Wednesday, March 31, 2004

Last days....

Today is the day of last days. The last day of this quarter (with its inevitable administrative burdens, tax forms). It's also the last day that the Postbank m-phone solution (in cooperation with Telfort) will be operational. And my goal is to be actually the very last customer that has made a transaction with the system.

Today also marks the end of an era (1992-2004) in which drs. J. Koning was the executive director of De Nederlandsche Bank NV, responsible for payment systems and retail payments. Under his guidance the central bank stepped into the time of the Euro; new systems (TARGET) were built and the bank started supervising electronic money in all its forms. Also DNB reported on the structure of retail payments (advising a better governance structure for Interpay) and further trimmed down the work force in cash handling.

Contopronto sells its technology to Saudi Arabian Company Zafa

See this press release. But do visit Contopronto's website as well. It turns out that they no longer accept customers and that the usage domain is restricted to Norwegian mobile phones.

What I think has happened here is that Contopronto has wrongly assumed that its Norwegian license as an e-money issuer would allow the use in all EU-countries. Having boasted about this in the media, the bank supervisor may now have informed Contopronto about the proper scope of their license (local at first, international only after notification of other bank supervisors in Europe).

Tuesday, March 30, 2004

First World Retail Banking Report demonstrates local banking playing field

Yesterday the first World Retail Banking Report was presented during an afternoon session in the hotel Okura. The report was a collective effort of the European Financial Management & Marketing Association and Cap Gemini Ernst & Young. Todays Financieele Dagblad reports on the meeting to highlight the following:

- banking is still a local business in EU-countries, with considerable cost for banking/payments,

- each country knows a delicate balance between banking sector, merchants, consumers and regulators,

- pricing information is widely available and consistent on a loca scale but international comparisons are quite hard.

The interesting thing is that the study also indicates that this local situation will not quickly change. If so, it would most likely be large players such as ING that may do so by introducing new and cheaper services upon entering different markets. Hans Verkoren, responsible for ING Direct is quoted to have said that ING might -given the 9,1 million customers of ING Direct- consider offering payment facilities as well.

In fact such a choice appears imminent. All over on TV we can now see ads for ING Cards. It would appear quite sensible that this infrastucture will also be used to enter other markets.

Monday, March 29, 2004

New release of Interpay Internet cash register for banks...

Interpay E-commerce services provide the back-office technology for some Internet cash registers of banks (TWYP, ABN AMRO, BNG). And as of tomorrow a newer version of its software will eventually allow end users more options such as:

- support for Mastercard Securecode and Verified by Visa,

- layered login (allowing merchants to use more than a single username/password and create their own sub-users/profiles for the internal treasurer, the customer care employee etc),

- more detailed reporting of transactions, more language options,

- etc.

Interpays technology is now in use by banks such as TWYP, ABN AMRO, BNG. Rabobank however has built its proprietary Internet cash register. And there are of course other providers such Bibit, Ogone, Triple Deal, Global Collect etc. Their offerings are sometimes based on using Interpays back-office or on the use of independent international acquiring agents.

The respective websites of these players are quite different in terms of transparancy on features/fees etc. For those who want to do a quick tour of the webinfo on cash registers and payment service providers:

- Abn Amro,

- Bank Nederlandse Gemeenten,

- The Way You Pay (ING Bank),

- Rabobank,

- Bibit,

- Global Collect,

- Triple Deal,

- Ogone,

- Multipay,

- Netgiro Nederland,

- ontwikkelaar Chess met PURE transactie techniek,

- Buckaroo,

- Virtual XS.

E-gold scams....

I've just received another 'brilliant' e-gold scam. Behind the href part of the html-mail (asking me to update my e-gold account data) I did not see the website but this other site: The scam uses the @-problem in old Explorer versions (that does not show the proper e-mail adres of the website). And, interestingly, the website asks consumers explicitly to check certificates. Also the link to e-gold examiner (on the normal website an explanation of how much real gold backs the e-gold) is now this broken link ( to an obscure russian server.

So would really no one fall for this? Imagine that only 1 in a million users in the Netherlands would fall for this one there will be about 3 or 4 account data collected.

Update: only 5 mails later in the same mailbox another try. This time the link is:

Payments and Settlements News, nr 4 is out

The fourth issue of Payments and Settlements News, the newsletter of the European Central Bank on retail electronic payment is now out. It contains references to regulatory developments in the UK, Australia and Europe as well as to card fraud figures in the UK and a working paper of the IMF on e-money.

On the Epso website there is also a discussion on on-line payment instruments by Roland Uittenbogaard of the Dutch central bank, In it I particularly like the following obvservation:

Presumably, there will never be a single standard payment product satisfying all payment needs, just as there currently are several payment products alongside each other, satisfying different needs. Transactions involving different products and services go hand in hand with different ways of paying for them.

And the more diplomatic central-bankerish statement:

The manner in which the [electronic money, SL] Directive is to be implemented has not fully crystallised across Europe (or indeed in the Netherlands).

Friday, March 26, 2004

Dutch most satisifed with their bank (but don't feel it that way...)

Todays Financieele Dagblad reports that a comparative study by KPMG shows that of all European citizens, the Dutch are most satisfied with their banks (90 %, compared to a European average of 57 %). KPMG's Stef Kroon observes a discrepancy between this outcome, the efficient Dutch payment infrastructure and the public perception in the Netherlands that banks are expensive.

I think the Dutch people may be sitting too much on the penny. KPMG's research also shows that of all nationalities the Dutch are most negative about the euro (73 % says that it has not been beneficial). So my hypothesis is that the Dutch are overly sensitive to direct pricing. As a result the comparatively cheap banking sector appears to be too expensive and the Euro is viewed as a failure.

Wednesday, March 24, 2004

Paypal coming to the Netherlands..?

Planet Multimedia reports that Paypal will soon start operating in the Netherlands as a part of an eBay offensive to challenge market leader:

Tuesday, March 23, 2004

MP demand free and transparent payment services

A good old Dutch saying says: only the sun rises for free. But some Dutch MP's feel that a set of basic payment services should always be provided free of charge. This is reflected in their quesitons to the Minister of Finance. The Ministers reply (in Dutch) essentially states that this goal is reached through a convenant with the banking sector. And for the rest, the economic principles and self-regulation ensure transparency and a proper level of fees.

Eastern Europe source of false Euro-notes

In reply to questions from Dutch MP's the Minister of Finance explains that indeed the number of false Euros is increasing rapidly. The source is often Eastern Europe (Bulgaria, Litouwen) but a lot of police effort is spent in preventing/detecting and arresting the fraudsters.

Collecting with chipknip not a success yet

Het Financieele Dagblad reports that twelve volunteers have tried to recieve chipknip donations in the cities of Amsterdam, Haarlem and Koog aan de Zaan. Their efforts lasted 6 days and only lead to a collected amount of 60 euro.

Now it could be that people just don't want to spend money. But perhaps the collections would have ben more succesfull in cities with obligatory chipknip-use for parking (such as Rotterdam). I hope this will not mean the end of this idea; as it is safer it does deserve another try.

Thursday, March 18, 2004

Goodbye Interpay, hello Trans Link Systems... ?

Last week, Automatisering Gids (paid access) featured an article on payments in public transport. One company, Trans Link Systems (TLS) will process all payments on behalf of transport companies.

Now the interesting thing is that until this month, we had a real monopoly in transporting debit-card authorisations. This was all done by Interpay and merchants had to have a contract with Interpay. This led to a lot of complaints on the monopoly structue and fees involved. Having studied this structure, the central bank advised that the system should become more open; a second processor should be allowed and merchants would no longer need to have a contract with Interpay but with their bank. This change took effect this month.

But with TLS we will see a comeplete copy of the old Interpay monopoly structure emerging for public transport companies, using the TLS_payment system. Except for one different detail. Although indeed there is a monopoly, the shareholders of TLS have agreed that the maximum return on investment for shareholders will be 10 %. So if profits of TLS are larger it should show up in lower fees....

Trust in e-commerce

The most revealing information that puts a lot of EU-policy talk into context is the result of Eurobarometers poll on confidence in e-commerce:

Trust is not the only factor deterring the EU's consumers from shopping online. A majority (57%) does not buy on the Internet simply because they have no access to it.

AOL launches on-line bill payment

Emerce and Planet Multimedia picked up a press-release and/or WSJ-article on AOL's new bill payment feature. AOL allows its users with AOL Bill Pay to pay bills to 2500 companies. Essentially the idea is similar as the Dutch Privver. But AOL is an ISP in an environment with awkward cheque-processing while Privver is an off-spin of our main mail delivery company TPG in an efficient billing environment (135.000 users and 13 billers)

Monday, March 15, 2004

A media dilemma rather than a payment crisis...

The last couple of days, a lot of people end up on my web site as they are looking for information on Fons Schirris and more background information on possible bank fraud with direct debits. For those non-Dutch readers not into this story: Fons Schirris sees himself as todays Robin Hood revealing all the 'flaws' in Dutch banking systems. Readers of his 'book' may gain more insight into the ramblings of his mind.

Having read the book and all the technical errors it contained, I decided not to spend a lot of time in this blog on his whereabouts (see this serie of blog-entries and this last conclusion). But I discovered that in general the Dutch media are so keen on getting more readers/viewers and audience, that they do not check their sources properly and that they are unable to view the ethical dillema they face.

Let us have a look at the real dillema. The main objection of Schirris to the Dutch direct debit and acceptgiro system is that is built on trust. It is because of that trust that we are able to process about 1 million direct debits and 250 million inpayments quite efficiently. And only some criminals and fraudsters (such as Fons S) deliberately seek to take advantage of consumers, banks and enterprises collectively. So they (try to) insert false payments into the payment system. And although this does economical damage to all players concerned and can be considered an act of violence, the media are happy to jump into the story and give such fraudsters quite some attention.

Now what is the media dilemma? The dillemma is that, due to the publications in other media, I am obliged to spend some time on this weblog on this theme, as it is my goal to report about all stuff that happens in the Dutch payment industry. Similarly other reporters and news shows may face a 'need' to report on this issue. But I would personally rather not spend any time/space on this issue at all. Research of the central bank (download here) has already shown that there are no serious security issues. So we need not be concerned.

The real thing happening here is that Schirris, as an (alleged) fraudster, is involved in legal proceedings and has apparently decided to fight back with all (publicity) means possible. So reporters may want to steer clear from this man and his musings and realize the ethical component of their role.

If anyone would come up to newspapers with a story that he can disrupt traffic in society completely by throwing stones from a number of viaducts above important highways onto all the cars in traffic, such a person would be:

1-completely right,

2-quite deranged.

Now, if the media would not take such a person seriously (nor provide him a voice that would increase his possibility to find supporters for his plan), why should they spend any time on the digital equivalent presented by Schirris?

Friday, March 12, 2004


So are these these the good or bad guys... too bad I don't understand russian.

Mailed credit-cards as basis for web-scam

De Telegraaf reports today that a number of webshop-owners face financial losses as they delivered goods to Indonesian buyers that used credit-cards. Those cards weren't reported stolen by the owners, simply because the owners had not received them (yet). The crooks intercepted the cards (or card data) in the mail, after the cards had been issued.

In the Netherlands this does not work, given that new credit-cards need to be activated before use. But other countries work differently. The result is that the webshop owner believes he can deliver services but is faced with a chargeback a couple of weeks after the transaction (when the legitimate card holders see a transaction they did not do).

Now, although the credit-card companies have such conditions that the shop owner pays the losses of the chargeback, we might wonder if the legal basis for doing so is not getting a little weak. Mail fraud with credit-card has been around so long that it could be considered best practice to have a separate activation procedure. Why should the merchant pay if an issuing bank is too sloppy in its issuing procedure?

I think that, although some of the merchant may have been somewhat naive, they might have a legal case and may hold the issuing bank responsible. Meanwhile everyone is best advised not take any large-value orders from Indonesia or Russia without sufficient risk assessment. Or choose a procedure in which irrevocable payment by money transfer precedes delivery.

Charity donations by Chipknip

Norbert Sijm pointed me tothe article in todays Telegraaf that explains that as of next week some pilot charity collections will only accept the use of the chipknip. Another indication that we are now speeding up towards the cash-less society.

Citychip uses loyalty-concept as a means of payment

The company ChipTeC that has developed the so called Citychip, a loyalty card that can be used to pay for parking, will further roll out this concept to shopping mall Brusselse Poort in Maastricht.

Although the concept of loyalty points and payment has already been tested and proved to work for gas stations it is now expanding. And as long as consumer get the points for free we have an electronic means of payment that is not electronic money, but may work as such for payment.

Reason being that the legal definition of electronic money is narrower than the economic definition (anything electronic that is being used as a means of payment). The legal definition aims at tackling all electronic money-products where the consumer first gives away money (loading a purse) to later spend it. Thus, the money of the consumer is protected. If however the retailer provides electronic points as a gift, it is not considered electronic money.

By the way, let's not underestimate this payment market. In Germany more payments are being made with electronic 1l1oyalty-points than with the e-purse.

Rabobank starts promoting services via i-mode

Emerce reports that Rabobank currently has 3000 customers that use -mode for its services. It aims for 90.000 at the end of this year and hopes to achieve this by a multi-channel (sms, outdoor, snail-mail, mail) promotion campaign that lasts some 11 more days.

Dutch e-commerce in 2003

Thuiswinkel org reports that in 2003, 3,4 million consumers were active buyers on the web. The amount spent was € 1,24 billion euro (on average € 364 per shopper, with a repeat frequency of 3,35).

The most lucrative segment in the market is the travel domain (€ 520 million euro) with hard en software (app 160 million euro) and consumer electronics (app. 140 million euro) as runner-up. It is most likely that the entertainment sector (ticketing) has made the 100 million euro benchmark.

Thursday, March 11, 2004

The cost of payments: a balancing act

Yesterday, the Dutch bank sector organised a conference to inform all players in the payment industry about recent and upcoming developments. It proved to be an informative and constructive day during which both cash-issues (falsifications) and e-payments (direct debit on internet, EMV) were discussed by representatives of the Ministry of Finance, Consumer Union, retailers, banks, central bank and Interpay.

Quite some time was spent on the discussion of costs in retail payments, Euro-falsifications and solutions to make payment systems in the Netherlands more efficient. And at the end of the conference, central bank director Jaap Koning presented the results of joint research (done by the Social Platform on Payments) into the costs of retail-payments at the point of sale.

In brief, the costs amount to 2,9 billion Euro in 2002, with a considerable potential for savings if we use the debitcard for payments of a value of € 11,63 and more and chipknip for the lower value payments. See the full report (in Dutch) at the DNB-website.

Essentially the conference may have been a break-through on the old fee-for-payment transactions discussion. Even the Consumer Union was willing to discuss under which conditions introduction of fees could best be done. So we may look forward to a complicated but successful balancing act on this issue.

Cards & Financial Service of Vendex/KBB expands....

Het Financieele Dagblad reported this morning that retailer Vendex/KBB will start selling financial services to the public (filling the gap that banks create by closing their branches). In its Hema-branches Vendex will sell the more simple insurances while up-street Bijenkort will sell insurances and mortgages.

Monday, March 08, 2004

Designation of Visa Debit Card Scheme in Australia

The Australian central bank, the RBA informs us on February 23 that:

Following a decision by the Payments System Board, the Reserve Bank has today designated the debit card scheme operated in Australia by Visa International as a payment system under the Payment Systems (Regulation) Act 1998. Designation is the first step in the possible establishment of standards and/or access regimes for a payments system.

Once again Visa faces a road of next steps (research, hearings, questionairre etc). So they may choose to go that road and await the decision of the RBA on interchange fees, honour all cards rule, access regime etc. But they could also skip the proceedings and determine/implement the appropriate end result:

- lower interchange fees,

- elimination of honoud all cards and no surcharge rules,

- open access to Visa system.

Given that the RBA's work provides us with a lot of solid research and analysis, I actually look forward to the Australian proceedings. It may cost a lot of work, time and effort, but the result is exemplary for regulators all over the world.

Mobile operator and leading banks in Norway launch mobile cash

The HS Business & Finance web edition of last week reports that mobile operator Radiolinja and leading banks in Norway (Nordea Bank, Sampo Bank) will launch mobile cash. The mobile wallet will allow consumers to pay for various services with SMS messages.

Loading the wallet requires a transfers between the consumer's bank account and the mobile wallet. This is done free of charge. The minimum sum that must be loaded is five euros, and the maximum mobile balance can be 400 euros.

Compared with existing SMS payment systems, the major difference in the new system is that the payments are not made via the consumer's mobile phone bill. Many Finns with mobile phones as a prequisite are not allowed to purchase personal services with their mobile phones.

The announcement in my view demonstrates the inevitable trend towards bank-based sms-payments.

Wednesday, March 03, 2004

Target phasing out "smart" Visa cards

CNN reports that retailer Target is phasing out 'smart' Visa cards. The cards were introduced in 2001 as a part of a multi-channel loyalty and cobranding approach. While the Visa co-branding worked out fine, the loyalty points in the IC-chip were not used enough to justify the continuation of the programme.

In 4 years time we'll know if this decision was:

1-accurate, given that RFID or mobile phones will take over,

2-wrong, as the programme was introduced too early....

My guess would be that it's a smart move to move away from smart.

Brands & Licenses for chip and pin services

Automatisering Gids reports that Interpay has announced the separation of its activities. The so called 'Brands & Licences Betalingsverkeer Nederland' wil now be responsible for product features of on-line debit card transactions and e-purse payments. Interpay will only be a processor of these transactions.

Sign here for cash back please

Yesterday I wanted some additional cash and asked for cash-back in the supermarket. I got my 40 euros but was also asked to sign the slip. The shop-owner told me that quite a number of people forget that they've received the cash-back money. Afterwards these people make a fuss in the supermarket and claim that they did not get the money at all. The signature is a simple precaution that makes them aware that they've already put it in their wallets.

Ship registration with SMS in Amsterdam

Planet reports that bargeman that enter Amsterdam with their ship may notify the city tax by means of an SMS. The skippers need to send the sms as well as a separate pincode and will then be registered. Payment of the tax will be done by means of direct debit or invoice (acceptgiro). See also the Amsterdam city website.

Online Postbank gets a lot of customers

Automatisering Gids reports that the number of new clients for Postbanks' on-line banking is so high that the on-line queues block the traffic. The disturbance in services is one in a series. Last week the autorisation center in Arnhem was unavailable for some time; in the beginning of this week the Leeuwarden location was hit by unavailable systems. Postbank says the incidents are not related.

RFID Tags in New US Notes Explode When You Try to Microwave Them

Ron Onrust mails me this link to an article on prisonplanet in which supposedly RFID tags in US notes explode when you try to microwave them. And he also provides this link with a further discussion and explanation.

Tuesday, March 02, 2004

ERG steps out of contact chip cards

The West Australian reported on February 28:

The new chief executive of struggling technology group ERG yesterday officially ended the company's costly push to be a world leader in smart cards and promised to focus on its core public transport ticketing business.

So much for contact-chip as the e-purse of the future?

Single number to report lost and stolen cards

The EU observer reports about a Commission initiative that aims at establishing a single European telephone number to report lost and stolen cards.

The proposal to establish a single number is linked to possible future EU legislation aiming to create a Single Payment Area. To prepare the ground for this, in December 2003 the Commission issued a Communication on a "new legal framework" for payments in the Internal Market, seeking views from consumers and businesses (see this link).

The proposal is a perfect example of the estethics paradox in policy making. This paradox (first observed and outlined by yours truly in a presentation for a financial markets policy makers course) tells us that if you give policy makers a desk and a vague job description, the first thing they do is make an overview of the world. Then they discover the confusing reality of multitudes of systems and solutions. And then they immediately jump to the conclusion that a single policy is desired. Or for that matter, a single phone number for lost and stolen cards.

Meanwhile the policy makers forget to answer more relevant questions such as:

- is there a problem in practice and what is the size of the problem?

- who is the problem owner: the market or government?

- are there indications that, if a problem would exist, the market is not going to solve it?

- if government or regulatory intervention is required, which is the most appropriate form that does most justice to the roles of market and government?

Instead they go about finding backing for their theoretical and esthetic plan(s). In this case they seek an alliance with the public, who can fill in a questionairre here. Still us EU-citizens are not allowed a single character of free open response to further detail any objections to the questions asked.

So is there nothing positive to mention here? I guess there is. We should all be happy that the EU policy makers didn't conceive and consult us on the real solution to all their esthetical/observer problems: fast track regulation to ensure that each EU-citizen gets one single card for all payments, issued for free by one single European bank.

Monday, March 01, 2004

Tax payment no longer free of charge... the end of cash as we know it

One of the pillars of accepting physical cash for payments of debts is that government accepts cash at all times for tax payment. And generally, government does not charge for that. Here in the Netherlands however, our Tax Office informs usthat as of November 2003, the free payment facility at post offices will no longer be continued. Anyone who pays to the Tax Office will have to pay for the payment itself. Or they can choose to send in the acceptgiro for debiting their current bank- or giro-account, but this may result in charges by the bank.

Now, what's relevant here, is the fact that government starts charging for cash. This can be no other than the beginning of the end of cash as we know it. How can such a government demand that other players in the market (banks, retailers) do not charge for the use of cash (or worse: continue providing payment services for free)? Or as we say: if there's one sheep over the fence, others will follow soon.

The end-result will be that in five years time we will actually see quite a number of retailers and banks agressively steering towards non-cash payments. The security and cost issues for those who handle cash will eventually lead to a proper pricing and elimination of this previously government sponsored product. And the losers in the game, the central banks, will undoubtedly find other ways to generate income (via direct or indirect taxes).

Interpay cuts jobs and will sell giro-services

Alerted by a brief article in De Financiƫle Telegraaf, Het Financieele Dagblad reportedmore details on the changes at Interpay:

-350 of the 1750 employees will lose their job but get an offer to do something else,

-300 of the 1750 employees will move to either synsis or paysquare or the company that will take over giro-processing,

-1050 full time equivalent employees will remain to do mostly electronic processing,

-the credit-card acquiring activities will be done by a daughter company Paysquare.

ING not interested in EGG

E-merce reports that ING is not interested in buying Egg. The main reason is that ING's penetration strategy in foreign markets is based on targeting the savings market rather than the credit-cards market.

Simpay goes for € 1 billion digital content market

This press release of Simpay demonstrates the stakes in the digital content market. Simpay aims to be the main scheme, allowing for a total amount of € 1 billion in payments. Now, if that doesn't illustrate the size of the e-money market, nothing will. Consequently, the Commission will have no alternative but to fully regulate this sector under the e-money rules.