Amsterdam, May 27, 2008. In its annual report, “Efficient and modern payment”, which was published today, Currence compared the cost to society* of PIN payments with those of cash payments in shops. In 2007 a 9.5% rise in the number of PIN transactions resulted in savings of €10 million in this area, and savings over the past four years now amount to €25 million. Currence expects that even more can be saved in the next few years if the trend towards using PIN cards instead of cash continues. This expectation is based on sound evidence, as the costs of PIN transactions have fallen while the costs attached to cash payments have risen. Clearly, charging fees for using PIN cards acts as a barrier to reducing the cost to society of the payment system.

Currence believes that the creation of the Single Euro Payments Area (SEPA) is a positive development that could lead to substantial benefits for the market in the longer term. The existing payment system in the Netherlands is

extremely efficient and the cost for end users is relatively low. To maintain this situation following the migration to SEPA, it is important that the switch from the existing Dutch products to SEPA products is based on demand from the market, which means that the suppliers of the products (banks) will have to convince the users (shops and consumers) that the SEPA products offer at least as much value for money. Currence has modified its PIN product to bring it into line with European requirements (i.e. making it SEPA-compliant) and has also made it compatible with the international EMV chip technology standard, which will replace the magnetic strip technology used at the moment. Banks, businesses and consumers will therefore be able to continue to use PIN cards for payment following the migration to SEPA if they so wish.

Competition within Europe is expected to increase, providing banks, retailers and consumers with a choice of payment card brands. Currence believes that the PIN product can serve as a benchmark for European alternatives and enable the Dutch market to decide on the most efficient brand. In Currence’s opinion, an environment that offers a range of alternatives (including PIN) provides the best guarantee of a favourable outcome for the market, and it should therefore be up to suppliers and users to decide whether they want to opt for PIN or another brand. For PIN to continue to be considered a good alternative in the future, banks will have to offer the PIN product on the EMV chips on their payment cards. Piet Mallekoote, Managing Director of Currence, summarised the issue thus: “Given the complex environment and the probability that the transition will take a long time, it would be unwise to get rid of older products that still work perfectly well until the new products have proved their superiority”.

iDEAL SEPA-compliant by end of 2008
iDEAL has proved highly popular in the market, and Currence intends to bring this product into line with European requirements by the end of 2008 so that it can continue to be used following the migration to SEPA. In addition, foreign banks will also be able to adopt iDEAL as a method of payment and offer it to their customers, meeting the demand among webstores and consumers for a simple method of online payment that can be used for e-commerce throughout Europe. Following an explosion in the use of iDEAL last year, the product is now the leading online payment system of its kind in the world. Some 15 million payments were made using the system during 2007 and growth is expected to rise substantially in 2008, based on current figures that show iDEAL is used to pay for 2 million online purchases a month. “iDEAL is very popular among webstores, consumers and banks alike,” Piet Mallekoote explained. “And soon banks in other countries will be able to benefit from this Dutch innovation too.”

Netherlands Incasso-land
There are 70 Incasso transactions per capita in the Netherlands each year, putting the country in third place in the European direct debit league table behind Austria and Germany. In 2007, there were almost 1.2 billion Incasso transactions in the Netherlands, up 3.3% on the previous year. In spite of what has been said in some reports in the media, the Incasso payment product is well-organised and secure, and in the case of permanent mandates for direct debits, consumers have the right to reverse Incasso transactions within 30 days. Currence has started compiling statistics on complaints about payees so that those that are frequently the subject of complaints concerning Incasso transactions can be dealt with sooner.

Acceptgiro to be continued as long as the market demands
The quintessentially Dutch Acceptgiro product is gradually falling in popularity, mainly as a result of the rise of online banking and new services such as digital invoicing. However, as not everyone is able to use online banking services, Currence will conduct a study in the course of 2009 to determine how great the potential future demand for the paper Acceptgiro product will be. This study will involve consultation with consumer organisations and the business market as well as with banks.

No successor in sight for Chipknip
The use of Chipknip increased sharply in 2007, particularly in the vending machine and canteen segments. As none of the new concepts trialled during 2007 have produced a successor to Chipknip, in the coming years Currence will work on developing its policy on the future of Chipknip and its potential successor.

* the cost to society is the cost incurred by all the links in the payment chain so that amounts can be paid and received.

Click here for Annual Report 2007.