Friday, October 31, 2003

VendexKBB introduces its own ATM's.....

Retailer Vendex/KBB just issued this press release to inform the public that the HEMA formula will do a trial with 20 ATM's to test the usage of cash dispensers in its retail stores. Consumers will not be charged for withdrawing cash (as is the case with the Moneybox ATM's). It is VendexKBB's intention to also replace the current 65 ATM's at the Bijenkorf and V&D formulas and to further expand the concept, when successfull.

The introduction of own-name cash dispensers is taking place in close cooperation with Vendex KBB Cards & Financial Services (CFS), a Group company which was set up last year to develop and market financial products and services for various retail formats. For the introduction of cash dispensers Vendex KBB is working together with the British cash dispenser supplier De La Rue and Staalbankiers.

Willem F. Duisenberg: time to say goodbye

Text of his speech at a special ECOFIN dinner.

Thursday, October 30, 2003

228 million SMS/e-money payments in 2003 in the Netherlands

Yesterdays information by Orange Netherlands about its turnover allows for an estimation of the value and number of Premium SMS in the Netherlands. Starting with the press release we know that:

- the quarterly turnover was € 124 million euro leading to an estimated total turnover of € 457 million in 2003,

- more than 10 percent of Orange's turnover is related to data income, resulting in an amount of € 45 million data turnover in 2003,

- about 75 % of the data income is SMS income, resulting in € 34 million SMS turnover for Orange Netherlands,

- Orange has a 10 percent market share, resulting in an estimated € 340 million SMS turnover for 2003 or approximately 523 million SMS's in the Netherlands,

- two thirds of the SMS's are coming from pre-paid users, resulting in 345 million SMS messages for a value of € 224 million,

- two thirds of the premium SMS's are not delivered by the operator itself but by third parties.

The resulting conservative estimate is that 228 million SMS e-money payments will be made in 2003 for a value of € 150 million. These payments qualify as e-money payments, as they are being paid out of the electronic money value issued by the mobile operators and to companies other than the operators themselves.

Last years estimate was a value of € 65 million and 100 million e-money SMS-messages. As can be expected with successfull retail payment mechanisms, the current growth percentage for e-money SMS-payments is 230 %. Consequently it may be expected that in 2004 the number of Dutch SMS/e-money payments will outnumber the total number of paper-based and Chipknip payments in the Netherlands.

So do I hear anyone claiming that e-money will not work ? Or that it is an obscure development ?

How does the Dutch competition authority work..?

See this document for a brief introduction and further links.

Halifax e-mail scam....

WebWereld reports that Halifax has been the subject of an e-mail scan. The scam demonstrates that user-id, password combinations may be insufficient to secure access to bank sites. And that consumers may still need to be educated to be careful and not to provide their bank details to strangers.

Wednesday, October 29, 2003

Sony, DoCoMo team up for e-money cell phones

The Japan Times online reports that Sony and DoCoMo will set up a joint venture to further develop and exploit mobile phones that have an integrated IC-chip with electronic money in it (based on Sony's Felica Smart Card). The new joint venture will license the contactless technology out to third-party businesses, such as public transportation operators, retailers and event organizers.

New billing... what's that ?

New Billing !

Yesterday I've had the pleasure to contribute to a seminar of TPG Post on new billing. You may wonder what that is.

Well, in New Billing a direct marketeer views the physical bill not as something alien and costly, but as an opportunity to once again reach the customer and further intensify contact. Given the animated discussions and case sessions at this seminar we may expect to hear more about this concept in the future.

Het Financieele Dagblad

Het Financieele Dagblad (paid access) reports that due to repeated raids, Rabobank will stop providing cash services in its branches in Utrecht. This is not to say that there are a lot more holdups than before. Last year we had 80 bank robberies and right now the counter stands at 68.

Tuesday, October 28, 2003

Napster to offer prepaid cards

CCN reports that Napster will offer prepaid cards as a means to pay for the music that users download. The Napster Card will cost $14.85, entitling the user to 15 downloads.

The company is aiming the card at teen-agers without credit cards and parents who want to give the gift of legal music downloads. The card features the familiar Napster "kitty" logo and is activated at the point of purchase.

So, with the end of the 'everything for free-era' on the Internet, we now see the rise of pre-paid mechanisms to allow controlled spending on the web.

Monday, October 27, 2003

Belgium Argenta may offer current accounts in the Netherlands

Also in this weekends Financieele Dagblad: Belgium bank Argenta is about to enter the Dutch payments market. It will offer current accounts with a debit-card, Chipknip purse and a high savings interest rate. Argenta will use the intermediaries as their sales channel.

Two pin-codes for one debit-card?

The Financieel Dagblad reports this morning about an innovation by a former debit-card/pincode victim. Mr Jantoon Roos suggested to the banking sector the use of two pincodes on one debitcard. The pincode a and b would both be 4 digits long and be used in alternation. The second pincode would be chosen by the customer himself.

The banking sector has taken the idea into consideration but explained to the inventor that it would be technically too complex and that it would confuse the consumers. But the inventor seems keen on pursuing the idea, now that he has invested a couple of thousands euro's in Patent application.

What disturbs me in the article is that it might suggest that banks would not be willing to adopt good ideas that may reduce fraud. They do adopt those ideas, yet operating and designing retail payment systems is a little more complex than people may imagine. So the chances that an outsider comes up with a brilliant solution to such industry problems are close to zero.

The exception to this rule is of course the Memo-card; this is small piece of carton on which you may encode / hide the pincode by using a four-letter word in between a number of other four letter words.

Way2Pay: 450 shops and 15.000 users

In its latest newsletter, Way2Pay states that it has 15.000 users and 450 shops. Especially the amount of shops connected is quite large for a product that has only gone live half a year ago. The tricky thing remains however the pricing for the consumer. Loading the Way2Pay wallet regularly costs 0,6 % of the load value, with a minimum of € 0,25 per transaction. These load fees are now being waved for a period of two months.

Earlier this year Rabobank announced it would introduce its own version of Way2Pay. I'm curious as to the pricing structure and load instrument that they've decided to use.

More and more euro-falsifications

Raad Nederlandse Detailhandel, an umbrella organisation for retailers, has announced that the quality of bank note falsifications is so good that false bank notes are difficult to detect at the point of sale. As a result, retailers may get stuck with false bank notes for which they receive no money when depositing it at the bank. Consequently Raad NDH has called for adapted reimbursement conditions.

The amount of false bank notes taken out of circulation was 145.153 in the first half year of 2002 and is 230.534 in the first half year of 2003.

Friday, October 24, 2003

Consultations of our Ministry of Finance

Quite a number of consultations are taking place in the Netherlands. And since it's not so easy to find the full list at the website of the Ministry of Finance I hereby provide the startpage for consultations (in Dutch) on:




-Wet Financiële Dienstverlening


-markttoetreding banken


-financiering toezicht

-herziening financieel toezicht

-toezicht accountants.

Financial Action Task Force on money laundering: session of October 1-3, 2003

Our Ministry of Finance regularly informs us of the proceedings of the FATF meetings. This document (in Dutch) informs the parliament that the Netherlands will abide with the FATF 40 recommendations. It is observed that Nauru is the country with dubious 'shell banks' in the hands of criminal organisations. Banks and supervisors are therefore urged to take all possible precautions in their contacts with any bank from that country.

Thursday, October 23, 2003

Scan, pin and go at the Hema !

Reacting on the previous post about the Chipknip goody at Albert Heijn, Ron Onrust was so kind as to send me some pictures of a new Dutch retail payment development, that he witnessed at the Hema-branch in Noordwijk:

Scan, Pin and Go

Additional research on the web shows that it is a NCR product, installed by BK Vision. It has been in use since februari 2002. See also the images below.

Start screen Scan, Pay and Go !

Tuesday, October 21, 2003

Great goody for Chipknippers at Albert Heijn...

This week Albert Heijn gets a lot of media attention because the food chain has started a price war in retail. But to me, something else is more interesting. Todays field research learns me that all customers that use the chipknip will receive a free key fob with a silver coin in it with the brand Chipknip. Now why is this and what's the use ?

Well, Chipknip and Albert Heijn have agreed to promote the use of the Chipknip for small payments in the shop. This eliminates the need for coins, but then again, we often need those coins to unlock a shopping cart for use in the shop. So if we are to use the Chipknip, Chipknip might as well provide a solution, a coin in the format of the 50 eurocent, for future use in the Albert Heijn shopping cart. Which is exactly what Chipknip en Albert Heijn do, provided that the shopper pays with Chipknip (and perhaps gets his first time Chipknip-experience).

Chipknip goody in AH shopping cart

So although I don't often get excited in the supermarket at the point of sale, this time I really admired the work of the marketing team that developed this promotion. It's very well focused, targeted and fully in line with the need to make payment and shopping as easy as possible. Excellent work !

Can existing payment networks meet future needs?

This was the major question at a conferency by the Chicago Federal Reserve Bank.

The conference summary is available here.

What I appreciated in the summary:

Payment innovations may take longer to adopt than innovations in other industries because of the need to balance the interests of multiple agents—consumers, merchants, financial institutions, and networks. In addition, payment providers must often operate both legacy and new systems side by side, increasing costs in the short run.

Visit of Her Majesty Queen Beatrix to ECB

Today our Queen Beatrix is visiting the European Central Bank (press release). I take it this is a formal 'Goodbye and Thank You-visit' to thank Wim Duisenberg for his efforts as the first President of the ECB.

Monday, October 20, 2003

Credit-cards repayment rates too high....? !

News Independent reports:

The Chief executive of Barclays - the largest credit card provider in Britain - said yesterday that he would not use a Barclaycard to borrow money because the repayment rates were too high.

Matt Barrett, one of Britain's best paid executives who earned £2.7m last year, made the unexpected comment to MPs on the Treasury Select Committee, which is examining the consumer effects of the credit card industry.

Friday, October 17, 2003

No real risk for money laundering in electronic payment systems !

Today, Ton Schudelaro will defend his dissertation on electronic payment systems and money laundering (see this Dutch press-release). His work is voluminous and provides a good overview of the topic. His analysis is brief and clear: there is far too much of a hype about money laundering in new electronic payment systems. Reality is that current countermeasures are sufficient and illegal whitewashing is not a real threat. This analysis nicely counterbalances the fear-driven Financial Action Task Force Fraud measures.

Thursday, October 16, 2003

Maersk Sealand and Citibank announce on-line B2B payment solution

Erwin Boogert was so kind as to point out this article in The China Post that discusses a new B2B payment service by Citibank:

Citibank developed a customized implementation project to meet Maersk Taiwan Ltd's requirements by incorporating the advantages of Citibank's on-line banking and financial service. CitiConnect Online Service is part of Citibank's EBPP (Electronic Bill Presenting and Payment) architecture, which covers complete on-line solutions from presenting bills, managing disputes, and online payments.

Through the integration of CitiConnect Online Service and Maersk Sealand's e-commerce website, Maersk Sealand customers in Taiwan may pay from non-Citibank accounts and even release payments after banking hours to proceed with the printing of Bills of Lading.

Wednesday, October 15, 2003

Credit-card more popular in the Netherlands...?

Het Financieele Dagblad notices a nice article of the Dutch statistics agency on usage of credit-card as a means of credit. Usually the amounts are low and the money is paid back in a couple of months. But in the summertime, there is a peak in credit:

1998: 120 million euro

2003: 280 million euro

Meanwhile, the actual numbers of credit-cards in circulation, according to the Dutch Bankers Association, is diminishing from 4,7 to 4,5 million. How can this be?

My explanation is that the summerpeak reflects already existing lending behaviour rather than suddenly increased popularity of the credit-card. We used to go on holidays and bring our guaranteed cheques with us to obtain money (and overdraft our current accounts). Now that since 2002, this type of cheque is not in use any more, some of the lending has shifted to the usage of the credit-line with the credit-card.

Tuesday, October 14, 2003

SMS Gold Rush: beware of the e-money rules

This website, explains that money may be made on SMS (the SMS Gold Rush) but has some good advice on the legalities:

Some services that are legal in one country may be illegal in another and often the interpretation and implementation of regulations can be different in the same market. For example, Vodafone UK does not allow micro payment services for all of its customers and 02 only makes such services available to its contract customers due to individual interpretations of the recent E-Money legislation.

Monday, October 13, 2003

It's all about prepayment now....?

New products on the market:

Oriental Bank of Commerce and Mastercard: OBC Prepaid card; The card is available from Rs 1,000 to Rs 50,000 and can be recharged any number of times at select OBC branches. The card is accepted at more than 60,000 merchant establishments and for withdrawing cash at MasterCard's network of 4,700 ATMs in India,

-Starbucks Duetto card, is the first prepaid card that also functions as a credit card. In addition to “loading” the card with cash that you can then spend inside Starbucks stores, as with most prepaid cards, you also can use it as a credit card at any merchant that accepts Visa. When consumers use the card as a credit card, they earn points that can then be redeemed for beverages or merchandise at Starbucks,

-Digi Beyond Prepay, automatically reloads pre-paid accounts from Visa-credit-cards,

-American Express Prepaid Travel Card, the new TravelFunds Card can be loaded with up to $3,000, or an equivalent amount of euros or British pounds. It can be used at any retailer or automated teller machine worldwide that accepts American Express cards. Consumers must fund the TravelFunds Card through an existing credit or debit card,

-CAMEL 3: SMS roaming for prepaid phone users, developed by Comverse. CAMEL-3 for SMS allows GSM operators to offer real-time charging for Mobile Originated Short Messages (MO-SMS) without the need for proprietary devices. The Comverse system supports a wide variety of real-time billing options. Charges can be based on the location of the sender, the destination of the message, the date and time, and more. Similarly, CAMEL-3 allows real-time charging for data services.

The Review of Network Economics: special issue on payment systems

The June 2003 issue of the Review of Network Economics was dedicated to the economics of payments and card network schemes.

Sunday, October 12, 2003

Legalities in parking payments

Newspaper AD reports that recently a judge has ruled on the issue whether or not payment for parking in Dutch cities may be limited to using the Chipknip only. While in September a judge in Den Haag rules that the city of Den Haag has the right to limit parking meter payment facilities to the use of the Chipknip (see the Dutch text here), this time the ruling is different (see new ruling here).

The jugde in this new case is actually basing the verdict on some independent thinking rather than looking at the similar trial in Den Haag. Actually the judge is diving into a non-decided legal debate on the status of a Chipknip betaling. And chooses to view the Chipknip betaling as different from a giro payment.

In my view, the judge may want to reconsider his/her opinion on the basis of reading the single one best thesis on this issue: a thesis by Elvira Büchner. In 1999 she won the legal faculty price of the University of Nijmegen for her graduation paper about the legal aspects of chip payments. Essentially she views the chipknip payment as a split up giro payment, where there is a time lag between the debit-side of the payment (the load) and the credit-side (the actual payment).

Although some people are happy with this verdict my guess is that some personal irritation of the judge may have played a role in the ultimate ruling. And my prediction is that the ruling will be overruled in due time.

Visa and Mastercard to reduce interchange fee in Australia

Australia's two largest credit card schemes, Visa and MasterCard, suffered a decisive courtroom loss on September 19, when a judge ruled the Reserve Bank of Australia's landmark credit card reforms were valid. The Federal Court judgement opens the way for the central bank to force banks to reduce so-called interchange fees by an estimated $400 million.

See also the press release of the RBA and their page on the reforms to credit card schems. Briefly, the reforms include a 40 per cent cut in interchange fees that banks charge each other for processing the transactions, estimated to be worth $1 billion a year. The changes will also allow retailers to charge customers extra for using a credit card and allow new non-bank players to enter the market.

Chris Connolly, of the Consumer Federation of Australia, said the ruling meant savings of up to $600 million in the first year of the reform.

"It's a big victory for consumers," he said. "There will be a domino effect across the banking system. We are hoping people will move from using . . . credit cards to cheaper options like Eftpos. That will save merchants and consumers a lot of money."

Well, speaking about landmark cases. This year the Wall-Mart settlement was already a blow to credit-card schemes. And now, they're being hit by the regulators as well. Credit-card schemes won't ever be the same no more.....

Paying to charities... why use cash?

Now that people are increasingly reducing the amount of cash in their wallets, charities may want to use new means to receive payments. See for an example the Donorpoint; a shoe-box like machine that allows people to donate by credit- or debit-card.

Thursday, October 09, 2003

Wellink states that consumer is going to pay for more efficient payments

Mr Wellink, president of our central bank, has made this speech on efficiency in payment systems. He explains that in the Social Platform on Payments a number of investigations is taking place to find out which are the more expensive payment instruments. And he also reveals the outcome: credit-card and cash.

Faced with the question how to make the payment system more efficient, Wellink suggests that we use the price-mechanism. In plaintext: consumers may prepare because they will be facing the introduction of fees for their retail payments. And this will be backed by the research in the Social Platform on Payment Systems.

ABN AMRO: pilot or operations first?

Today ABN AMRO released this press release explaning that it is teaming up with Douwe Egbert (DE, a coffee label here in the Netherlands) to open a Café DE in a brand new ABN AMRO bankshop in the centre of Enschede on 20 December 2003. The pilot represents a next step in the further development of their bankshop concept.

By adding Café DE to our bankshop, we hope to make the bank even more inviting for our customers. It also gives us a chance to discuss the customer's banking needs in a more informal setting.


The bankshop will have the same opening hours as the surrounding shops, which means that it stays open longer and will also be open on late-night shopping days and Saturdays.

The announcement comes at an interesting time. Right now I am on the receiving end of payment from an ABN AMRO customer. This customer informs me that at this very moment no payments can be made. Customer service of ABN AMRO informs him to try again tomorrow. Apparently the systems are down since yesterday evening when this customer first tried to arrange for the credit-transfer by phone.

So if we generalize these two events, we can draw up an important lesson from payments industry. Pilots are a very good thing to test the waters. But pilots should never stand in the way of the continuity of core operations such as payments.

Wednesday, October 08, 2003

Dutch build Arab SMS-payment facility

Planet Multimedia reports that LogicaCMG has agreed to build SMS-features for the Saudi Telecom Company. These include the reverse charge billing functionality to facilitate payment (and increase revenue). Now that's what I would call successful further diffusion and export of innovative payment instruments.

Tuesday, October 07, 2003

Dexit ; RFID e-money application

ePaynews reports:

Canadian banks, TD Canada Trust and National Bank, and wireless operator, Telus Mobility, are participating in Dexit debit express, a new stored-value cashless debit payment system. With Dexit, consumers can easily make small-value purchases by tapping an electronic tag on a merchant’s reader. Payments are debited from the consumer’s account, which can be reloaded to a maximum of CD 100 daily, at a cost of CD 1.50 per reload.

With Leo van Hove (who provided the link) I share the opinion that the future will see more similar hybrid payments instruments that are inbetween the pay now and pay before segment. Another one of those examples is the pre-authorised debit application by Mastercard. This provides the consumer with a guaranteerd payment facility at Point of Sale, but the money does not need to be loaded on the card. Instead, the payment facility draws on a blocked amount of money (reserved for this purpose) in the customers current account. And this would then not be e-money but remote access.. !

See also:

- article in Star

- the website of Dexit.

Monday, October 06, 2003

Interoperability is a matter of common sense

Het Financieele Dagblad features an article on Herman Roebersen, director of Parkline. Parkline is a product to be used to pay for parking with the GSM. What's interesting in the article is that it becomes clear that last week he visited his competitor to discuss the common technical features of GSM parking. As a result, users would not be confronted with different systems and different interfaces.

Now, although this appears to be common sense to all, it appears that regulators or supervisors are only too often unware of the fact that standardisation will occur as a matter of common sense in the market. For a more elaborate discussion of this issue, please read this chapter on Standardizing Retail Payments.

The Future of Money .....

.. may be the eternal newsgroup topic around the world. Will new technology change our payment habits? When will there be one all-encompassing worldwide coin? Are non-monetary electronic payments going to be the future's payment instrument?

Those interested in joining a debate/conference on these topics might consider going to The Future of Money Summit 2003.

Payments in the media this weekend

This weekend, retail payments were in the spotlight in the Netherlands. First of all newspaper Trouw published an interview with departing CEO of Interpay, Willem Stolwijk. And Trouw decided to highlight his statements on debit-card fraud on the front page, suggesting that the magnetic-stripe fraud appeared to be unstoppable.

Then on the Saturday edition of Kassa, the use of the direct debit instrument was once again subject of debate. Gijs Boudewijn, representative of the Dutch Banker's association assured the public that banks would take additional measures to get rid of errors and fraudulent use of the direct debit by companies.

Thursday, October 02, 2003

C2it ends...

Planet Multimedia (P7) reports that C2it, Citibanks P2P e-mail systeem will end this year. The number of users will not have been more than 200.000. Paypal with its 30 million users is no match to them.

Now, where is this going to leave the other P2P e-mail systems (Send Money, Way2Pay .. etc)? If Citibank doesn't get this one to work within their business model, how will ING make Way2Pay work?