRANSACTION
Expert group
DELIVERY
Expert group
CUSTOMER CARE
Expert group RETAIL LOCATIONS & FUNCTIONS
Expert group RETAIL ORGANIZATION
Expert group CUSTOMER DATA VALUE MANAGEMENT
Source: Bonsing/Mann
© Shopping 2020 – Expert group Transaction
6
This report covers the current situation in transactions
Central Research Question Shopping 2020
How does the consumer shop in 2020 and which actions should be taken on national, branch and
company level so that Dutch B2C operating companies can anticipate on that, nationally and
internationally?
‘Shopping Today’
(2013)
Shopping2020
(To be delivered in January 2014)
Research Questions expert group Transaction
1.
What is the current situation for transactions in
1.
Dutch retail practice?
2.
What are the most important trends. points for
improvement and opportunities in transactions?
What are current trends and examples?
2.
What are the most likely future scenarios?
© Shopping 2020 – Expert group Transaction
7
Two-phased approach: ‘Shopping today’ and ‘Shopping2020’
Phase 1: ‘Shopping today’
Shopping2020
Future trends (other expert groups)
January 22/23:
‘Shopping2020’
September 26:
‘Shopping Today’
‘How do the Dutch pay in 2013?’
Work streams on various topics
Gather
information
Document
Determine
scenarios
Implications
Reports ‘Shopping Today’ and ‘Shopping2020’
1. What are the most likely future scenarios?
2. How do we get there from the current situation?
3. What are preconditions and relevant developments in order to make these scenarios become reality?
© Shopping 2020 – Expert group Transaction
8
Agenda
1. Introduction and background
2. Payment contexts
3. How do the Dutch shop anno 2013?
4. How do the Dutch pay anno 2013?
5. Trends and examples
© Shopping 2020 – Expert group Transaction
9
How consumers and merchants are related: a two-sided
market
Purpose of the chapter:
• This chapter illustrates the factors determining how merchants and consumers choose their preferred
payment method.
• Furthermore, this chapter shows how shopping and payments are related.
Two-sided markets:
• Two distinct user groups with different needs that are interdependent
• Network effects: benefits of usage are experienced across sides
Challenges:
• Reach is a chicken-and-egg phenomenon
• Winner takes all dynamics
• Pricing of services across both sides: often one side is subsidized by the other side. In payments, the
payer is subsidized by the payee
Source: Innopay
© Shopping 2020 – Expert group Transaction
10
Transactions consist of three processes: agreement,
payment and delivery
Transactions are determined by contexts
• The ‘transaction context’ is the total of situational circumstances in which three processes of the
transaction take place: agreement, payment and delivery
• A successful transaction typically consists of two actors: buyer and seller
• Risk is at the heart of every transaction, for buyer and seller
Source: Innopay
© Shopping 2020 – Expert group Transaction
11
e-Commerce changed the relative timing of the three
processes, resulting in unbalanced risks
A
P
A
P
A
P
Agree
Pay
Agree
Pay
Agree
Pay
R
Risk
D
•
•
•
RP
R
Risk
Risk
Deliver
Point of Sale
transaction
RA
R
RD
D
Deliver
Internet
transaction
D
Deliver
Context:
Relation (r)
Product (p)
Location (l)
Timing (t)
In traditional commerce, three processes are executed at one time, in one place: agreement, payment,
delivery. The Risk is balanced.
The introduction of new channels such as internet changed the dynamics of transactions. Transaction
processes are now disconnected in time and place, introducing unbalanced Risks.
These risks can be characterized by four risk factors:
• Relation (r)
Do buyer and seller know or even trust each other?
• Product (p)
What is the value and substance of the product involved?
• Location (l)
Where does the transaction take place?
• Timing (t)
In what order are Agreement, Payment and Delivery executed?
Source: “Understanding buyer and seller behaviour for improved payment product development”, C. Liezenberg, D. Lycklama, H. Smorenberg. Journal of Payment Strategy & Systems, April 2007
© Shopping 2020 – Expert group Transaction
12
Timing determines whether Buyer or Seller bares the risks
1
time
2
time
3a
time
A
P
D
Agree
Pay
Deliver
A
D
P
Pay
Agree Deliver
A
P
D
Agree
Pay
Deliver
Pay in advance
Risk with buyer
Pay afterwards
Risk with seller
Pay and delivery at same time
Risk equally divided
3b
time
A
P
D
Agree
Pay
Deliver
Timing (t): The timeline and order in which the processes are executed. Processes can be executed
simultaneously or disconnected. In the latter case the order of Payment and Delivery can be swapped.
This leads to three generic types of timing.
Source: Innopay
© Shopping 2020 – Expert group Transaction
13
… leading to endless payment methods to match all contexts
© Shopping 2020 – Expert group Transaction
14
Every context has its own payment methods
Person-to-Person





Cash
Proximity

Consumer-to-Business
Debit and Credit Cards
Prepaid
Wallets
Giftcard
Cash
1






eWallet
Credit transfer
Remote


2
Online Banking ePayments
eWallet
Credit transfer
Debit and Credit Cards
PayPal
Gift Cards
3
4
Source: Innopay 2010
© Shopping 2020 – Expert group Transaction
15
Payment and Loyalty and related fee structures are mainly
based on three or four corner models in 2013
4-corner payment model
3-corner payment model
Good/
Servicess
1.Consumer
Goods/
Services
2.Merchant
3.Issuer
•
•
•
•
1.Consumer
PSP
Periodic
Fee
Authorisation
(Clearing &
settlement)
(C&S)
3-corner gift card/loyalty model
Paymen
t
4.Acquirer
2.Merchant
1.Consument
Goods/
Services
CPSP
PSP
TRX Fee
Authorisati
on
Periodic
Fee
Payment
3.Service
provider/
Bank
2.Merchant
TRX Fee
3.Brandowner
Giftcard (C&S)
EGI
autorisatie
Most payment methods and fee structures in The Netherlands are based on a four corner model (f.i.
debit card, Maestro, Mastercard, Visa, iDEAL)
Interchange fees are relatively low in The Netherlands compared to EU
Most gift/loyalty methods are based on a three corner model
1.2B euro is paid in gift cards and vouchers in NL in 2012
Source: Intersolve, Innopay
© Shopping 2020 – Expert group Transaction
16
Since the beginning of e-Commerce, we’ve seen continuous
evolution of the payment landscape …
3-party
model
New 3-party based challengers
4-party based challengers
3-party based challengers
5. New contexts demand new
functionality. A new wave of 3-party
models aims to fulfill these needs
4-party
model
Volume
Online Banking
based ePayment
4. In reaction, the 4-party paradigm
was translated to the web
3-party
model
1. In the beginning, there
were cards
3. New payment methods were
designed specifically for use on the web
2. Making traditional payment products
suitable for use on the internet
(...cards were never designed for the web…)
1995
•
•
4-party
model
2005
2015
Both three and four party models have adapted for usage on the internet
Ever more niches demand new functionality and therefore new payment methods
Source: Innopay
© Shopping 2020 – Expert group Transaction
17
… but only a few new payment methods make it through
their infancy
Payment products on the Dutch market
(non exhaustive)
Cash
PIN
Maestro / V Pay
Chipknip
MasterCard / Visa
Acceptgiro
Wallie card
MiniTix
iDEAL
eWallet
emPayment!
Bill
Payter
Mobiel betalen NL
Travik
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
• As new payment methods will need reach to become successful, many do not survive for long
• As the uptake of the payment method takes too much time, merchants and consumers will
loose faith and abandon the novelty
Source: Innopay, Equens
© Shopping 2020 – Expert group Transaction
18
Successful payment solutions provide Reach and Conversion
against fair Cost
Consumers:
Merchants:
1. REACH: Consumers choose
payment methods that are
widely accepted by
merchants  reach
1. REACH: Merchants are looking
for those payment methods
that their target audience
uses: this makes a visitor an
potential customer  reach
2. CONVERSION: From those
payment methods that
merchants accept, consumers
will choose those that they
trust, that are fast and easy to
use  conversion (ease-ofuse)
Reach
Conversion
1.
Cost
2.
3.
3. COST: Although consumers
might not be very aware of
the cost of the payment mix
they use, they do
acknowledge cost factors like
risk  cost
2. CONVERSION: Payment
methods that consumers
trust, that are fast and easy to
use increase the number of
potential customers that
actually buys  conversion
3. COST: The cost of payment
methods are primarily born by
merchants. Therefore,
merchants will offer those
payment methods that are
most economical for them.
Fraud can also be regarded as
a cost factor  cost
Source: Thuiswinkel, Innopay
© Shopping 2020 – Expert group Transaction
19
Summary: new payment contexts demand constant
development of payment methods
•
The choice of a payment method depends on the context
•
Many factors determine the context of a payment, which leads to many different contexts
•
This could lead to many different payment methods to cater for all these contexts
•
Risk (or perceived risk: trust) is a determining factor in the choice for a payment method by
consumers and merchants
•
The rise of the internet introduced a totally new context in which new risks were introduced
•
The challenge is to balance ‘fit-for-purpose’ (a payment method should meet the requirements of
the specific context) with ‘simplicity’ (fragmentation leads to complexity for merchants and
consumers)
•
Successful payment methods balance reach, conversion and cost
•
The added value of payments is to create loyalty (enable the building of client shopping profiles and
provide relevant merchant offers)
© Shopping 2020 – Expert group Transaction
20
Agenda
1. Introduction and background
2. Payment contexts
3. How do the Dutch shop anno 2013?
4. How do the Dutch pay anno 2013?
5. Trends and examples
© Shopping 2020 – Expert group Transaction
21
NL Shopping landscape: small supermarkets, historic city
centers and domestic e-Commerce
Purpose of the chapter:
• This chapter illustrates the factors determining where and how consumers shop anno 2013
The Dutch shopping landscape is characterized by:
• Small distances and therefore relatively strong regional shopping areas, located in old city centers
• Shopping areas often restricted to (historic) city centres
• Absence of hyper markets and relatively small number of ‘big-box retailers’
• A relatively strong e-Commerce sector
Source: Van der Gijp 2013, Innopay analysis
© Shopping 2020 – Expert group Transaction
22
Online shopping is growing, while offline retail is declining
Development online vs. offline retail (NL)
+14%
100
7
8
5
9
16
10
11
80
10
50
8
83
90
92
89
87
83
30
79
6
4
20
2
10
30
25
20
15
10
5
0
-5
-10
0
2007
2008
2009
% online retail / total retail
•
•
•
•
35
Percentage
Turnover in Billion €
60
0
•
40
14
12
70
40
45
Percentage
90
6
Growth compared to the previous year
2010
2011
2012
Online retail turnover
2005 2006 2007 2008 2009 2010 2011 2012
2013
Offline retail turnover
Retail Total
Online Retail
The Dutch online market is one of the most developed e-Commerce markets in EU (after UK ~96 Bn, DE ~50
Bn, FR ~45 Bn online sales of goods & services [2012])
In NL online retail will account for 12% of total retail turnover in 2013
The double digit e-Commerce growth in NL is stabilizing at ~ 10% per year since 2013
The vast increase of online retail until 2030 is for nearly 30% at the expense of offline retail
The prices in offline retail have increased, as the amount of goods sold (i.e. volume) have decreased
substantially since 2009, while recovery is not expected in the short term (> 2015)
Source: Thuiswinkel.org, ING Economisch Bureau, Internet World Stats, Emerce, E-commerce Europe, Roland Berger, CBS, Innopay analysis
© Shopping 2020 – Expert group Transaction
23
Stable retail landscape, in spite of declining turnover
# companies in thousands
Division of verticals in Dutch retail
+2%
120
110
100
90
80
70
60
50
40
1
3
4
1
3
4
1
3
4
1
3
4
1
3
4
1
3
4
1
3
4
5
7
7
17
21
24
10
10
10
10
10
10
10
10
10
12
12
12
12
12
7
10
10
7
11
7
7
7
13
14
10
11
10
10
12
12
30
20
10
0
6
4
3
2
1
0
-1
-2
-3
32
33
33
32
32
32
31
2007
2008
2009
2010
2011
2012
2013
-4
-5
-6
Gas station
Street trading '(no shop or market)
Shops in other articles
Shops in consumer electronics
Market trade
% growth y/y retail
Supermarkets and department stores
Shops in food products
Shops in recreational items
Shops in other household goods
• Declining turnover of total retail sector is not (yet) reflected in the number of businesses
• Number of shops over verticals is relatively stable, except for alternative (micro) retailers, ~16% yoy
• Top 10 largest retailers all active in ‘Food’ ((top 10 retailer (# shops): Ahold (759), Jumbo (685), Aldi (480),
Emté (Sligro) (130), Plus (270), Lidl (270), Super de Boer(20), Makro (17), Dirk vd Broek (99))
Source: CBS, Innopay analysis
© Shopping 2020 – Expert group Transaction
24
e-Commerce in the Netherlands compared to Europe: high
internet penetration and uptake of online shopping …
% 100
% of online shoppers / total population
% Internet penetration (2012)
NL
80
93
UK
60
84
FR
80
40
DE
83
20
EU
0
’10 - ’11 - ’12
NL
Mn 350
’10 - ’11 - ’12
’10 - ’11 - ’12
UK
FR
’10 - ’11 - ’12
’10 - ’11 - ’12
DE
EU
Number of online shoppers
300
250
200
150
100
50
0
’10 - ’11 - ’12
’10 - ’11 - ’12
’10 - ’11 - ’12
NL
UK
FR
’10 - ’11 - ’12
73
’10 - ’11 - ’12
DE
0%
20%
40%
60%
80%
100%
• % Online shoppers in NL as part of
total population well above EU
average and leading e-Commerce
countries
• High internet penetration in NL
contributes to high share of Dutch
population shopping online
• Although a modestly sized market,
the Netherlands is seen as one of
the frontrunners in e-Commerce
EU
Source: ANVED, Datamonitor, Euromonitor, Ecommerce Europe, Innopay analysis
© Shopping 2020 – Expert group Transaction
25
… although average spending per user is relatively low
Average transaction value (’10 – ’12)
€
Average yearly online spending per user (’10 – ’12)
140
€ 3,500
120
3,000
100
2,500
80
2,000
60
1,500
40
1,000
20
500
0
’10 - ’11 - ’12
’10 - ’11 - ’12
NL
UK
’10 - ’11 - ’12
FR
’10 - ’11 - ’12
’10 - ’11 - ’12
DE
EU
0
’10 - ’11 - ’12
NL
’10 - ’11 - ’12
UK
’10 - ’11 - ’12
FR
’10 - ’11 - ’12
’10 - ’11 - ’12
DE
•
•
•
Average yearly spending is relatively low, even lagging behind EU average
Relative success of the Dutch online market is due to the high percentage of people shopping online
Next wave of growth to be expected from increased spending of experienced users
•
An average spending per user in line with other EU markets would result in a growth of 35%!
EU
Source: ANVED, Datamonitor, Euromonitor, Ecommerce Europe, Innopay analysis
© Shopping 2020 – Expert group Transaction
26
e-Commerce in the Netherlands highly concentrated in small
number of large retailers
Note: total online turnover amounted to € 9 Bn in 2011
70%
30%
3,2
Top 10 online retailers (NL)
RFS Holland Holding
(e.g. wehkamp.nl)
Bol.com
469
358
200
Ahold
Travel
Revenue in Billion €
Distribution of (B2C) online retail revenue (NL)
1.8
130
KPN
BAS Group
(e.g. MyCom)
Coolblue
108
H&M
108
HEMA
106
110
2.0
2.0
Amsterdamgold.com
Thuisbezorgd.nl
Top 10
Top
11-100
94
83
Online retail revenue in Million €
Outside
Top 100
• In 2011 the top 100 online retailers represented € 3.8 Billion revenue (an increase of € 700 Million compared
to 2010), this exludes the large Travel websites (e.g. KLM), that accounted for € 3.2 Billion revenue
• The top 100 online retailers account for ~70% of online retail turnover and growth in online retail is primarily
claimed by larger online retailers
• The trend that large webshops will grow further and smaller players will either be acquired, remain small or
drop out, is likely to continue in the future
• Although 5 of the top-10 e-Commerce players have offline operations, channels still seem strictly separated
Source: Twinkle, Innopay analysis
© Shopping 2020 – Expert group Transaction
27
Summary: Dutch consumers are embracing ‘online’, although
in 2013, online and offline still seem separated channels
•
Offline retail is dominant, but growth is centered in e-Commerce
•
There is a trend of retail shifting towards larger businesses. This trend is strengthened by the growth
of online, where large, professional players are dominant
•
Top 10 retailers are all supermarkets with (very) limited online activity
•
Small group of businesses sets the standard for the way people shop and pay in the Netherlands
•
Offline and online channel still seem to be strictly separated
© Shopping 2020 – Expert group Transaction
28
Agenda
1. Introduction and background
2. Payment contexts
3. How do the Dutch shop anno 2013?
4. How do the Dutch pay anno 2013?
5. Trends and examples
© Shopping 2020 – Expert group Transaction
29
Offline and Online can still be considered as two different
payment channels in 2013
Purpose of the chapter:
• In this chapter the most important payment methods for the Dutch market are described
Offline
Online
+
Remarks:
• Payments can be initiated in the real world; Offline or in the digital world; Online
• This context determines the choice of payment method
• In our research m-Commerce is considered a type of e-Commerce and thus online
• In this report we refer to “pinnen” what is actually a Maestro/V Pay transaction
© Shopping 2020 – Expert group Transaction
30
If the consumer is not already registered, online payments
are typically more complex than offline payments
Offline
1. Choice of
Products
2. n/a
3. Cash
Register/ Order
intake
4. Choosing
Payment
Method
5. Paymentproces/
Authorisation
4. Choosing
Payment
Method
5. Paymentproces/
Authorisation
6. Validation +
Order
Referention
7. n/a
Online
2. Filling in
Contact/
Delivery Details
1. Choice of
Products
2. Log In
3. Order Check
6. Validation +
Order
Referention
7. Order
Tracking
2. Accountregistration
2a. Filling in
Contact/
Delivery Details
2b. Log In
© Shopping 2020 – Expert group Transaction
31
Main differences in the Transaction flow are in Checkout,
Delivery details and Payment Flow
Selection
Orientation
Delivery
details
Transaction
Payment flow
Receipt
Delivery
Service
Customer Care
Basket
Checkout
Offline
• Physical
• Loyalty card
• NA
• Pay now
• Paper
• Email
• On site
• Phone
• Law:
“Verkoop en
garanties
voor
consumenten
goederen”
• Cash
• D/C Cards
• Giftcards
•
•
•
•
Online
• Virtual
• Log-in
• Input prefs
• Input
prefs
• Stored
prefs
• Virtual
register
• PSP
• Email
• Website
• Phone
• Law: “Kopen
op afstand”
• PSD
•
•
•
•
•
•
iDEAL
Credit card
Paypal
Acceptgiro
DD/CT
Cash on
delivery
• Giftcards
• PC,
• Laptop
• Tablet
Mobile
• Virtual
• Log-in
• Input prefs
• Input
prefs
• Stored
prefs
• Virtual
register
• PSP
• Email
• Website
• Phone
• Law: “Kopen
op afstand”
• PSD
•
•
•
•
• Smartphone
• Tablet
© Shopping 2020 – Expert group Transaction
Policies
Payment
method
DD/CT
Paypal
Acceptgiro
Cash on
delivery
Device
Kassa
Terminal
Dongle
Mobile
32
Current Account is the core funding source of basically all
payment methods
Context
Offline
Online
Wallet
iDEAL
Channel/
Paymentproduct
Funding
Cash
Cash
Debit
Card
Credit
Card
Current
Account
Prepaid
‘Card’
Credit
Account
Gift
‘Card’
Stored
Value
© Shopping 2020 – Expert group Transaction
Loyalty
Card
SEPA
Direct
Debit
Virtual
Currency
Internet
Banking
SEPA
Credit
Transfer
Loyalty/
Points
33
A broad variety of loyalty schemes and gift cards exist as
‘alternative currencies’
Types of loyalty programs and examples
Brand
Retailchain
Brand combinations
Savings Card
Branch combination
Temporary Savings
Program
Shoppingstreet/ -mall
Gift Cards
Closed-loop
Semi-open-loop
Open-loop
Legal supervision for consumer protection (e.g. In case of bankruptcy) differs among the
products: FRS, Cadeaubox and the paper VVV bon lack legal supervision, while the consumers
enjoy protection with the electronic ‘boekenbon’
Source: Intersolve
© Shopping 2020 – Expert group Transaction
34
Offline - Dutch still like to pay with PIN (Maestro)
Number of electronic payments in NL
Split of electronic payment methods relatively stable
3.000
# transactions (millions)
2.500
+8%
2.000
1.500
147
30 164
32 175
1.000
500
1.334
1.451
1.588
34 176
1.756
37 177
35
178
35 172
39 148
38
100%
90%
2%
2%
2%
2%
2%
1%
2%
1%
10%
10%
10%
9%
8%
8%
7%
6%
88%
88%
88%
89%
90%
91%
92%
93%
2005
2006
2007
2008
2009
2010
2011
2012
80%
70%
60%
1.946
2.154
2.285
2.474
50%
40%
30%
20%
10%
0
0%
2005
2006
2007
2008
2009
2010
2011
2012
Creditcard
Chipknip
PIN
• In this report Maestro (or V-Pay) transaction are called PIN transactions since this is the commonly used term
by Merchants and Consumers
• Chipknip was introduced in ’96 as a payment scheme to facilitate low value payments, i.e. payments under € 10
• Credit cards are in NL mainly used for high(er) value payments (travel, clothing, catering) rather than everyday
purchases, thereby explaining their limited share of total transactions in the offline context
Source: DNB, Innopay analysis
© Shopping 2020 – Expert group Transaction
35
120
2.500
100
2.000
# of trx in Millions
140
160
Development # of credit card trx
and avg. trx value at POS (NL)
140
120
120
100
100
80
80
80
1.500
60
1.000
40
500
0
2000
140
Trx value in €
3.000
Development # of debit card trx
and avg. trx value at POS (NL)
Trx value in €
# of trx in Millions
Offline – # Debit card transactions is increasing considerably
20
2002
2004
2006
2008
Total # of Debit Card trx NL
2010
0
2012
60
60
40
40
20
20
0
2008
Avg. Debit Card trx value
2009
2010
Total # of Credit Card trx NL
2011
0
2012
Avg. Credit Card trx value NL
• Convenience, speed and (lower) costs (for merchants) have driven the increase in debit card transactions
• Phasing out ‘Chipknip’ in 2015, the intended Dutch payment method for low value payments, and campaigns
such as ‘Pinnen, ja graag!’ and ‘Klein bedrag? Pinnen mag!’ has also contributed to the increase in debit card
transactions and a decreasing value per transaction
• Low value payments represented ~ 30% of total offline debit card transactions in 2012
• Average transaction value of credit cards has been rather stable for several years at ~ €120,Source: BVN, Currence, Panteia, Innopay analysis
© Shopping 2020 – Expert group Transaction
36
Online - iDEAL by far most used for internet payments
Prefered online payment method
Top 10 payment methods used last purchase
58%
54%
58%
iDeal
Acceptgiro
(Online)
13%
14%
13%
Acceptgiro (Online)
10%
6%
8%
8%
Credit Card
Online bank credit transfer
5%
4%
4%
PayPal
1%
1%
1%
PIN
Cash
1%
1%
1%
One-off Mandate
1%
1%
1%
0%
4%
One-off
Mandate
1%
1%
2%
Recurring Mandate
74%
iDEAL
4%
3%
3%
Acceptgiro (paper)
7%
Credit Card
5%
7%
4%
Buyers 2011-2 (n=1296)
Buyers 2012-1 (n=1440)
4%
PayPal
Buyers 2012 -2 (n=1453)
2%
Other
10% 20% 30% 40% 50% 60% 70%
20%
40%
60%
Note: the percentages indicate market shares based on surveys
• iDEAL is the most used (58%) and preferred (74%) payment method online in 2012
• Pay later payment methods are also popular in 2012 (21%)
• The Accept giro will be phased out in 2019, leaving an opportunity for other payment methods to fill the gap
Source: Blaauw, GfK 2013
© Shopping 2020 – Expert group Transaction
37
Number of iDEAL transactions is growing rapidly
Number of iDEAL Transactions (1,000)
Why do consumers prefer iDEAL
116.870
120.000
Habit
110.000
93.063
100.000
Fast
Number of transactions
90.000
+51%
80.000
62.961
70.000
Convenient
60.000
43.575
50.000
30.000
Familiar
27.865
40.000
14.811
20.000
10.000
0
•
•
•
•
Safe
2007
2008
2009
2010
2011
2012
5%
10%
15%
20%
25%
117M transactions with a total value of 8.8B EUR in 2012
Number of iDEAL transactions has increased with a CAGR of 51% between 2007 and 2012
Number of iDEAL transactions is growing faster than e-Commerce
Consumers state that they prefer iDEAL because of high trust and convenience
Source: DNB, GfK, Innopay analysis
© Shopping 2020 – Expert group Transaction
38
Roughly the same preferences for mobile payments as for
online payments
Payment method last mobile order 2012
iDeal
Acceptgiro (Online)
6%
8%
Credit Card
8%
6%
7%
5%
Online Bank credit transfer
4%
PayPal
1%
Cash
One-off Mandate
2%
2%
Other
2%
Do not know
70%
54%
Tablet(n=225)
Smartphone (n=196)
7%
5%
11%
0%
1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Source: Blauw 2013
© Shopping 2020 – Expert group Transaction
39
Though electronic transactions score relatively good
compared to other EU markets, cash is still popular
Cash’s share of total transactions NL 2011 (%)
Greece
97
Poland
90
Italy
89
Spain
80
Ireland
75
Germany
69
Switzerland
66
Austria
64
UK
57
Belgium
54
Netherlands
52
France
50
Nordics
46
%
0
10
20
30
40
50
60
70
80
90
• Compared to other EU countries NL has a lower % of
cash transactions
• Merchants value cash payments due to its
ubiquitous acceptance and the direct income of
revenue streams, while consumers experience cash
payments as easy and ‘common’
• Despite the fact that average costs for a debit card
trx are lower (~€ 0.21 ) compared to cash payments
(~€ 0.24), > 50% of transactions are cash based
• For certain contexts, alternatives for cash are not
considered valid
• However, the higher costs, safety risks, counterfeit
money and the administrative handling are reasons
for merchants to revert to debit card payments
• Cashless checkouts continue to grow in NL
• Cash will also remain the number one fall-back
option in case the electronic payment system
encounters technical problems
100
Source: McKinsey, Innopay analysis
© Shopping 2020 – Expert group Transaction
40
Summary: Dutch like to pay with Cash, ‘pinnen’ and iDEAL
•
Offline and online can still be considered as two different
and not yet integrated payment channels
•
In spite of all the fuzz around new payment methods, Dutch
still like to pay offline and electronic with Pin: 93% (2012)
and online with iDEAL: 58% (2012)
•
Pay later payment methods are also popular online since it
decreases the (delivery) risk for the consumer
•
Current account is still the core funding source of almost all
payment methods
© Shopping 2020 – Expert group Transaction
“Cash is still king”
41
Agenda
1. Introduction and background
2. Payment contexts
3. How do the Dutch shop anno 2013?
4. How do the Dutch pay anno 2013?
5. Trends and examples
© Shopping 2020 – Expert group Transaction
42
Many trends have been identified of which nine have been
selected as most likely to change the way Dutch pay
Technology
2. Mobile shopping and payments
3. Digital wallets
1. Digital identity
4. Changing POS interaction
5. Changing checkout
7. Consumer in control
6. Convergence of channels
Transaction
8. P2P payment
Legislation
&
Regulation
Economy
&
Society
9. Increasing regulation
© Shopping 2020 – Expert group Transaction
43
Trend 1: Digital identity
Using a single digital identity throughout the shopping experience can enable seamless payments
Description
Impact on shopping
Impact on payments
Increasing electronic interaction between parties
leads to demand for identification/authentication
in the virtual world, thus requiring a trust
framework and providing the participants with
clarity on rules of engagement , risk and liabilities
•
•
Since trust is a basic requirement for consumers
and merchants to participate in (e-)commerce,
having an online identity which is as strong as a
real-world identity is the ultimate solution
•
During current e-Commerce shopping
experience, consumer identifies multiple times;
towards the shop, payment provider and
delivery service provider
Having a single digital identity decreases
customers effort of multiple identification and
minimizes effort of maintaining identification
credentials
•
•
Making payments between parties identified
and authenticated early in the shopping
experience can enable a true seamless
payments
Providing payments as an invisible step in the
shopping experience will increase consumer
demand for budget control and insight in
payments carried out
Seamless payments may affect the sense of
safeness negatively. The actual act of pushing a
button or entering a code creates awareness of
the expense
“It's wrong to say IRL means offline: Facebook is real life.”
Nathan Jurgenson (2012) The IRL fetish
"Easy access, via a single digital identity, to reliable
information about the person with whom you do business
is crucial for the continued growth of online shopping. It
may also be interesting for retailers and customers to
learn more of each other for 'tailored' services.“
Paul Alfing – Thuiswinkel.org
© Shopping 2020 – Expert group Transaction
44
Trend 1: Digital identity
Examples
Signicat:
• To reuse existing strong authentication mechanisms for various
purposes
• Based on trusted banking technologies
Benefits:
• Bilateral agreements between banks and businesses
• Five assurance levels, tailored to set of needs
• One solution to fit various needs
http://www.signicat.com
IDchecker:
• Multichannel solution to verify ID documents
• Automated checks based on various large databases
Benefits:
• Effective, cross channel solution
• Extensive database for accurate checks
http://www.idchecker.nl
DigiD:
• Secure online identification with the Dutch government
Benefits:
• One gateway for all online services of the Dutch government
http://www.digid.nl
© Shopping 2020 – Expert group Transaction
45
Trend 2: Mobile shopping and payments
Smart mobile devices have quickly changed the way we shop, both in-store and on the go
Description
Impact on shopping
Impact on payments
The share of smartphones of total mobile phone
penetration in The Netherlands has well passed the
50% mark. Nearly 3/4 of Dutch smartphone users
browse the internet every day, and more than 70%
have used them to make informed shopping
decisions.
•
•
•
•
Mobile devices are increasingly being used in
different contexts:
• In store: to look up product information and to
compare prices at competitors’ webshops
• On the go: mobile commerce enables users to
visualize products and offers while not in front
of a computer screen. Localized offers are also
available thanks to GPS functionalities
•
Mobile devices are increasingly being used in
store to access product information and to find
cheaper offers (also known as “showrooming”)
According to Thuiswinkel.org, in 2012, 1,2 M
Dutch consumers made at least one purchase
with their phone
Mobile based services often share the same
user profile as online counterparts. This makes
possible to continue researches and manage
lists both on the go or behind a bigger screen
Mobile internet glues together the traditionally
separated, worlds of online and offline shopping
•
•
•
•
Currently mobile shopping is held back from the
lack of widely adopted payment methods that are
designed for the smaller screens (although PayPal
and KNAB and ING’s iDEAL implementation are
exceptions to this rule)
Existing payment methods should be adapted
for use with mobile
Mobile devices require different user
interactions, due to the smaller screens and
different input methods
Users are asking for familiar online payment
methods to be redesigned for the mobile
screens
Future expected developments will allow
deeper integration between mobile phones and
POS terminals, with solutions that close the
loop of advertising, payment and loyalty points.
This will increase the need for payment
methods that are able to seamlessly integrate in
the integral shopping value chain
Mobile devices will provide new opportunities
for cheaper PoS payment terminals for
acceptance of online and offline payment
methods
“Mobile phones as successors of cards are one
part of the ‘mobile revolution’, but more profound
is the idea of smart devices bringing internet into
all contexts”
Innopay
© Shopping 2020 – Expert group Transaction
46
Trend 2: Mobile shopping and payments
Examples
eBay:
• Scan any barcode and see the available listings and offers
• Exploits the link between online and mobile profiles
• Payments carried through digital wallet profiles
Benefits:
• Users can access competitors’ prices in store easily
• No need to manually type,
• Frictionless interaction
http://mobile.ebay.com/
OKit:
• Single brand covering market needs over multiple contexts
• Multi-channel experience, both online and offline
Benefits:
• Underlying payments via credit cards and direct debits
• Future direct connection to bank account available
• Reusability for other purposes than payments (eg: mandates)
• Integration with merchant terminals with no dedicated hardware
http://www.okit.com
© Shopping 2020 – Expert group Transaction
47
Trend 3: Digital wallets and in-app payments
Payments are initiated from digital wallets, making payment means less relevant
Description
Impact on shopping
Impact on payments
Digital wallets offer services for payment and
loyalty, storing consumer and payment credentials.
Wallets aim to:
• Increase speed and convenience for consumers
• Provide conversion and customer retention for
retailers
•
•
•
•
We currently see many parties are trying to offer
wallets to consumers and retailers, resulting in a
“war on the wallets”. The current market shows
diversified reach & acceptance and channels
supported. There are Internet- and POS-only
wallets as well as omni-channel wallets. Wallets
can be used in a variety of contexts and from a
variety of consumer devices (PC, Tablet, mobiles).
Many additional and innovative services are
expected as wallets try to claim the primary
customer and merchant interface
•
Digital wallets providing loyalty influence
consumer shopping behavior in the orientation
and selection phase.
Wallets steer consumers in where to buy and
what to buy by providing relevant offers and
financial benefits to consumers
Digital wallets are increasingly used as quickcheckout method in web shops as alternative
for traditional PSP-checkout
Upon checkout digital wallets disclose consumer
and payment credentials
•
•
Consumer’s bank account is still the preferred
location to store funds
Digital wallets offer initiation of different types
of payments (cards, direct debit) resulting in
charging the current account, credit account
and/or stored-value
By providing a seamless payment initiation and
additional services from a Digital Wallet, the
relevance of the payment means (and it’s
provider) decreases and shifts to the provider of
the Digital Wallet
“The increasing number of parties offering digital wallets
asks for a stronger supervision of the e-money institutions
from the Central Banks to protect the stored-funds of the
consumer.”
Source: Rommert Jorritsma - Intersolve
© Shopping 2020 – Expert group Transaction
48
Trend 3: Digital wallets and in-app payments
Examples
Minitix:
• Cash-replacement app, allows for various services to be paid
through mobile phones
• Funded with traditional payment methods (iDEAL, CT)
Benefits:
• Integration with third party platforms
• Mobile user experience adapted to users needs
http://www.minitix.nl
PayPal:
• Single brand covering market needs over multiple contexts
• Multi-channel experience, both online and offline
• Arguably the largest online 3-party model
Benefits:
• Integration of different channels
• One single user experience, brand trust
• Capability to support future payment innovations
• Targeted offers by merchants
• Enable relevant merchant offers (which will benefit customers and
merchants)
http://www.paypal.com
© Shopping 2020 – Expert group Transaction
49
Trend 4: Changing POS interaction
Contactless payments provide convenience and new technologies challenge the classic POS terminal
Description
Impact on shopping
Impact on payments
The in-store Point of Sale terminal (POS) is
changing to new interfaces, the classic magstripe
has been changed to the EMV chip and a next step
is the contactless interface, allowing consumers to
tap with either a contactless card or a contactless
mobile phone supporting Near Field
Communication (NFC).
•
Contactless payments
• NFC contactless payments provide consumer
with new interaction with a POS
• Using NFC enabled card or mobile phone.
• Contactless payments allow for PIN-less low
value payments
New technologies are challenging the traditional
POS terminals and the way payments are initiated
in-store. The need for smart and secure terminals
might decrease with security moving into the
network and shifting to the consumers mobile
device. Here we also see the use of new forms of
hardware, identification and data communication,
such as mPOS devices, Biometrics, NFC and QRcodes.
•
•
•
•
In the current Dutch market, consumers can
walk into a store without considering
acceptance of payment cards
Consumer and merchant interact in a two-sided
market
Both sides need to be enabled for the new
types of interaction to complete the shopping
with the preferred means of payment.
All developments aim for a smooth and hassle
free checkout
Goal is taking the pain* out of the shopping
experience
Increased use of loyalty, in combination with
contactless mobile phones will require multi-read
capabilities at the checkout, where not only
payment credentials need to be exchanged but also
coupons, vouchers, tickets, loyalty points and so
on. Providing consumers with a uniform user
experience is the challenge here
In-store alternative payments
• New technologies, enables use of non-card
alternatives
• This brings e-Commerce payment experiences,
into the physical store
• Examples; Digital Wallets and Card-not-present
(CNP) transactions
“There is a positive correlation between pain of paying
and the amount spend on the purchase. More
surprisingly, research indicates that the payment method
used influences the level of pain of paying experienced.”
Source: The irrationality of payment behavior
A DNB Occasional study, describing the ‘pain of paying’
© Shopping 2020 – Expert group Transaction
50
Trend 4: Changing POS interaction
Examples
Mobile NFC Leiden:
• Collaboration between banks and one mobile operator
• Banks and mobile operators to subsidize the issuing of capable
devices
• Contactless NFC retail payments from mobile phone
Benefits:
• Collaboration between different types of players
• Mobile operators providing hosting of secure banking application
http://www.mobielbetaleninleiden.nl
Octopus, Hong Kong:
• One of the world’s leading smart card payment systems
• Enables payment for transport systems as well as at retail outlets
and online transactions
Benefits:
• One single card to enable different payment services
• Reloads automatically by connecting to users’ bank accounts,
solving the loading problems
http://hong-kong-travel.org/octopus/
Snel en simpel betalen, The Netherlands:
• Enables caterers to speed up checkout
• Supports biometrics and contactless initiated payments
Benefits:
• Increasing the speed at checkout
• Providing an alternative for e-Purse (Chipknip)
• Automatic reloading of stored value by connecting to users’ bank
accounts
http://youtu.be/_o4kyCcb6to & http://www.snelensimpelbetalen.nl
© Shopping 2020 – Expert group Transaction
51
Trend 5: Changing checkout
New shop floor experiences with evolving cash registers and payment terminals
Description
Impact on shopping
Impact on payments
In combination with the capabilities of smart
devices such as tablets and smartphones, the instore checkout and payment flow is changing.
•
•
Some stores allow sales assistants to freely roam
the shop floor, where checkout can be delivered
from a smart device such as a tablet and payment
is carried out by mPOS. Others allow consumers to
scan products using their mobile device and pay via
a wallet, thus eliminating the need for a checkout
as a whole.
•
•
Shop floor experiences are evolving from new
technologies
Location based services (geo-location, in-storewifi, etc) allow for direct recognition and
identification of the consumer
Using CRM services to determine customer
preferences and sales history over all channels
maximizes cross and upselling
•
•
If user is identified and authenticated
sufficiently, the payment can be carried out as
seamless part of checkout
Using CRM to linking customer’s payment
history to checkout, decreases the merchant’s
need for a guaranteed payment
New technologies are used to initiate payments;
e.g. NFC, QR-code and biometrics
Where electronic payments used to be made based
on POS terminals, the capabilities of smart devices
allow for the customer to pay with a digital wallet
in the store
© Shopping 2020 – Expert group Transaction
52
Trend 5: Changing checkout
Examples
LevelUP:
• Platform to enable payments and loyalty solutions together
• ‘Closing the loop’ of commerce by issuing consumer app and
providing merchants with new terminals
Benefits:
• One solution for merchants’ advertising & payments needs
• Hiding the payment interaction behind a pleasant user experience
http://www.thelevelup.com
Apple Store checkout:
• Dematerialisation of the counter: mobile POS solutions allow for
payment interaction anywhere in store
• Counters can be reused for customer service purposes
Benefits:
• Better use of store space
• Customers do not have to wait in line to pay anymore
• Mobile POS terminals are less expensive than traditional
http://www.apple.com
© Shopping 2020 – Expert group Transaction
53
Trend 6: Convergence of channels
Customers are not distinguishing e-, m- or physical commerce; the future will be commerce
Description
Impact on shopping
Impact on payments
As the internet maturity of the Dutch population
continues to grow, consumers are by default
considering both the online and offline channel to
make purchases. On top of this, there is a growing
possibility at merchants to go across channels
during in the shopping experience, creating a true
omni-channel customer experience. For the
consumer this means no longer distinguishing
between e-Commerce, m-Commerce or physical
commerce, but just commerce
•
•
•
•
•
Omni-channel integrates e-Commerce platforms
into the physical stores
Enabling sales personnel to sell products even
when they are not in stock
Delivery of goods in an e-Commerce manner.
Increasingly online orders can be picked up at
physical store or pick-up-point
•
•
Payment is specific to the context, resulting in
separate payment user experiences for the
virtual world and for the physical world
Digital wallets try to provide a generic payment
user experience across channels
Other payment means are adapting to the
variety of channels, e.g iDEAL growing to mobile
“iDEAL Mobile goes beyond channels and offers
“payments everywhere.”
Source: Max Geerling
© Shopping 2020 – Expert group Transaction
54
Trend 6: Convergence of channels
Examples
Tesco Virtual Store, South Korea:
• Pilot for window shopping through QR codes in metros
• Users can scan selected products, pay in-app and get groceries
delivered conveniently at home
Benefits:
• Extension of grocery shopping spaces in creative locations
• Online shopping enables better stock management, while
payments are carried forward in-app
http://www.tescoplc.com
Clicks-in-Bricks:
• Extending online commerce experiences in-store
• Tablets are connected to terminals that allow users to ‘self service’
checkouts
Benefits:
• Merchants can still sell goods when not in stock
• Buyers can browse through merchants catalogs in store and
purchase directly
http://www.clicks-in-bricks.com
© Shopping 2020 – Expert group Transaction
55
Trend 6: Convergence of channels
Examples
xXess360°. Scan & Shop Around, The Netherlands:
• Online multi-channel, loyalty and e-Commerce platform. Providing
consumers a real shopping experience through innovative ways of
product discovery (360°shopping)
Benefits:
• Turns real shopping malls into mobile and personalized shopping
environments for consumers
• Transforms smart phones into personal point of transaction
devices allowing consumers to discover, scan & buy products
• Retailers expand their stores with mobile shops allowing personal
interaction with their customers and increasing loyalty .
http://xxess360.com
MyOrder SideKick: Cookies for the physical world
• Know who’s in the shop
• Reach the customer on the smartphone and the tablet with
attractive offers
• Geo fencing technology, customer gets a reminder when in a
certain radius of the store
• Consumer gets a reward when he checks in the shop
Benefits:
• Learning to know your customer
• Cross sell possibilities
• Push offers over the air
• Instant rewards and offers
http://www.myorder.nl
© Shopping 2020 – Expert group Transaction
56
Trend 7: Consumer in control
Increasing need to be in control of personal (payment) data
Description
Impact on shopping
Impact on payments
•
•
•
•
•
•
The need to register yourself over and over
again forced consumers to leave information
across websites. Sensitive information is left
scattered on the internet, which makes it
vulnerable for fraudsters. This is also causing
many privacy risks especially when online or
offline personal data is being used for big data
mining
As a reaction to this scattering and usage of
personal data and related privacy issues an
interesting trend emerged to turn the
ownership of personal data around
Life Management Platforms or Personal Data
Ecosystems provide users the possibility to
retain full control over their own personal data
and can basically determine what data to share
with which company
•
•
Consumers want to know if merchants respect
their privacy (transparency) both online and
offline
Increasing attention towards merchant and
third party behavior by consumers and privacy
interest groups
Need to balance shopping experience
improvement versus privacy
•
Increasing need for transparency and security
Rising need for anonymous and less centrally
controlled payments method such as Bitcoin
Consumers may have to be protected or made
aware of risks when payments are being
pushed to the background or further integrated
into the seamless shopping experience
“The Age of Privacy is Over.”
Mark Zuckerberg
© Shopping 2020 – Expert group Transaction
57
Trend 7: Consumer in control
Examples
Qiy:
• Platform for users to control their data and privacy levels
• The Qiy Foundation is an independent organisation that
developed an infrastructure of which your personal Qiy domain
is part. This infrastructure is called the Qiy Trust Framework
Benefits:
• Qiy gives you a personal domain to manage your personal data.
That way, you decide who and when others may access your
personal data and for what purpose
http://www.qiy.nl/
Personal Data Ecosystem Consortium:
• Community: face-to-face events in Europe and North America
• Education: white papers and hold seminars explaining the
personal data economy to enterprises, investors, and
entrepreneurs.
• Advocacy: engagements with government US and European
initiatives like NSTIC to promote user-centric identity and
personal control of personal data.
• Research: research and share findings about personal data
technology, business models, ecosystems, and social impact for
our members and the public
Benefits:
• Credible organization that can provide access to global best
practices
© Shopping 2020 – Expert group Transaction
58
Trend 8: P2P payments
Why would only merchants be able to accept payments?
Description
Impact on shopping
Impact on payments
Peer to peer payments, payments with less links in
the chain and less central control, will be an
alternative in retail contexts, when messaging
surrounding the transfer of funds becomes real
time.
Such payment methods could be based on mobile
technology because it gives both sender and
receiver an interactive (and real time
communicating) device.
The distinction between a merchant and just any
economic actor might become less obvious as
shopping contexts become more fluid. The
acceptance of a payment by just any economic
actor would enable also less formal shopping
contexts and, in the same time, embrace ‘System
D’: the informal economy
The informal economy is currently responsible for
about $ 10 trillion and completely dependent on
P2P payment methods. Because of the lack of
alternatives, this part of the economy is 100% cash
based
•
•
•
•
The development of a P2P payment method
would create a payment method that is
applicable to a wide variety of contexts
Card schemes add value because they enable
real time trade between actors that do not
know each other, in a world where funds travel
at less than real time speed. Real time
messaging around a P2P payment method
would challenge this functionality
The business case in most retail payment
contexts is based on fees paid by the receiver.
A P2P payment method is likely to find its
business case more equally distributed
between payer and payee
This could result in fragmentation of payment
methods and thus additional complexity for
regulators and end users
“The ultimate payment method is aP2P payment method”
The experts from the Transaction working group discussed
about this statement and found that there may be some
truth in it as any ‘economic actor’ might be wanting to
accept payments.“
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Trend 8: P2P payments
Examples
Bitcoin:
• First ever decentralised virtual currency
• Monetary policies do not exist, an algorithm keeps the system in
balance
• Funds are stored decentralised in enduser’s bitcoin wallets
Benefits:
• Immediate, worldwide transfers between users and businesses
• Zero or low-cost payment processing
• Added benefits of anonymity and limited traceability
http://bitcoin.org/
Mobile Payments, UK:
• Coordinated by the Payments Council, allows users to send money
between bank accounts
• Using mobile phone number as alias to the bank account, providing
high ease of use
Benefits:
• Instant payments, via trusted provider (bank)
• Payments carried through Faster Payments for quick settlement
http://www.paymentscouncil.org.uk/current_projects/mobile_payments/
mPesa:
• Mobile money remittance service. Launched by Vodafone in 2007
• Became most successful domestic P2P payment service, forced
merchants to accept it as well
Benefits:
• Money messages sent through mobile devices, via Telco operators
• Instant transfers, with immediate notification that helped uptake
with businesses
http://www.safaricom.co.ke/personal/m-pesa
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Trend 9: Increasing regulation
A clear direction towards a digital economy, increased competition and innovation in payments
Description
Impact on shopping
Impact on payments
The European Commission (EC) has been providing
the legislative directives to harmonize payments on
a European level. This has resulted in the initial
Payment Services Directive (PSD) and the
implementation of SEPA payments under the
European Payments Council (EPC). Another
relevant directive is the Electronic Money Directive
(EMD), setting the rules on funds held in non-bank
managed stored value accounts.
•
•
Parallel to this the EC is working on the Digital
Agenda for Europe (DAE) to help European citizens
and businesses to get the most out of digital
technologies. In general, the EC is focusing on
increased competition and innovation in payments
as well as safeguarding the trust and reducing
fraud and cybercrime.
•
Banks will implement XS2A in the payments
portfolio offered to the account holders
XS2A is expected to trigger a broad range on
new and innovative payment user experiences
•
•
The PSD2 only drafted legislation on XS2A, it is now
up to the market players to continue to come to a
mutual understanding and further detailing of the
framework. Depending on the speed generated,
the ultimate date of implementing the legislation
into national laws of EU member states is 2017.
XS2A payments will use SEPA Credit Transfers
for settling funds between payers and payees
Consumers will be able to initiate payments
with greater convenience
Increasing complexity and possibly the cost
structure of commerce and payments
There is a risk of diversification, leading to confused
consumers and a lack of trust in XS2A payment
solutions. A clear understanding on consumer
dispute handling and related liabilities is crucial for
the trust in and adoption of XS2A services.
Mid July 2013 a new legislative pack has been
released with regards to payments; PSD2. This
drafted legislation sets out new rules on Access-tothe-Account (XS2A). As a result of this Third-party
Payment Providers (TPPs) can get access to the
consumer’s payment account for informational
services and payment initiation. This will lead to
merchants seeing new providers of payment
services.
“XS2A is a clear example of opening up of the payments
industry. Banks can either see this as a threat or an
opportunity, but when done properly, linking the
innovation capacity of new entrants to the reliable and
trusted payment capabilities of banks can be a
tremendous boost for Commerce.”
Eric van Vuuren - Equens
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Trend 9: Increasing regulation
Examples
SEPA:
• 2014 will be the end date for the SEPA migration
• Trough unified standards, Europe is making payment systems
effective and reducing their costs
Benefits:
• Common standards across the region
• Cost effective solutions for maintenance of systems
http://www.europeanpaymentscouncil.eu/
PSD2:
• Opening up access to the payment account for informational and
transactional services
• Linking innovation to standardized payments
Benefits:
• New services to become available using bank accounts
• Payment account’s access will develop in services including cash
management and investment advisory
http://ec.europa.eu/
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Contact information expert group Transaction
Eric van Vuuren (Host)
Business Developer
[email protected]
Equens
Shikko Nijland (Chairman)
Managing Partner
[email protected]
Innopay
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63

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