Paying by debit card is supplanting cash payments more and more
Amsterdam, 16 June 2010. In its 2009 annual report, Currence addresses its concern about foreign banks that are not adopting the iDEAL online payment system. Currence believes that foreign banks would be better off using the iDEAL standard, instead of each country introducing its own online payment system, which Currence fears would lead to a European patchwork for online payments. This is not only bad for online shoppers in Europe, but also for the banks themselves, because in the meantime, other non-banking parties will step in to fill this vacuum, allowing them to win an ever-increasing share of the payment traffic. This makes banks dependent upon such parties, and limits their innovative clout. iDEAL, the largest system of its kind worldwide, has been a leading success story and a model of financial innovation at international conferences on payment systems. The Dutch public also considers iDEAL to be the most indispensable financial brand, which is why Currence has also adapted iDEAL to meet the European SEPA requirements so that foreign banks can deploy iDEAL in Europe and offer it to their online customers.
As Currence notes in its annual report, Dutch consumers made significantly more debit card payments in the past year, resulting in the number of cash payments significantly decreasing for the first time. The share of debit card payments (38%) in over-the-counter traffic rose to almost 2 billion transactions, as a result of the successful campaign ‘Small amount? Use your PIN card!’ – approximately
100 million more transactions for small amounts (under € 10) were made by debit card. These ‘small’ payments accounted for half of the growth, which, despite the decline in sales (-5%) due to the financial crisis in the retail sector, was substantial (11%). Although debit card payments will continue to supplant cash, Currence does not expect that cash payments will disappear within the next few years. An increased amount of debit card payments means a reduction in costs for payment traffic, and more security in shops. An analysis of payment behaviour shows that 80% of all consumers have a (very strong) preference for debit card payments. Only 4% of consumers have a strong preference for paying in cash.
The amount of the losses resulting from skimming over the last year increased to € 36 million, but the number of skimming cases decreased slightly in 2009 to 917 (2008: 926). Businesses, banks and suppliers of point-of-sale terminals have been collaborating well with Currence, reducing the number of point-of-sale skimming cases by 20%, thanks to targeted measures. Replacing the magnetic strip on payment cards with EMV chips (the new form of debit card) has made this form of fraud quite difficult. Next month, the new form of debit card payment will begin. Research conducted by Currence shows that media coverage of skimming has not affected the level of trust in debit card payments, though it has contributed to greater awareness among the public, which led to a number of skimming incidents being avoided. Consumer behaviour also improved, especially in terms of shielding the keypad entry of the PIN code.
The paper giro (‘Acceptgiro’) is still in use, and will be adapted to meet the European requirements. The Dutch public’s evaluation of this payment method was a 7.5. The automatic direct debit product (‘Incasso/Machtigen’) was slightly more popular, with a rating of 7.7. Through the introduction of European legislation (PSD), the consumer conditions for the automatic direct debit product have been adjusted. The refund period has been extended to 8 weeks (previously 30 days), and reporting an incorrect direct debit can take place up to 13 months after the amount has been debited.
Download the Currence annual report.