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How do the dutch pay in 2013

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In its capacity as chairman of the transactions expert group within the Shopping2020 research platform, Innopay has the honor to present a new report: How do the Dutch pay in 2013? The report sketches …

In its capacity as chairman of the transactions expert group within the Shopping2020 research platform, Innopay has the honor to present a new report: How do the Dutch pay in 2013? The report sketches the trends that shaped the transactions of today and describes the way at which Dutch consumers are paying. Above that the report sketches the future of (online) shopping and paying by identifying the most important trends.

The publication was made possible by the Shopping2020 'transactions' expert group, existing of 23 members hosted by Equens and chaired by Innopay.

Published in: Economy & Finance, Business
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  • 1. HOW DO THE DUTCH PAY IN 2013? September 2013 DON’T BELIEVE THE HYPE...........YET 25 September 2013 – Expert group Transaction - FINALCONFIDENTIAL AND PROPRIETARY © Shopping 2020
  • 2. © Shopping 2020 – Expert group Transaction 11 Payments in NL anno 2013: cash, ‘pinnen’ and iDEAL Offline: Maestro Online: iDEAL 93% (market share, # electronic transactions) 58% (Last used online payment) Source: DNB, Currence Remarks: • In this report we refer to “pinnen” for what is actually a Maestro transaction
  • 3. © Shopping 2020 – Expert group Transaction 22 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
  • 4. © Shopping 2020 – Expert group Transaction 33 Expert group Transaction is part of a nationwide study regarding current and future consumer shopping behavior 19 Expert Groups Economisch Demografisch, Sociaal-Cultureel Technologisch Future Touchpoints Ecologisch Politiek / Juridisch Future Trends Orientation Selection Transaction Delivery Customer Care Customer Intelligence Business Models Omnichannel Organisatie Veiligheid & Fraude De Nieuwe Winkelstraat Smarter Shopping Supply Chain Shopping2020 Vision Actieplan S2020 Nederland Travel Actieplan Finance Actieplan Retail Actieplan … Actieplan Customer Journey Key Themes Online Ondernemen Shopping2020 study
  • 5. © Shopping 2020 – Expert group Transaction 44 Michel Drupsteen Sr. Business consultant ING Bank Wieske Ebben Policy Advisor Payment De Nederlandsche Bank Max Geerling Director Card Products & iDeal Currence Rene Hodde Executive Director Chess Group Rob Hoitink Productmanager iDEAL Currence Rommert Jorritsma Consultant Payment Systems Intersolve Expert group Transaction: well-grounded with 23 payment experts from diverse backgrounds (1/2) Eric van Vuuren (Host) Business Developer Equens Shikko Nijland (Chairman) Managing Partner Innopay Paul Alfing Policy Adviser Thuiswinkel.org Simon Berende Senior Product Manager Consumer Payments ABN AMRO Bank Gert Blom Manager Strategic Alliances Paysquare Gijs Boudewijn Hoofd Betalingsverkeer & Veiligheid Nederlandse Vereniging van Banken
  • 6. © Shopping 2020 – Expert group Transaction 55 Marja van Kalveen Teamleider productmanagement Toonbankbetaalproducten Rabobank Nederland Bedrijven Gerben Klop Strategy and Business Development xXess360 Jip de Lange Consultant Innopay Okke Mönking Business Leader Acceptance Mastercard Raoul Manten e-Commerce manager Maxeda Tom Nijenhuis Head of Strategy & Development Equens Jaques Parson Detailhandel Nederland Noor Pierik Sr. Marketeer Cards Acquiring Equens Marja van Reijn Regional Manager Global Blue Michel van Westen Voorzitter VBIN Dennis Wooning Sr. Productmanager Debit- & Credit Cards ABN AMRO Bank Expert group Transaction: well-grounded with 23 payment experts from diverse backgrounds (2/2)
  • 7. © Shopping 2020 – Expert group Transaction 66 Expert group Transaction covers the Customer Journey from Shopping Basket to Check-Out Source: Bonsing/Mann ORIENTATION Visibility Accessibility Look & feel User experience Performance Functional elements SELECTION Shop entrance Shop interface Product search Product information Price & delivery details Selection enhancement Selection flows TRANSACTION Shopping basket Check-out entry Opt-in Check-out-flow flow Delivery details Payment flow Policies & services DELIVERY Order confirmation Track & trace Deliverance Unboxing Returns CUSTOMER CARE Follow up Feedback options Review options Customer care Customer profile mgmt. 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. SCOPERESEARCHQ © Bonsing / Mann time 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 EXPERTGROUPSSHOPPHASE
  • 8. © Shopping 2020 – Expert group Transaction 77 This report covers the current situation in transactions ‘Shopping Today’ (2013) Shopping2020 (To be delivered in January 2014) 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? Research Questions expert group Transaction 1. What is the current situation for transactions in Dutch retail practice? 2. What are current trends and examples? 1. What are the most important trends. points for improvement and opportunities in transactions? 2. What are the most likely future scenarios?
  • 9. © Shopping 2020 – Expert group Transaction 88 Phase 1: ‘Shopping today’ Shopping2020 Two-phased approach: ‘Shopping today’ and ‘Shopping2020’ 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? Future trends (other expert groups) ‘How do the Dutch pay in 2013?’ Work streams on various topics Determine scenarios ImplicationsGather information Document September 26: ‘Shopping Today’ January 22/23: ‘Shopping2020’
  • 10. © Shopping 2020 – Expert group Transaction 99 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
  • 11. © Shopping 2020 – Expert group Transaction 1010 How consumers and merchants are related: a two-sided market 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 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.
  • 12. © Shopping 2020 – Expert group Transaction 1111 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
  • 13. © Shopping 2020 – Expert group Transaction 1212 e-Commerce changed the relative timing of the three processes, resulting in unbalanced risks • 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 Point of Sale transaction Internet transaction A Agree P Pay D Deliver R Risk A Agree P Pay D Deliver R Risk RA RP RD Context: Relation (r) Product (p) Location (l) Timing (t) A Agree P Pay D Deliver R Risk
  • 14. © Shopping 2020 – Expert group Transaction 1313 Timing determines whether Buyer or Seller bares the risks 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 A Agree P Pay D Deliver Pay in advance Risk with buyer time1 A Agree D Deliver P Pay Pay afterwards Risk with seller time2 A Agree P Pay Pay and delivery at same time Risk equally divided time3a D Deliver A Agree P Pay time3b D Deliver
  • 15. © Shopping 2020 – Expert group Transaction 1414 … leading to endless payment methods to match all contexts
  • 16. © Shopping 2020 – Expert group Transaction 1515 Person-to-Person Consumer-to-Business Proximity  Cash  Debit and Credit Cards  Prepaid  Wallets  Giftcard  Cash Remote  eWallet  Credit transfer  Online Banking ePayments  eWallet  Credit transfer  Debit and Credit Cards  PayPal  Gift Cards Every context has its own payment methods 1 4 2 3 Source: Innopay 2010
  • 17. © Shopping 2020 – Expert group Transaction 1616 Payment and Loyalty and related fee structures are mainly based on three or four corner models in 2013 2.Merchant1.Consumer 3.Issuer 4.Acquirer PSP (Clearing & settlement) (C&S) Good/ Servicess Authorisation Paymen t TRX FeePeriodic Fee 4-corner payment model 3-corner payment model 2.Merchant1.Consumer 3.Service provider/ Bank PSP Goods/ Services PaymentAuthorisati on TRX Fee Periodic Fee 2.Merchant1.Consument EGI autorisatie CPSP 3.Brandowner Giftcard (C&S) Goods/ Services 3-corner gift card/loyalty model • 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
  • 18. © Shopping 2020 – Expert group Transaction 1717 Since the beginning of e-Commerce, we’ve seen continuous evolution of the payment landscape … • 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 1995 20152005 2. Making traditional payment products suitable for use on the internet (...cards were never designed for the web…) 3-party based challengers 4-party based challengers 3-party model 4-party model New 3-party based challengers Online Banking based ePayment Volume 1. In the beginning, there were cards 4-party model 3-party model 3. New payment methods were designed specifically for use on the web 4. In reaction, the 4-party paradigm was translated to the web 5. New contexts demand new functionality. A new wave of 3-party models aims to fulfill these needs
  • 19. © Shopping 2020 – Expert group Transaction 1818 … but only a few new payment methods make it through their infancy Source: Innopay, Equens • 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 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Cash PIN Maestro / V Pay Chipknip MasterCard / Visa Acceptgiro Wallie card MiniTix eWallet Bill iDEAL Travik Payter emPayment! Mobiel betalen NL Payment products on the Dutch market (non exhaustive)
  • 20. © Shopping 2020 – Expert group Transaction 1919 Successful payment solutions provide Reach and Conversion against fair Cost Reach Cost 1. 2. 3. Conversion Merchants: 1. REACH: Merchants are looking for those payment methods that their target audience uses: this makes a visitor an potential customer  reach 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 Consumers: 1. REACH: Consumers choose payment methods that are widely accepted by merchants  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-of- use) 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
  • 21. © Shopping 2020 – Expert group Transaction 2020 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)
  • 22. © Shopping 2020 – Expert group Transaction 2121 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
  • 23. © Shopping 2020 – Expert group Transaction 2222 NL Shopping landscape: small supermarkets, historic city centers and domestic e-Commerce 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 Purpose of the chapter: • This chapter illustrates the factors determining where and how consumers shop anno 2013
  • 24. © Shopping 2020 – Expert group Transaction 2323 Online shopping is growing, while offline retail is declining 0 2 100 90 80 70 60 50 40 30 20 10 0 12 16 14 10 8 6 4 TurnoverinBillion€ 2013 79 11 2012 83 10 2011 87 Percentage 89 8 9 2009 92 7 2008 2010 5 6 2007 83 90 Offline retail turnoverOnline retail turnover% online retail / total retail +14% Development online vs. offline retail (NL) -10 -5 0 5 10 15 20 25 30 35 40 45 2005 2006 2007 2008 2009 2010 2011 2012 Percentage Growth compared to the previous year 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
  • 25. © Shopping 2020 – Expert group Transaction 2424 Stable retail landscape, in spite of declining turnover -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6120 110 100 90 80 70 60 50 40 30 20 10 0 #companiesinthousands 2013 31 12 10 4 3 1 2010 32 12 10 10 14 7 4 3 1 2009 33 12 10 1 2008 33 12 10 10 11 7 4 3 1 2007 32 12 10 10 10 7 4 3 1 3 4 7 13 11 10 24 7 4 3 1 2012 32 12 10 10 21 7 4 3 1 2011 32 12 10 10 17 7 Street trading '(no shop or market) Shops in recreational items Supermarkets and department stores Shops in consumer electronics Gas station % growth y/y retailMarket trade Shops in food products Shops in other household goods Shops in other articles • 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)) Division of verticals in Dutch retail +2% Source: CBS, Innopay analysis
  • 26. © Shopping 2020 – Expert group Transaction 2525 e-Commerce in the Netherlands compared to Europe: high internet penetration and uptake of online shopping … 0 20 40 60 80 100% EUDEFRUKNL % of online shoppers / total population ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 200 150 100 50 0 350 300 250 EUDEFRUKNL Mn Number of online shoppers % Internet penetration (2012) ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 100%20%0% 80%60%40% DE 83 FR 80 UK 84 NL 93 EU 73 • % 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 Source: ANVED, Datamonitor, Euromonitor, Ecommerce Europe, Innopay analysis
  • 27. © Shopping 2020 – Expert group Transaction 2626 0 20 40 60 80 100 120 140€ EUDEFRUKNL Average transaction value (’10 – ’12) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 € EUDEFRUKNL Average yearly online spending per user (’10 – ’12) ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 ’10 - ’11 - ’12 • 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%! … although average spending per user is relatively low Source: ANVED, Datamonitor, Euromonitor, Ecommerce Europe, Innopay analysis
  • 28. © Shopping 2020 – Expert group Transaction 2727 e-Commerce in the Netherlands highly concentrated in small number of large retailers Top 10 Top 11-100 Outside Top 100 1.8 2.0 2.0 3,2 Travel • 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 RevenueinBillion€ 70% 30% Distribution of (B2C) online retail revenue (NL) Note: total online turnover amounted to € 9 Bn in 2011 110 83 94 106 108 108 130 200 358 469 BAS Group (e.g. MyCom) KPN Ahold Bol.com RFS Holland Holding (e.g. wehkamp.nl) Amsterdamgold.com Thuisbezorgd.nl HEMA H&M Coolblue Online retail revenue in Million € Top 10 online retailers (NL) Source: Twinkle, Innopay analysis
  • 29. © Shopping 2020 – Expert group Transaction 2828 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
  • 30. © Shopping 2020 – Expert group Transaction 2929 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
  • 31. © Shopping 2020 – Expert group Transaction 3030 Offline and Online can still be considered as two different payment channels in 2013 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 Offline Online + Purpose of the chapter: • In this chapter the most important payment methods for the Dutch market are described
  • 32. © Shopping 2020 – Expert group Transaction 3131 If the consumer is not already registered, online payments are typically more complex than offline payments 1. Choice of Products 2. Account- registration 2. Log In 7. Order Tracking 6. Validation + Order Referention 5. Payment- proces/ Authorisation 3. Order Check 4. Choosing Payment Method 2. Filling in Contact/ Delivery Details 2b. Log In 2a. Filling in Contact/ Delivery Details Online 2. n/a 7. n/a 6. Validation + Order Referention 5. Payment- proces/ Authorisation 3. Cash Register/ Order intake 4. Choosing Payment Method 1. Choice of Products Offline
  • 33. © Shopping 2020 – Expert group Transaction 3232 Main differences in the Transaction flow are in Checkout, Delivery details and Payment Flow Basket Checkout Delivery details Payment flow Receipt Service Policies Payment method Device Offline • Physical • Loyalty card • NA • Pay now • Paper • Email • On site • Phone • Law: “Verkoop en garanties voor consumenten goederen” • Cash • D/C Cards • Giftcards • Kassa • Terminal • Dongle • Mobile 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 • DD/CT • Paypal • Acceptgiro • Cash on delivery • Smartphone • Tablet Orientation Selection Transaction Delivery Customer Care
  • 34. © Shopping 2020 – Expert group Transaction 3333 Current Account is the core funding source of basically all payment methods Offline Online Funding Channel/ Payment- product Context SEPA Direct Debit Internet Banking Credit Card Cash Debit Card Cash Credit Account Stored Value Virtual Currency Loyalty/ Points Current Account Loyalty Card Prepaid ‘Card’ Wallet iDEAL SEPA Credit Transfer Gift ‘Card’
  • 35. © Shopping 2020 – Expert group Transaction 3434 A broad variety of loyalty schemes and gift cards exist as ‘alternative currencies’ 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’ 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 Source: Intersolve
  • 36. © Shopping 2020 – Expert group Transaction 3535 70% 100% 90% 80% 60% 50% 40% 30% 20% 10% 0% 2012 93% 6% 2005 88% 10% 2% 1% 2011 92% 7% 2% 2010 91% 8% 1% 2009 90% 8% 2% 2008 89% 9% 2% 2007 88% 10% 2% 2006 88% 10% 2% PINChipknipCreditcard 1.000 1.500 2.000 2.500 3.000 0 500 +8% 2012 2.474 148 38 2011 2.285 172 39 35 2008 1.756 176 37 2007 1.588 175 34 2006 1.451 164 1.946 2005 1.334 147 30 #transactions(millions) 177 2009 35 178 2.154 2010 32 Split of electronic payment methods relatively stableNumber of electronic payments in NL Offline - Dutch still like to pay with PIN (Maestro) • 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
  • 37. © Shopping 2020 – Expert group Transaction 3636 Offline – # Debit card transactions is increasing considerably 2000 2002 2004 2006 2008 2010 2012 0 20 40 60 80 100 120 1403.000 2.500 2.000 1.500 1.000 500 0 Trxvaluein€ #oftrxinMillions Avg. Debit Card trx value Total # of Debit Card trx NL Development # of debit card trx and avg. trx value at POS (NL) 2008 2009 2010 2011 2012 0 20 40 60 80 100 120 140 20 40 60 80 120 140 100 160 0 Trxvaluein€ #oftrxinMillions Avg. Credit Card trx value NL Total # of Credit Card trx NL Development # of credit card trx and avg. trx value at POS (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
  • 38. © Shopping 2020 – Expert group Transaction 3737 Online - iDEAL by far most used for internet payments 1% 1% 1% 2% 3% 4% 4% 8% 13% 58% 1% 1% 1% 1% 3% 4% 7% 8% 14% 54% 1% 1% 1% 1% 4% 5% 5% 6% 13% 58% 0% 10% 20% 30% 40% 50% 60% 70% One-off Mandate Cash PIN Recurring Mandate Acceptgiro (paper) PayPal Online bank credit transfer Credit Card Acceptgiro (Online) iDeal Buyers 2011-2 (n=1296) Buyers 2012-1 (n=1440) Buyers 2012 -2 (n=1453) 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 Top 10 payment methods used last purchase Source: Blaauw, GfK 2013 Prefered online payment method 2% 4% 4% 74% 7% 10%Acceptgiro (Online) iDEAL One-off Mandate PayPal Other Credit Card 20% 40% 60%
  • 39. © Shopping 2020 – Expert group Transaction 3838 120.000 110.000 100.000 90.000 80.000 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0 Numberoftransactions 2012 116.870 2011 93.063 2010 62.961 2009 43.575 2008 27.865 2007 14.811 +51% Number of iDEAL Transactions (1,000) Number of iDEAL transactions is growing rapidly • 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 Why do consumers prefer iDEAL 5% 10% 20%15% 25% Habit Fast Convenient Familiar Safe
  • 40. © Shopping 2020 – Expert group Transaction 3939 Roughly the same preferences for mobile payments as for online payments 1% 11% 2% 5% 7% 5% 6% 8% 54% 0% 2% 2% 1% 4% 7% 8% 6% 70% 0% 10% 20% 30% 40% 50% 60% 70% 80% Do not know Other One-off Mandate Cash PayPal Online Bank credit transfer Credit Card Acceptgiro (Online) iDeal Payment method last mobile order 2012 Tablet(n=225) Smartphone (n=196) Source: Blauw 2013
  • 41. © Shopping 2020 – Expert group Transaction 4040 Though electronic transactions score relatively good compared to other EU markets, cash is still popular 0 10 20 30 40 50 60 70 80 90 100 75 Spain 80 Italy 89 Poland Nordics 46 France 50 Netherlands 90 Greece 97 % 52 Belgium 54 UK 57 Austria 64 Switzerland 66 Germany 69 Ireland Cash’s share of total transactions NL 2011 (%) • 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 Source: McKinsey, Innopay analysis
  • 42. © Shopping 2020 – Expert group Transaction 4141 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 “Cash is still king”
  • 43. © Shopping 2020 – Expert group Transaction 4242 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
  • 44. © Shopping 2020 – Expert group Transaction 4343 Many trends have been identified of which nine have been selected as most likely to change the way Dutch pay Transaction Technology Economy & Society Legislation & Regulation 3. Digital wallets 4. Changing POS interaction 9. Increasing regulation 1. Digital identity 7. Consumer in control 5. Changing checkout 6. Convergence of channels 8. P2P payment 2. Mobile shopping and payments
  • 45. © Shopping 2020 – Expert group Transaction 4444 Trend 1: Digital identity Using a single digital identity throughout the shopping experience can enable seamless 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 Description • 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 Impact on shopping • 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 Impact on payments “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
  • 46. © Shopping 2020 – Expert group Transaction 4545 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 IDchecker: • Multichannel solution to verify ID documents • Automated checks based on various large databases Benefits: • Effective, cross channel solution • Extensive database for accurate checks DigiD: • Secure online identification with the Dutch government Benefits: • One gateway for all online services of the Dutch government http://www.digid.nl http://www.signicat.com http://www.idchecker.nl Trend 1: Digital identity Examples
  • 47. © Shopping 2020 – Expert group Transaction 4646 Trend 2: Mobile shopping and payments Smart mobile devices have quickly changed the way we shop, both in-store and on the go 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 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) Description • 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 Impact on shopping • 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 Impact on payments “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
  • 48. © Shopping 2020 – Expert group Transaction 4747 Trend 2: Mobile shopping and payments Examples 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 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/
  • 49. © Shopping 2020 – Expert group Transaction 4848 “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 Trend 3: Digital wallets and in-app payments Payments are initiated from digital wallets, making payment means less relevant 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 Description • 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 quick- checkout method in web shops as alternative for traditional PSP-checkout • Upon checkout digital wallets disclose consumer and payment credentials Impact on shopping • 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 Impact on payments
  • 50. © Shopping 2020 – Expert group Transaction 4949 Trend 3: Digital wallets and in-app payments Examples 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 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
  • 51. © Shopping 2020 – Expert group Transaction 5050 Trend 4: Changing POS interaction Contactless payments provide convenience and new technologies challenge the classic POS terminal 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). 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 QR- codes. 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 Description • 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 Impact on shopping 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 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 Impact on payments “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’
  • 52. © Shopping 2020 – Expert group Transaction 5151 Trend 4: Changing POS interaction Examples 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 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
  • 53. © Shopping 2020 – Expert group Transaction 5252 Trend 5: Changing checkout New shop floor experiences with evolving cash registers and payment terminals In combination with the capabilities of smart devices such as tablets and smartphones, the in- store 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. 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 Description • Shop floor experiences are evolving from new technologies • Location based services (geo-location, in-store- wifi, 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 Impact on shopping • 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 Impact on payments
  • 54. © Shopping 2020 – Expert group Transaction 5353 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
  • 55. © Shopping 2020 – Expert group Transaction 5454 Trend 6: Convergence of channels Customers are not distinguishing e-, m- or physical commerce; the future will be commerce 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 Description • 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 Impact on shopping • 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 Impact on payments “iDEAL Mobile goes beyond channels and offers “payments everywhere.” Source: Max Geerling
  • 56. © Shopping 2020 – Expert group Transaction 5555 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
  • 57. © Shopping 2020 – Expert group Transaction 5656 Trend 6: Convergence of channels Examples 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 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
  • 58. © Shopping 2020 – Expert group Transaction 5757 Trend 7: Consumer in control Increasing need to be in control of personal (payment) data • 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 Description • 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 Impact on shopping • 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 Impact on payments “The Age of Privacy is Over.” Mark Zuckerberg
  • 59. © Shopping 2020 – Expert group Transaction 5858 Trend 7: Consumer in control Examples 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 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/
  • 60. © Shopping 2020 – Expert group Transaction 5959 Trend 8: P2P payments Why would only merchants be able to accept 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. Description 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 Impact on shopping • 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 Impact on payments “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.“
  • 61. © Shopping 2020 – Expert group Transaction 6060 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
  • 62. © Shopping 2020 – Expert group Transaction 6161 Trend 9: Increasing regulation A clear direction towards a digital economy, increased competition and innovation in 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. Mid July 2013 a new legislative pack has been released with regards to payments; PSD2. This drafted legislation sets out new rules on Access-to- the-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. Description • 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. 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. Impact on shopping • 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 Impact on payments “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
  • 63. © Shopping 2020 – Expert group Transaction 6262 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/
  • 64. © Shopping 2020 – Expert group Transaction 6363 Eric van Vuuren (Host) Business Developer eric.vanvuuren@nl.equens.com Equens Shikko Nijland (Chairman) Managing Partner shikko@innopay.com Innopay Contact information expert group Transaction

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