Monday, December 26, 2005
Friday, December 23, 2005
While the NMa remaines the opinion that it might be possible that Interpay has abused its economic market position, it feels that further research is required to make this case final. In the light of recent events (the agreement of banks and retailers which lowers POS-fees ; the restructuring of the Dutch market so that each bank now competes on POS-fees where Interpay used to be the collective agent ; the actual observations that competition is taking place in the market for POS-authorisation services) the NMa decided not to further pursue this case.
All in all, this is a quite balanced and forward-looking view of the NMa. Why keep on researching the past and determining fines etcetera if all players in the market are looking towards the future and working collectively to make payments more efficient?
Meanwhile, the press release of Interpay does twist the issue a little bit. Interpay states that the NMa withdrew its previous allegations and finds that Interpay has no position of power and does not maintain excessive rates. This is too brief a conclusion which is legally not justified. NMa has not withdrawns its allegations but has ended the work on the case and only withdrew its penalty.
Then again: try explaining such technical detail to the public..... no wonder the European Commission is seeking further guidance on the market abuse issue.
Wednesday, December 21, 2005
Technically perhaps, but in a functional way money needs to go from A to B. So while many keep on dreaming of making money by inventing payment mechanisms, they better focus on selling something rather than doing this payment stuff.
Before you know, you end up signing your own regulatory measures.. ;-)
Tuesday, December 20, 2005
Now let us see what's so interesting about this case (see the full document here).
First of all, the incident which is at the basis of the problem, dated before ABN AMRO signed into a previous agreement (July 2004) with US regulators to clear up internal mess. So the order of events is that ABN AMRO was cleaning up internal mess as a result of the agreement with US regualtors to do so. While doing this, they noticed trouble in Dubai and informed the regulator of their finding. And then, the regulator responds with a fine. Now if this were for an incident of later date than July 2004 I would understand, but to do so for events occuring before that date seems to me the wrong way to motivate...
Second, the regulatory measure is a coproduction with the Dutch central bank which is the home bank supervisor. To me this implies that US regulators know that they are on the edge of their competencies. If indeed ABN AMRO could be fined for actions in Dubai in violation of US-regulation; it could also be fined in Russia, Belgium, the Netherlands for that same violation. Similarly, the office in Dubai needs to comply with all banking laws that apply to ABN AMRO internationally (Dutch, local, US, etc). That can't be true. There is a serious conflict of law here, but it has been managed by drawing in the home country supervisor. And as this home country Dutch supervisor was already under public pressure (given that just 2 weeks before a small Dutch bank actually went broke while under supervision), that might explain the willing cooperation of the Dutch central bank in its supervisory role.
Third, also quite interesting, is the fact that ABN AMRO signed the regulatory measure and promised not to appeal. Is this because, after the Fazio case, the supervisors are afraid to be sued by ABN AMRO? Is it because ABN AMRO management wishes this issue to be dealt with properly on the inside; using this external measure as an extended instrument to get internal operations aligned? Or is it because the actual incidents require a decent cover-up? We may well tick either one or all three of the boxex above. The beauty is that we will never know.
Which leaves us with the main question. Are we just looking at an incident which is not representative for the future of supervision or is this a precedent leading us forward into a new regulatory future.
I hope it is the first, but I fear it is the last.
Where a dominant company is present on a market, competition on that market is already weak. The concern of the competition rules is therefore to prevent conduct by that dominant company which risks weakening competition still further, and harming consumers, whether that harm is likely to occur in the short, medium or long term.
It is a good thing that the Commission appears to lighten the old approach. What still worries me though, is that essentially we keep on building Europe on the normative basis of economic competition theory. The Europe that results will be a dreamwork full of mirrors, night-mares where theorists may feel at home and find their way while the general public feels quite uneasy...
Do note that the Commission is anxious to put the consumer in the first place in all these ramblings. My guess is that the Commissions fears creating a further distance with the citizen, leading to a more general NO against the concept of Europe. Consequently we may continue to see a strategy where the Commission takes on the most visible/perceived dominant market players ; this will continue the support of the consumer/citizen. But the road that is being paved while doing so, may in the end lead us to a more ugly than social Europe.
Is the rational economic perfect competition Europe the Europe that we really want..?
Sunday, December 18, 2005
Friday, December 09, 2005
- the Commission White Paper on Financial Services
- a Eufiserv press release to demonstrate their SEPA-committment,
- special e-business watch report on e-invoicing,
- the Quarterly Bulletin of De Nederlandsche Bank, containing descriptions of latest developments (pp 38-44).
Much will be said about this Directive, not least of all the very funny way of using the term authorisation (up until now the word for a bank action checking the transaction) for the consumer action of sending a payment to the bank.
Sunday, December 04, 2005
And... nicely timed as well. In the Netherlands we have a local custom called Sinterklaas. A kind of Santa Claus that provides gifts. Well, this is what one would call a good Sinterklaas gift. So if any retailer would still complain about banks and/or POS-fees, I'm pretty sure that Black Piet will take them off to Spain next year.
Tuesday, November 29, 2005
This is quite a significant market to leave unregulated (which is actually the plan of the Commission, on the basis of the argument that a huge number of small payments do not require regulation given the small individual size of the payments...).
Sunday, November 27, 2005
The trial lawyers are locked in on Visa and MasterCard because they see dollar signs. The merchants who are buying into these suits are, in their understandable desire to cut costs and maximize profits, being shortsighted. Crippling Visa and MasterCard through regulation or litigation would decrease consumer choice and buying power and ultimately hurt the merchants who are calling for it. The trial lawyers may be their friends on this fight, but seeking legal and regulatory intervention for market advantage is a precedent that large merchants will likely regret in the future.
Australia, where regulators slashed interchange fees well below their market level, the result has been a dramatic decline in cardholder benefits -- reward programs and the like -- and an increase in annual fees. This has driven a double-digit increase in the use of more expensive charge cards from companies like American Express and Diners Club. As a result, merchants are paying more on many transactions, and there is a push for regulation of the three-party payment systems.
In conclusion: betting on regulation and/or regulatory intervention rather than on the forces of the market may be a costly strategy with a high boomerang factor. One may end up with unexpected by-effects....
Saturday, November 26, 2005
But they're up and running again.
Three of the big five European countries distinguished themselves by their leisurely approach to EMV:
? Zero per cent EMV conversion for EFTPOS terminals
and ATMs in the Netherlands
? Migration speed is down to the business case
More specifically the report states:
Despite the lack of motivation, the Netherlands will still have to be compliant with the SEPA Cards Framework. This means that, with the exception of POS terminals, multi-purpose payment cards and ATMs in the Dutch market should be fully EMV-compliant by 2010.
The report is of course extremely expensive, but from the table of content we can read:
The Netherlands: A classic story of a weak business case
? But there is a business case for credit cards
? However, with the exception of POS terminals,
payment cards and ATMs will have to be
EMV-compliant by 2010 in the context of SEPA Cards
"The directive* defines a new category of payment service provider, namely payment institutions," reads the directive. "There has been last minute discussions among Commissioners on euro payments and there is a serious consideration that it will be go from three days to one," added the source.
The maximum execution time for payment transfers inside the Euro zone was originally thought to be three days and discussions among Commissioners are bringing it back to one day. This comes a week before the Commission is due to endorse the directive and send it to the European Parliament* and Council for approval.
Non-credit institutions will be granted market access across by including them in the scope of the directive. Providers of all payment services that do not involve taking deposits or issue e-money will be subject to new rules. The prudential regime will involve closer participation from regulators and less capital requirements. "Capital requirements and other quantitative solvency requirements are deemed to be disproportionate to the risks facing payment institutions," reads the draft.
It will be up to the national member states to appoint a regulatory body that will ensure that all payment providers fulfil their obligations, disclosure of information, follow their recommendations and warnings, and get authorisation. The authorisation given by this local regulator will be valid to operate across the EU*.
All payments that do not exceed 50,000 EUR* will be subject to rules of transparency and liability of the provision of services. The directive replaces the 25 different sets of rules which include information requirements, framework contracts, and common provisions. The liability rules focus on the rights and obligations of users - that is ensuring customers that the full payment will arrive within the execution time, with clear costs and guaranteed delivery.
The Commission was contacted and had no comment on the leacked information.
Interpay and Surpost developed the Prepaid Transfercard in order to enhance convenience, safety and speed when transferring money to, for instance, family in Surinam. Rather than sending cash or a money order, the sending party deposits the money in a central account. The recipient in Surinam then withdraws the money or makes payments using the Prepaid Transfercard.
Friday, November 25, 2005
The two articles provide an indication of the future ICT-strategies of Dutch banks. ABN AMRO and ING will start to become a European gateway for other banks; notably for smaller banks who can not further bear the burden of investments towards integrated European processing. Rabobank on the other hand has decided to be an early mover by partnering with KBC's Finforce.
Fin-force, starting out as the separated payments processor for KBC, is increasingly partnering with others. On March 11, Finforce signed a partnership with DZ BANK AG/Transaktionsinstitut. And now the deal with Rabo is done. This will allow Fin-Force, Rabobank, DZ BANK AG and KBC Bank to acquire a bigger market share in future.
At the moment, Fin-Force processes around 3300 million transactions a year (22.5 million of which are cross-border transactions) for DZ BANK AG and KBC. With Rabobank, they will have to process approximately another ten million payments and cheques.
The actual shift towards Finforce is planned for 2007. This results in the redundancy for 45 Rabo-employees, for whom new jobs will be sought.
Sunday, November 20, 2005
I do wonder however if the deal has any povisions to ensure that the old owner of CCA pays for any fines that the Eu Commission may want to give later on as a result of their card competition study....
Friday, November 18, 2005
1-all banks will lower the fee for acquiring debit-card transactions with at least one cent; retailers will drop all pending law-suits on this topic;
2-the banks will setup a fund of 10 million euro so that banks and retailers may use the money to further promote innovation and efficiency in payments
3-banks, retailers and all parties involved will work together to determine which measures, communication, positive and negative incentives can be used to make Dutch payment more efficient.
Mr Zalm, the Dutch Minister of Finance commented on the agreement in his speech, explaining that it confirms that the market functions properly. He stated that it also confirms that the so-called Social Platform on Payments (a halfyearly round table forum of representatives of all users and supliers in the payments market) proves its use.
Zalm also outlined the challenge ahead. He noted that the often quoted low Dutch fees in the World Banking Report are only the visible fees to consumers. The real costs however are larger. Therefore he suggested that the market should work towards more transparent and direct pricing of payments. This statement is similar to that of numerous central bank speeches of the last years.
The final good news is that, contrary to popular belief, the competition authority has no fundamental objections to this agreement (see their informal view here); it does want to see the details of further collective actions of course.
So onwards to further efficiency and direct pricing it is...
Wednesday, November 16, 2005
Further on in the same newspaper EPC-chair Hartsink outlines that he feels that further legal rules are inevitable to arrive at SEPA. Mr Hartsink furthermore announces that the EU government treasurers may meet in the coming months to decide how they may use EPC-based payment mechanisms to kickstart the use of panEuropean payments.
At last I would say. This is an example of an issuer of digital value which is so big, that it does make sense to only spend the value at the issuer. As such Microsoft does not have to deal with financial legislation. The Microsoft Points are simply a prepayment of goods.
The concept of company points (or similarly: MacDonald points, Virgin points; Easypoints in the case of the Easy-imperium) is a further step towards an economy in which it becomes quite explicit what it is that consumers trusts. It has been expected for a long time, and now it is here.
Why could we expect it? Well, in short because there is no theoretical reason why a consumer would not trust a large brand as much as a central bank (that issues currency on behalf of government). In practice however most companies do not have a consumer base that equals a complete population in a country; so the use of company points will then alway be limited.
This changed with the Internet and the increased irrelevance of national borders. As a result, e-gold for example, now has a goldreserve bigger than a whole lot of small central banks. And similarly, the user base of Paypal equals the size of large EU-countries. So the real worldspanning brands and companies do have sufficient critical mass for their company-currency to become useful to the consumer.
Q.E.D. (by Microsoft).
Monday, November 14, 2005
Meanwhile operators in Australia earn more with data and content than with voice.
See the article in PC World (Mobile report: Multimedia leaves voice behind). So let's not kid ourselves into believing that all those small payments via mobile are neglectable...
Dutch Parliament wants to await further investigation into costs of contactless payments for public transport
Yet, the Minister has said she was unable to explain how much was needed until the beginning of 2006.... when things are much much clearer.....
Sunday, November 13, 2005
Not a bad idea, remote card payments over the wb are protected in Europe under the e-commerce directive; thus providing for the revocation options that we have in direct debits.
Thursday, November 03, 2005
That is an ideal start for iDeal !
Sunday, October 30, 2005
....Google CEO Eric Schmidt has said Google Wallet will not be a PayPal clone. Unlike PayPal, analysts speculate that transactions would be limited to ones between businesses and consumers. The service would probably not allow more personal uses, such as a friend sending money to a friend. But like PayPal, it would likely be a stored value account.
Dan Schatt, an analyst with Celent, a research and consulting firm, predicts the search giant will release the service by the end of the first quarter, if not for the holidays.
Quite an interesting line of resoning. Similarly they could advice consumers not to buy at merchants that use Microsoft servers rather than Unix alternatives. The reason being that the higher cost of merchants that use Microsoft eventually needs to be borne by the consumer.
Or am I missing something here?
Saturday, October 29, 2005
Which lead to the conclusion:
For KPMG's Mr Dillon, the resources already spent on the effort have handed a victory to the terrorists. “The cost to our global economy is so large, they've already had the effect they wanted,” he says. “The increasing costs of compliance and technology are a form of terrorism. We're damaging ourselves.”.
* EBA – Luxembourg's banks to move national retail transfers to EBA Clearing's STEP2 platform,
* Leo Van Hove's reference database on e-purses: more than 2,000 records,
* ECB – Second progress report on TARGET2,
* the European Commission – Report on the application of Regulation 2560/2001: Preparatory studies,
* FRB of Chicago – Forces shaping the payments environment: A summary of the Chicago Fed's Payments Conference 2005.
"Watch and we'll show you how..."
"In a blink you're done,... go ahead and try it yourself'.
Now, if you don't do anything after having looked at the introduction you get this woman voice saying stuff like:
- Come on, blink already.....
- Are you afraid to blink?...it's easy, just click on a the card...
- Blink if you're still there.....
- Go ahead, blink away...
- Are you still there...?
So they sell of some shares and do the administrative thing.
See the document here.
...the Board of Directors of the Company has approved plans for a new ownership and governance structure that will broaden our ownership to include not only customer financial institutions, but also public investors and a foundation to be incorporated in Canada known as The MasterCard Foundation. These plans will also result in a new board of directors with a majority of independent directors. Approval of the proposals to be acted upon at the Special Meeting is necessary for the Company to transition to the new ownership and governance structure.
We believe that the proposed changes will give us a more stable base on which to implement our customer-focused strategy and bring value to our customers’ businesses. We believe this is a positive development for you as both a stockholder and a customer. We intend to continue to leverage our global strength and presence to the benefit of customers while remaining sensitive to regional needs. Through the MasterCard charitable foundation, we also intend to make a significant contribution to the societies in which we operate.
Wednesday, October 26, 2005
As a result Triple Deal will incorporate the payment mechanisms of KPN (Switchpoint, payment via premium SMS, payment via 0900-services) and KPN will incorporate the payment mechanisms of Triple Deal (iDeal, Wallie Card, Paypal, credit-cards, credit transfers etc).
My guess is that KPN realises that it can't stay out of the payment business if they are to make money with selling content via whichever channel. So their best move is the first move towards a payment consolidator. This allows them to cut a good deal on payment fees. And if this works for both of them, the next move may eventually be that KPN takes over Triple Deal altogether.
Tuesday, October 25, 2005
The goal is to know exactly what the expected cost will be for the new system. The Ministry has reserved 90 million euro for the scheme but rumours are that an additional 100-150 million euro is needed as the systems does not appear to function properly.
While in principle the contactless chipcard appears a good idea to the Ministry, the goal is to be able to inform parliament in december about the outlook for the OV-chipcard. As long as the new system is not as good as the current paper-based ticketing system for public transport (strippenkaart), the Minister of Transport does not want to throw away the old system.....
Sunday, October 16, 2005
eBay and Verisign will in the future work together to combat identity theft issues. VeriSign will equip eBay and PayPal with security services that include a system called a two-factor authentication, which gives users a one-time password or digital certificate to help protect against online identity theft.
So eBay gets acquiring business which is merely risky non-core business to Verisign. But it's what eBay and Paypal can handle and are good at. And Verisign gets to sell more security stuff and solutions (which is what Verisign is good at.
Looks like a win win thing. Does'nt it ?
That is, the release should read that one of the systems of Interpay (rather than Interpay itself) complies with central bank standards. It appears from the DNB report in its Quarterly bulletin from September 2005 that Interpay's Clearing & Settlement System (CSS) complies with the BIS standards for system-critical retail payment systems. This covers ten Core Principles that relate to all aspects of an organisation: from security and management efficiency to control of financial risks and legal matters.
Too bad that this unique system, with features as half-hour settlement periods during the day, may have to be adapted / downgraded to fit the unified Target2 environment... just to show how European harmonisation experience in payments may result in improvements in Europe generally, but not for the Dutch in particular....
Wednesday, October 12, 2005
But I also want to be clear that I am ambitious for the successful delivery of this project. In order to sustain its political backing the Commission will need to be convinced that certain objective standards are met. For example:
* It would be unacceptable if the Single Payment Market results in a general price increase and price convergence at the top of the current range;
* It would likewise be unacceptable if the Single Payment Market results in less competition, fewer providers and governance and scheme rules that are not conducive to competition;
* User expectations have to be met.
Note the word objective standards, which is used in one sentence with user expectations... And note the plans for a New Legal Framework. This includes a light supervisory regime of payment service providers. But anyone may assume that supervisors will even make light supervision a heavy burden. So this will most likely raise costs and diminish competition...
Those objective standards sound more like incompatible mathematic functions to me...
Tuesday, October 11, 2005
Essentially, the ECB acknowledges that the previous idea that SEPA infrastructures would be completely migrated by 2010, is unrealistic:
I will therefore present the 2010 objective in a slightly different way than I did last year by acknowledging that SEPA for infrastructure will rather evolve gradually in the following three phases:
First, the adjustment of infrastructures by 2008 for the processing of SEPA payments in parallel to national payments (in this respect, it is important to focus specifically on how to ensure technical reachability for the pan-European direct debit scheme);
Second, the irreversible migration of a critical mass of national credit transfers, direct debits and cards to SEPA instruments by 2010 and the achievement of complete interoperability between SEPA-compliant infrastructures;
Third, and beyond 2010, I expect a reduction of the number of retail systems in operation in the euro area by means of competition and the phasing out of national instruments.
Friday, October 07, 2005
See the payment systems session overview
- not too well informed helpdesks of banks
- technical errors on application.
Furthermore there is some discussion on fees. Which may differ between banks and depending on the relationship with payment service providers.
All in all, the service may turn out to work fine but it appears that the Dutch have been spoilt by low fees. Rather than acknowledging the commercial value of a irreversible e-payment and immediate reconciliation, which can be priced into the consumer price, the comparison is made with the existing low fees for POS-payments.
Apparently the price can never be low enough for the Dutch.....
It is estimated that 98 per cent of all payments are domestic. If that is the case—if only 2 per cent of payments are cross-border—what is all the bother about SEPA anyway?. The focus then has to be on banks exploiting the opportunities this brings as much as the loss of margin it incurs. The lost revenues are in part the costs of losing historical protectionism. As in all deregulated markets, there are always some losers.
Monday, October 03, 2005
The European Payments Council today approved its SEPA Cards Framework at a Plenary meeting in Brussels. It also agreed to release its SEPA Scheme Rulebooks for credit transfers and direct debits for consultation amongst national banking communities who will deliver the Single Euro Payments Area (SEPA) as set out in the EPC Roadmap.
Saturday, October 01, 2005
First experiences are not ravishing. Even on a busy thursday evening, the shop is quite empty. The reason: there used to be only one line; right now there's queuing at the scan-machine, the payment machine and the exit-machine...
The trial is supposed to last eight weeks, but my guess is that it won't last that long.
Thursday, September 29, 2005
-Vodafone and KPN could have chosen to continue Simpay rather than stop it...
-both companies are already highly active in this market,
-more than 1 million phone-minutes occur every day
-more sms-payments occur than e-purse payments,
-the mobile operators themselves have blocked new players as moxmo and digipay from entering the market of mobile phone payments.
So what's up...? I think it's an effort of mobile operators to ensure attention for the review of the e-money directive. The operators want to codify the current under-the-desk-exemption-regime for mobile operators in the text of the new e-money directive. This regime essentially means that supervisors look the other way and do not apply the regular banking and payment rules to the mobile industry (while applying those rules to any other player who wants to do exactly the same... Paypal for instance). And they use publicity and lobby to ensure that the Ministries of Finance and EU Commission (who bought into this back-room deal) can point at the operator's position to legitimize this codified exemption in the new e-money directive.
If that strategy really works, the real rules of the European game essentially are that it pays to ignore formal EU-rules if you make sure that you strike a behind-the-doors deal with regulators and supervisors. All formal speeches by McCreevy, Kroes can then be viewed as smokescreens of bureaucrats who essentially care for their own position rather than for a Europe which is based on open, true competition and transparant regulators that simply do what they're told by parliament (rather than striking back-office deals without involving parliament).
Wednesday, September 28, 2005
The OV-chipkaart is by the way target of a lot of misunderstanding, mis planning and questions in parliament.... see also my previous post...
Originally in 2001, the problem was that elections were coming up and the socialist party sought an issue to become popular with the public. And bank bashing always works of course (it's also a popular strategy of the European Commission to increase its popularity), so the PvdA chose to do so as well. Quite some customers were confronted with banks that chose toclose down local branches in favor of more modern means of communication and service delivery (phone, Internet). And so the plan was born to oblige banks to offer services and ensure that a bank branch was close to every 10.000 inhabitants.
When, after some discussions with banks, it turned out that the banks already fulfilled this criterion, the idea was to change the proposal and require that for every 5000 inhabitants a branch should exist (in fact a branch that would be a white labeled office allowing all bank customers to do business there). And in order to sell the idea, the concept/ideology of universal services obligation was used.
Meanwhile the public adapted to technology, new distribution channels started to take over the role of branches. But PvdA member of parliament Ferd Crone kept on revising his proposal and started an legislative initiative.
Why he has now sent it to parliament is a complete mystery. In september 2004, the Council of State advised negative: it saw no reason for legislation. The Ministry of Finance stated at the end of 2004 it deemed the proposal to be disproportionate and unnessecary. The Dutch platform for payment systems found the problem to be limited to single areas only. Furthermore a renowned Dutch expert on Universal services (van Damme) analyzed the issue and did not find a need for the legislative proposal.
I'm curious to find out if there is more to this than is apparent to the eye; otherwise I would not understand why the socialists maintain this initiative. Unless of course if this is already their first step towards the new elections......?
Tuesday, September 27, 2005
My personal favorite is a paper by Guerin-Calvert and Ordover, which contains goodies such as:
This accelerating focus on cost-based regulation of interchange fees is also quite perplexing in view of the common recognition among economists and policy makers that heavy-handed price regulation is rarely desirable and risks unintended consequences (such as suppression of incentives to invest and innovate, and shifting of cost burdens to consumers) that can distort markets.
This focus on direct ex ante price regulation as a policy instrument to address perceived inefficiencies in the marketplace is at odds with the broadly accepted principles that the standard antitrust enforcement “toolbox,” which has historically been used to address concerns about non-competitive pricing, barriers to entry, or other impediments to competitive functioning of the marketplace, provides a better approach than price regulation to achieving efficient functioning of markets (other than natural monopolies, perhaps) such as the credit card and debit card markets.
The trend toward direct regulatory intervention is thus questionable given the nascent stage of empirical work on estimates of benefits to merchants from debit and credit card networks, and the complex inter-relationships between network-level investments, card usage, and the delivery of such benefits. Indeed, much of the available literature and policy pronouncements define “benefits” to merchants too narrowly and thus tend to understate these by confining them to transactional gains, while omitting from the assessment the broader benefits provided by credit card and debit card networks.
But the other stuff is good stuff as well of course...
Monday, September 26, 2005
The new divide may be based on scale (big banks vs smaller banks); on risk profile (risky and inexpensive banks vs low-risk, expensive banks). Or any other orientation for that matter. No-one really knows which paradigm to shift to... but time will surely tell.
Sunday, September 25, 2005
Right now it is a trial. And the work on fees and interchange fees has not yet been finished. But it is a promising start, to say the least.
Thursday, September 22, 2005
- a good comparative overview of interchange fees in countries (it's different everywhere and we can't really explain why...),
- a link to the CapGemini World Payments report with the impact of SEPA for banks; not really a super report, but it could have been worse,
- an announcement of pricing change at Paypal, making it clear that Paypal is in direct competition with other micropayments mechanisms for digital content,
- the French regulators Card monitor 2004 which actually contains a very good overview of fraud statistics and developments,
- another speech of Commissioner McCreevy on regulation.
And I should say, it's the speeches of McCreevy that make my eyes water:
Now, my focus is firmly on making it work. Regulation, if it is not implemented effectively and enforced responsibly, is useless. Much remains to be done on this front. The EU single market can only develop effectively if actors understand the need for cooperation and regulatory convergence, and work together to find common rules. And to stick to those rules once they have been agreed.
The emphasis should not only be on speed of transposition, but also on quality. Ensuring a level playing field is the key to Europe’s success. For this, the day-to-day implementation of EU rules should be done in a consistent and coherent way. The Commission is determined in its efforts to ensure that European market players can enjoy all the advantages that the EU regulatory framework offers them.
Now if McCreevy were only to apply these words to his own impact assessment for the new legal framework for payments in the internal market. That is really a piece of work that has few analytical qualities, if any. It serves to back a harmonisation of payment rules in Europe in order to stimulate a level playing field and competition in a truly European market. But as I see it, the actual impact/effect of the proposed laws will be that it will become exterme costly to be in payment business. High prescribed levels of consumer protection and the costs of supervision will have to be bourne by providers. And by raising the overall costs, the number of payment service providers in Europe will decrease rather than increase. And competition will be less rather than more.
Another day in the life of Europe....
Wednesday, September 21, 2005
Interpay, the Dutch payment processor, will end its Internet-cash register services to banks. This is the result of reshaping of the market where Interpay has no more direct contact with end-users of payment services but only with banks. In a similar move, the contracts for POS-switching services have all been migrated to banks. And now the Internet cash register services are stopped.
Interpay's customers, amongst which the Chambers of Commerce, some municipalities and some banks, will need to find alternatives. One of those is Ogone. But there are of course many more players in this market...
Friday, September 16, 2005
Thursday, September 15, 2005
A group of 13 bank-owned payment processors have banded together to explore the possibility of creating a Sepa-compliant IP-based network, bypassing Visa and MasterCard, and enabling cross-border ATM and POS transactions in the eurozone.
Interesting enough, it may be this move towards Europe that could make it impossible to maintain a European experience for consumers. Right now consumers have a cobranded card with a domestic scheme and an international scheme. However, the international brands will not be likely to allow the domestic scheme to reside on the card if this domestic scheme turns out to be international as well.
So, thanks to the pressure of European Regulators, the forward thinking of domestic schemes and the defenses of international card schemes consumers may end up with less pan-European payment facilities on their card rather than more.....
Just another sign that regulators should not pressure cook a market and try to shape it into a specific form (which reminds me too mich of the outdated sixties approach to shaping society in a positive form) but should only take action where basis competition rules are violated...
Sunday, September 11, 2005
Microsoft and Unisys Build on Interpay Solution to Create Common European Platform for Cross-Border Payments
At Sibos 2005 Copenhagen, Microsoft announced that it is working with Unisys to deliver a common European platform to help financial institutions better manage cross-border payments operations. Based on Microsoft(R) BizTalk(R) Server 2004, EBA Link is currently implemented at a number of financial institutions in Poland and Hungary. The solution grew from work done by Interpay Nederland, a top-three European payment processor located in the Netherlands, to clear high-volume, low-value payments. It provides a fast and cost-effective service for cross-border payments.
Thursday, September 08, 2005
The OFT has found that a collective agreement between members of MasterCard UK Members Forum (MMF), including most major banks, setting the multi-lateral interchange fee (the MMF MIF) paid on virtually all purchases in the UK made using UK-issued MasterCard credit and charge cards between 1 March 2000 and 18 November 2004 restricted competition and infringed Article 81 of the EC Treaty and the Chapter I prohibition of the Competition Act.
What's this with the MIF...?
Well, the only way is down.......
Monday, September 05, 2005
Saturday, September 03, 2005
- more info on the Berlin Gruppe
- information on Mastercard study on EU-payments with Cards
- BAH report on Mobile Payments.. (the time is ripe...).
And of course I should not forget that to mention that the ESCB has issued a policy statement which essentially reads that central banks will price their settlement systems on the basis of cost-recovery. And the non-Euro national central banks also subscribe to this vision.
What's interesting is the redundancy of this statement. According to their statute the ESCB is already held to act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources. So why bother issuing a separate statement? Generally such reassuring statements, coming out of the blue, can be understood to imply the reverse.
And another question. Who checks this policy principle? Are we just to take the central banks word for it? Or are accountants checking this and issuing declarations of conformance..? The recent Italian affairs have made it clear that also central banks are prone to make misstakes just as any other organisation.
Interesting people those Romans...
Sunday, August 28, 2005
Some indications for a large bank...
Entry fee of 100 euro and monthly fee of 40 euro.
Transaction fees of 0,55-0,75 euro.
Meanwhile, wat the public will most likely fail to understand or appreciate is that there will not be uniform banking fees for this product. The fees may vary per bank, per merchant sector etc. This is a reflection of the 'new world' that Dutch banks have entered. In this new world cooperation is no longer the default value; nor are price-agreements (until the mid-80s a commonality for banks).
I'm curious how much time it will cost before the public and the regulatory stakeholders will begin to understand that in this new world, it is no longer useful to ask stuff from all banks collectively...
Saturday, August 20, 2005
Yet, quite interesting is the ESCB view on the EU-Green Paper on financial Services.
Read the following pieces:
In this regard, the Eurosystem agrees that asset management and retail financial services are areas where regulatory intervention at the EU level could be considered. With regard to asset management, the issue as to whether or not a specific regulatory treatment of hedge funds is needed deserves attention. As far as retail financial services are concerned, the Eurosystem recognises that a combination of targeted regulatory actions and a more active application of competition policy could be the way forward. In particular, issues related to bank accounts deserve careful attention as they are the starting-point for the distribution of banking and financial services.
The Eurosystem agrees with the key policy orientation of the Green Paper which focuses on: (i) the consolidation and consistent implementation of the existing legislative framework for financial services to be achieved by exploiting the potential of the existing institutional set-up; and (ii) a better ex-ante and expost
assessment of new legislative initiatives.
What's so interesting about these bits is that the ESCB points out the retail financial services as an area for intervention. At the same time the ESCB subscribes to evidence-based policy making as proposed by the Commission (better regulation). IMHO those two don't really go together, as the ESCB completely fails to provide the argument/evidence for the first statement.
My guess is that the ESCB's self interest is making them want to have a bigger say in the retail financial services domain? Which is a strategy that can only work if you proclaim those services/market as an area that requires intervention. And so we find a completely unbacked (evidence-less) statement on required market intervention in a paper that states that the only way forward for regulators is better ex-ante and expost assessment of new legislative initiatives.
It appears to me that is high time that the ESCB itself prepares evidence-based impact assessments for its own policies.....
Sunday, August 14, 2005
Thursday, August 11, 2005
Encorus was the promising mobile payment entity, also taken over by First Data. Having reviewed the business, First Data announced earlier this week that it will write-off its investment.
SNS Bank will further use the experience with Bill, the banking buddy, to improve the positioning and expand services.
Monday, August 01, 2005
Being PvdA, Minister of Finance and supporting a privatised Postbank was kind of an interesting combination. When Rabobank asked him to become a director, Duisenberg agreed to this. As a result Rabobank's negative stance on the privatisation of the Postbank then softened. This opened the road towards privitisation of the Postbank (quite some years later) and building towards a national payment circuit in the Netherlands (the two were a package deal).
There is more to tell of course, but not here, not now.
Sunday, July 31, 2005
Now let's take a look at the future. It is not unlikely that eventually Dutch banks end up doing the same as the Belgians. Which is to leave atm-withdrawals in the home-bank ATM for free, while pricing those at other banks. So that leads to a renewed battle between banks, that will all want their own ATM in good places in order to provide their customer the best service possible.
Saturday, July 30, 2005
Still, such things then continue to become a rule in their own right. And US and EU have agreed to implement the so called Special Recommendation Number 7 (wire transfers). And, given the current UK chairmanship of Europe, and the bombs going off in London, UK decided to step up the pace. Consequently the Commission published its draft regulation this week; in mid-summer.
Meanwhile, Dutch government published a report on underground banking, undercutting the regulations completely. Conclusion: there is not much to be done to get these organisation to follow the regular bank rules. So if any terrorist needs to get his money somewhere, it'll get there...
Friday, July 29, 2005
-Paypal expanding to China
-the European Association of Payment Service Providers for Merchants
-E-Invoicing in Europe – Standardisation efforts at the European level
-Changes in the cash infrastructure as announced by the US Feds.
- and much much more
Sunday, July 24, 2005
TPG Post, which set up the digital bil payment via Privver, is the partner in this set-up. The new functionality will mean that people will find their bills electronically prepared in their home-banking internet-application. So payment will then be quite easy.
TfL aims to incorporate e-money to its contactless ticketing and payment smart card, Oyster, allowing holders of the card to use it to make low value payments for goods and services at news agents, parking machines, fast-food restaurants, supermarkets and other locations where the transaction speed is important and cash is inconvenient.
TfL expects to confirm a partner by the end of the year and aims to commence trials for Oyster e-money in late 2005 or early 2006.
Monday, July 18, 2005
First of all, the last three years should be the years in which all players in the e-money world were to be properly supervised. But the commission struck a deal with mobile operators so these would be exempted from the regulation. As a result, many small innovative companies (for whom the directive meant to establish a level playing field to compete with banks) went out of business, leaving basic only the bigger guys (Paypal) in the e-money market. See also this website of former Dutch m-payment players, which apparently documents the rise and fall of non-bank, non-telco m-payments providers in the Netherlands.
So while the Commission is keeping up appearances and pretending that this is an official evaluation, the only question that remains is which trick they will pull to ensure the competitive advantage of mobile operators in the m-payment business.
Internal market commissioner Charlie McCreevy words can thus only be viewed as a major cover up. Should we really believe this:
'I am personally committed to ensuring that the Directives we adopt fulfil their objectives and improve the functioning of the single market. Should the evidence prove that this is not the case, we will not hesitate to take decisive action.'
Time will tell...
Tuesday, July 12, 2005
To balance all the central banking oriented stuff (claiming that oversight is required for financial stability... bla bla bla) I'd like to point the readers to these remarks made at the St. Louis Banking Conference by Professor George Kaufman:
I also come from the perspective that "systemic risk" in banking is not a threat and has not been a great danger in world history. It is a scare term, much like the use of the word "fire" in a crowded theater. Systemic risk is used shamelessly by regulators to justify their own actions, and by novelists and movie script writers to provide plots for horror stories. This is my bottom line, and if I had two hours I could go on and give you all the evidence.
Monday, July 11, 2005
The ruling corrects an erronoues judgment of a lower court. And it also puts aside an advice of the legal council to the court. Both these incorrect legal findings made the public believe that there would be a legal requirement to accept cash at all times. Yet, this is however a common misconception.
In general there is no requirement to accept cash, provide one states it beforehand. An additional rule for government entities is that, as far as it concern a payment of tax, sufficient ways exist to pay with cash (or use cash to buy a pre-paid chipcard nearby).
I'm glad that the High Court made this one clear once and for all.
Friday, July 01, 2005
Sunday, June 26, 2005
This is no wonder. If all banks would charge 1 or 2 euro for domestic payments, the European credit-transfer processors would quickly thrive...
Following the decision of one of its founding Members not to launch Simpay for the foreseeable future, the decision was made today at a General Meeting of Simpay not to pursue its activity on a pan-European scale as originally planned.
Instead, Simpay’s operations will be scaled back with immediate effect. Member operators will be able to exploit Simpay’s intellectual property rights at a national level, although international interoperability remains a goal. The members will make known their individual plans in due course.
All of the operators involved in Simpay continue to share the vision of the enormous potential of the mobile commerce market and the importance of providing a robust and straightforward payment facility to content providers.
In other words:
Mobile operators make money by exploiting their own quick-and-dirty payment mechanisms and (inter)national roaming agreements for the interoperable use of these instruments. With Simpay they found out what it would cost to build and operate a system that really accounts for all transactions. Also, they may have started to discuss interchange fees for Simpay, the applicable Regulation 2560 as well as the future legal framework for payments in the European Market.
The conclusion could then well have been that they are far better of with the current grey-area, less-visible payment arrangements than with a formal payment processor that has no business case to work on. The benefit: more income from payments business while maintaining less visibility and transparance.
What's interesting is that EU-regulators keep on telling the banks that they should do what telco's do. If the telco's can do it, why can't banks? Furthermore the EU DG Internal Market is keen on having banks deliver panEuropean payment mechanisms.
Let's see what the repercussion is of the Simpay decision. This can go two ways:
1. If telco's can't deliver coordinated panEu payment products beyond what they already have, banks should also stop trying to deliver EPC
2. If banks are held to deliver EPC, telco's must be held to deliver Simpay for all customers and merchants in Europe
Or would the Commission now say that the analogy with mobile operators is no good after all?
Friday, June 24, 2005
The secret to this success is being able to top-up e-money from your bank towards the e-money storage on the phone. And the stuff is contactless at the point of sale. Which is also good for consumers. Interestingly though users that want to top up may need use their bankPIN on the mobile phone. Which appears to be somewhat risky if the PIN is the same as the PIN for the bankcard...
Today, officials in Brussel have debated the future of the e-money directive. Already for a number of years they're turning a blind eye to the mobile and phone payment industry, pretending it is not payment that happens when you pay with your mobile.
Have a look at www.MobileMoney.com and determine for yourself if what they offer is a paneuropean payment facility or not.
Tuesday, June 21, 2005
Will Google succeed in competing with Paypal?
The stock market doesn't think so.
Shares fell after the word got out.
And Ian Grigg has an interesting analysis here:
Where Google will fall short is in the higher layers. Particularly, their regulatory and relationships side is likely to be their archilles heel, that being a reflection of the company as full of geeks that think there isn't a problem that can't be solved by a neat algorithm. They will shine in the lower layers and muddle along in governance and accounting.
Sunday, June 19, 2005
So where does this leave the European banks? What can be expected to happen as a result of these enquiries? Peter Jones provides an interesting analysis.
He also estimates what would happen if Europe were to apply a common multi-lateral interchange fee for cards-payment. France, Spain, Italy and Portugal would stand to lose considerable sums of money, while the Netherlands and Belgium would reach a more profitable situation.
Imagine that the Commission would provide guidelines or orders which boil down to the application of a low uniform MIF. That would be a considerable intervention and most likely a boost for further dissemination of cross-border card schemes. And eventually, such a ruling might make the current work of European banks and the European Payment Council redundant.
As a matter of fact: why would these banks even consider further walking the road of self-regulation if a could of sheer intervention is hanging above the market? A wait-and-see approach might be better than the continued struggle to achieve consensus on card frameworks and what have you....
Sunday, June 12, 2005
Pilots for the introduction of the card have already been postponed twice. But the Minister, who sponsors and funds the new card, is still optimistic that it will work properly. As long as the involved companies keep to the suggestions of the Minister of course.
Well, that's the price one pays for being under the 'wings' of government...
Friday, June 10, 2005
- the fee for pinauthorisations will be lowered considerably,
- parties agree to work together towards more efficient payments in the Netherlands by stimulating their clients.
Given that some conceivable forms of client stimulation may be arousing and effective, but legally forbidden, the 'stimulating' here can only be interpreted as: campaigns and fees. But before we get there the agreement is yet to be reached (and most likely also involves an endorsement of regulators...).
Wednesday, June 08, 2005
-Retail Decisions (ReD), a world leader in card fraud prevention and payment processing,
-Voca, a leading secure payments processor (formerly BACS Limited)
-Mi-Pay, an m-payments and stored value provider,
today announced the formation of a joint venture company, Digital Payments.
Digital Payments will be a enabling retailers to manage consumer payments on digital sales channels including digital television, the internet and mobile phones. Consumers will be able to pay by Direct Debit across these channels for the first time in the same way as they use a credit card. By using Direct Debit, consumers can organise direct withdrawals from their bank securely and with ease.
Will this then become a serious multi-channel payments competitor for Paypal?
Saturday, June 04, 2005
Dear Postbank Customer,
This email was sent by the Postbank server to verify your e-mail address. You must complete this process by
clicking on the link below and entering in the small window your Postbank online access details. This is done for
your protection - because some of our members no longer have access to their email addresses and we must verify it.
To verify your e-mail address, click on the link below:
Immediately, customers phoned Postbank and the the bank sent out a warning via all media. Undoubtedly to be continued...
UPDATE: Techies may want to read the technical analysis by Vincent 'rastakid' van Scherpenseel.
Friday, May 20, 2005
Thursday, May 12, 2005
As to be expected (CPSS is of course a central bank thing), the guidance is central bank centered. And tells us that its different for all countries, but one common rule is to involve the central bank in the game:
This report aims to give assistance in and advice on the planning and implementation of reforms in the payment system as a whole. It underlines that the central bank is always a driving force in the
development of the national payment system. However, reforms in this field depend on a parallel development of the banking system, and should therefore be a cooperative effort, involving stakeholders from, for example, the banking sector and regulatory agencies. An adequate understanding of the different infrastructures and their institutional framework is needed and is
indispensable for getting the priorities right.
Wednesday, April 27, 2005
Before throwing the idea away from the US or European perspective we should recognize that the Japanese society is very cash oriented. Thus, e-money might very well work in Japan as a replacement of cash.
After Sony Corp. and its partners launched Edy e-money in November 2001, the number of such cards had reached 9.2 million as of March, double the figure a year earlier. The number of stores where Edy e-money can be used increased fivefold in the same 12 months.
Of the 11 million Suica cards issued by East Japan Railway Co. as of the end of February, about 5.7 million have the e-money function.
Using special machines or the Internet, users can deposit money on cards with integrated circuit chips and cell phones that have an e-money function. They can then pay for purchases simply by having the cards or cell phones scanned by reading devices in stores.
Saturday, April 23, 2005
According to FinCEN:
The judge rejected the defense argument that the government also must show that the person operating the money transmitting business knew that the business had to be registered, thereby following the general rule that ignorance of the law is no defense. This case illustrates that money services businesses are responsible for knowing their registration obligations under the Bank Secrecy Act and implementing rules.
See: http://www.fincen.gov/rosenopinion1960.pdf for a copy of the Opinion.
Wednesday, April 20, 2005
The Belgium rollout of PIN-based EMV credit cards has now fuelled an unexpected increase in debit card use, as consumers prefer to use the PIN for their debit cards. Issuers in the UK had expressed concerns that UK consumers would reduce their credit card use when PINs were introduced, but so far a significant drop has not been documented.
Belgium’s e-purse cards are predicted to benefit from the country’s EMV migration as debit cards will carry an EMV chip that can support e-purse and check guarantee functions. Until EMV cards were issued, Proton was the only financial smart card in Belgium, but the gains it achieved in the post-euro currency environment have caused speculation that Proton will be used for more small-value purchases once it is bundled on chip-based debit cards. Ultimately, Proton is predicted to take market share from debit cards, given the recent increases in the average amount per transaction on its cards.
Thursday, April 07, 2005
Tuesday, March 29, 2005
Friday, March 25, 2005
The average price of basic banking services in the 2005 report is €78, with prices between countries ranging from €25 in the Netherlands to €137 in Switzerland, which is a 1:5.5 range. Prices differ in terms of cost for consumers depending on the level of maturity of the banking environment and the banking environment pricing model.
Wednesday, March 23, 2005
An advanced mobile telecommunications infrastructure is a key catalyst to stimulating growth and creating jobs in Europe, yet the required investments are both long term and not without risk. Ever increasing regulation becomes a disincentive to investment. GSM Europe welcomes the Commission's commitment to clamp down on over-regulation, and will actively contribute to impact assessments in order to deliver less regulation, common-sense regulation and better regulation.
My mobile phone fees are staggering and off-the scale and I'm pretty sure that that's not leading to more jobs in EU but to more profit for share-holders...
Saturday, March 19, 2005
In this paper we look at a special kind of threat: the individuals and organizations who run botnets. A botnet is a network of compromised machines that can be remotely controlled by an attacker.
See this article.
The link now says: "Sorry, We Can't Find That Page".
So that's half a day of fish perhaps...
Paypal in the meantime has sent me a thank-you note (which my provider automatically put in my SPAM-box by the way.....):
Thank you for contacting PayPal. We appreciate you bringing this suspicious email to our attention. We can confirm that the email you received was not sent to you by PayPal. The website linked to this email is not a registered URL authorized or used by PayPal. We are currently investigating this incident fully. Please do not enter any personal or financial information into this website.
And the bottom of their mail says:
PayPal and its representatives will NEVER ask you to reveal your password. There are NO EXCEPTIONS to this policy. If anyone claiming to work for PayPal asks for your password under any circumstances, by emailor by phone, please refuse and immediately contact us via webform at https://www.paypal.com/wf/f=sa_pass.
Friday, March 18, 2005
By the way; similar set-up as before.
Now the e-mail client is:
and the e-mail address at yahoo:
Silicon for example reports:
Speaking at the Consult Hyperion Digital Money Forum in London today, Monika Hartmann of the European Central Bank's e-money observatory said that 0.1 per cent of cash in circulation in January 2005 is electronic. "It cannot be called such a big success," she said. According Hartmann, e-cash can't take off until providers crack the issue of how an individual could repay the fiver he borrowed from a friend without having cash: "We have observed at European level that e-purses proved more successful in some countries than others - Belgium, Netherlands, Luxembourg.... There's a lot of person to person schemes coming up. If we had more peer-to-peer capability, it would be thrilling."
And the EPSO-news bulletin in turn quotes David Birch:
Banks gave the electronic purse a try back in the 1990s, but largely abandoned their efforts when the products failed to gain any real traction in the marketplace. But new technology means that the e-purse is back again with more potential for success, and it isn't only banks that are playing with it, says David Birch, a director at Consult Hyperion. Gift cards and prefunded brand cards issued by Starbucks and 7-Eleven are, he says, proving very successful in the United States (gift cards are reported to account for more than 8% of retail transaction value in the United States already), with hybrid cards (i.e. prepaid debit and credit cards) in the United States forecasted to have more than a third of the e-purse market by 2007, according to TowerGroup. Contactless payment and electronic ticketing systems (such as Oyster in London and Octopus in Hong Kong) are proving particularly effective on transport networks. More and more organisers of concert, sporting and other events around the world are also opting for these systems. Contactless payment services offer, among other things, speed and convenience and, according to David Birch, the next few years may well see prepaid and pre-authorised contactless (i.e., e-purse) volumes surpass debit card volumes.and refers to this Finextra article.
Thursday, March 17, 2005
Tuesday, March 01, 2005
Tokyo (JCNN) - East Japan Railway (JR East) will join forces with NTT DoCoMo and Sony to launch a new mobile Suica smartcard service in January 2006. The partners will conduct a trial service beginning in March using pilot service-compatible handsets.
The new service will combine JR East's Suica smartcard functions with DoCoMo i-mode cellphones enabled by Sony's FeliCa smartcard platform. IC chips for the service and service applications will be developed by FeliCa Networks, a joint venture established by the three companies. The service will allow users to check the fare balance, recharge e-money fares, and buy a commuter pass whenever and wherever from their handsets, as well as enjoying the basic Suica smartcard functions.
JR East plans on service expansion by making the service available for online shopping (by the second half of 2006) and for purchasing Shinkansen bullet train tickets (in fiscal 2007).