Sunday, February 26, 2006
OFT launches new Mastercard investigation
See the press release here to see the UK reglator on its quest to the ideal world.
Are the bank-individual contracts on debit-cards a good thing for the small retailer..?
Since 2004 the Dutch retailers need to negotiate price for POS-authorisations with their banks directly rather than via Interpay. An investigation into the result of all that for prices can be found in the Financial Monitor 2005 of our competition authority. The research shows that small retailers get a worse deal than big retailers.
So, the effect of all this effort of retailers protests against the monopoly price setting by Interpay is that bigger retailers end up with better deals than smaller ones. While in theory this may be more efficient on a macro-economic level, the result is that, if applied to other purchase processes as well, in the end small retailers will have a higher cost base.
Perhaps someday scientists will come to conclude that the 'monopolistic' provision of services by Interpay wasn't soo bad after all, as it worked as a coordination mechanisms that ensured accessibility/payability for the small retailer, effectively funded by the big ones.
So, the effect of all this effort of retailers protests against the monopoly price setting by Interpay is that bigger retailers end up with better deals than smaller ones. While in theory this may be more efficient on a macro-economic level, the result is that, if applied to other purchase processes as well, in the end small retailers will have a higher cost base.
Perhaps someday scientists will come to conclude that the 'monopolistic' provision of services by Interpay wasn't soo bad after all, as it worked as a coordination mechanisms that ensured accessibility/payability for the small retailer, effectively funded by the big ones.
TOP: the good old times of Dutch Gross Settlements....
In a couple of years the Dutch Gross Settlement Solution TOP will be a thing of the past. And we will undoubtedly come to regret the fact that this up-to-date system had to be replaced for Target2. Which costs a lot of effort to get reduced functionality. But there will always be this working paper on TOP that allows us to remember the good old times...
Launch of the International Network of Money Transfer Agents
See the press-release:
Leading money transfer networks and banks have launched The International Association of Money Transfer Networks (IAMTN) to increase the understanding of the role of this major and rapidly expanding financial services sector which until a recent World Bank report has been largely ignored.
Leading money transfer networks and banks have launched The International Association of Money Transfer Networks (IAMTN) to increase the understanding of the role of this major and rapidly expanding financial services sector which until a recent World Bank report has been largely ignored.
Saturday, February 25, 2006
Official Google Blog updates work on Google payments
On this official Google Blog you can read an update on the Google Work on Payments. It explains that at first Google needed a payment infrastructure for itself to pay out for the Ads. That used to be all checque based, but over the years Google improved towards ACH and bank-links. Having done all that, it's a smaller step to using the payments connection for users themselves as well (see an example of the purchase and payment process here on Scot Wingo's E-bay blog).
A perfect example of how new forms payments always pop-up on the back of some other primary activity:
- parking,
- buying/selling via e-Bay (Paypal)
- making phone calls (m-Payments)
- travelling (travelers cheque/ credit-card).
It wouldn't pay for anyone to develop a Google-payment product from scratch. But it does if very similar technology and the user base is already in place.
A perfect example of how new forms payments always pop-up on the back of some other primary activity:
- parking,
- buying/selling via e-Bay (Paypal)
- making phone calls (m-Payments)
- travelling (travelers cheque/ credit-card).
It wouldn't pay for anyone to develop a Google-payment product from scratch. But it does if very similar technology and the user base is already in place.
Dovetail Systems take: is SEPA worth doing ?
In all the debate on SEPA and Target2, we may lose track of economic reality. As an unexpected and pleasant surprise I stumbled on the website of dovetail systems. Where the obvious economical questions are at the center of the debate. Which is the cost-benefit rationale for EU-developments.
In their analysis on Target2, they analyze the EU-cross border traffic via current systems (EBa, Target etc), to conclude that merely 10 % of Targets traffic is cross-border. Which raises the question:
Is it worth changing the whole system (TARGET) to permit just over 10 percent of the traffic to be handled more efficiently?
Their answer is that the question of whether TARGET 2 is economic, sensible or just the right thing to do is not a banking question, or an economic one. It is a political one.
Continuing to their article: So, is SEPA worth doing?, the best is to quote the conclusion here:
The pat answer would be that it depends on the cost case. Has anyone ever made one? Will anyone argue that this regulatory reform, made by European politicians and Central Bankers in the name of European customers is worth the $9 billion it is going to cost, rather than simply justify it on the basis of a political agenda?
From a bank's perspective, the huge sum of money is being spent in the name of a small part of the business, and being subsidized by all of it, in order to conform to an idealised view of what Europe should be. Therein lies its weakness. The banks also argued that free market competition would have naturally led to solutions to some of the problems that SEPA solves. The regulators argue, tellingly, that there were no signs of these solutions emerging from the free market and, therefore that regulatory reform was necessary.
There is no doubt that the wheels of international trade need to be greased better, in particular to ease the complexity and cost burden of money transfer for corporates paying and receiving funds both cross-border and domestically. SEPA will make a difference to this, but not enough of one, mostly because the limited geographic scope of SEPA only eases the burden for part of Europe, and not at all for the rest of the world.
Regrettably, the answer as to whether SEPA gives sufficient benefit is a hesitant maybe.
In their analysis on Target2, they analyze the EU-cross border traffic via current systems (EBa, Target etc), to conclude that merely 10 % of Targets traffic is cross-border. Which raises the question:
Is it worth changing the whole system (TARGET) to permit just over 10 percent of the traffic to be handled more efficiently?
Their answer is that the question of whether TARGET 2 is economic, sensible or just the right thing to do is not a banking question, or an economic one. It is a political one.
Continuing to their article: So, is SEPA worth doing?, the best is to quote the conclusion here:
The pat answer would be that it depends on the cost case. Has anyone ever made one? Will anyone argue that this regulatory reform, made by European politicians and Central Bankers in the name of European customers is worth the $9 billion it is going to cost, rather than simply justify it on the basis of a political agenda?
From a bank's perspective, the huge sum of money is being spent in the name of a small part of the business, and being subsidized by all of it, in order to conform to an idealised view of what Europe should be. Therein lies its weakness. The banks also argued that free market competition would have naturally led to solutions to some of the problems that SEPA solves. The regulators argue, tellingly, that there were no signs of these solutions emerging from the free market and, therefore that regulatory reform was necessary.
There is no doubt that the wheels of international trade need to be greased better, in particular to ease the complexity and cost burden of money transfer for corporates paying and receiving funds both cross-border and domestically. SEPA will make a difference to this, but not enough of one, mostly because the limited geographic scope of SEPA only eases the burden for part of Europe, and not at all for the rest of the world.
Regrettably, the answer as to whether SEPA gives sufficient benefit is a hesitant maybe.
P+S-News 34... a new Mondex-like try to eliminate cash..
The 34th edition of Payments and Settlements News has a lot on the recent SEPA statements of the ESCB and the Commission (see elsewhere on this blog).
But is also features this Mastercard press release that outlines a trial to eliminate cash by introducting a contactless debit card for payments below Eur 15.
Which looks as if, more than 10 years after the Mondex trial, there's another attempt to kick out cash. Well, let's wait and see if this one will fly....
But is also features this Mastercard press release that outlines a trial to eliminate cash by introducting a contactless debit card for payments below Eur 15.
Which looks as if, more than 10 years after the Mondex trial, there's another attempt to kick out cash. Well, let's wait and see if this one will fly....
Friday, February 24, 2006
Mobile phones as development aid...(?)
The worldwide GSM Association has published this report that describes cases where the mobile phone can be made to allow access to funds in underdeveloped countries. It's an interesting report, showing that it may be possible to skip some of the general stages of payment system development. Furthermore, it's of course a comfort that at least some part my steepingly high bill for the mobile may end up being put to use for the poor and underdeveloped.
Thursday, February 23, 2006
Skype Chooses GlobalCollect for Alternative Payment Methods Processing
See the press release here. GlobalCollect today announced it has been selected by Skype to process payments for its premium offerings. For Skype, GlobalCollect will process local bank transfer payments in local currencies worldwide, including real-time online bank transfers in countries where this payment method is available.
Postbank does trial with Skype for the younger
Planet Multimedia reports that retail bank Postbank will be doing a trial to allow customers to use Skype to 'phone' the bank for free. The trial focuses on the younger account holders and students. Planet Multimedia have tried the service and found out it worked fine.
Wednesday, February 22, 2006
How a bank my fail under supervision
This document describes how the small Dutch bank 'van der Hoop' went broke while being supervised. Van der Hoop was actually a small niche bank with 'rich' customers.
The case goes to show that supervision is never a guarantee for your funds. Furthermore the Dutch central bank (which is also the supervisor of banks) is quite embarrassed of course. And will undoubtedly step up its supervisory efforts even more.
As a final touch of irony, the Hoop in the name 'van der Hoop', means hope.
Well, there's little of that left for the customers that held more funds/deposits than the 20.000 euro of the Dutch Deposit Guarantee System.
The case goes to show that supervision is never a guarantee for your funds. Furthermore the Dutch central bank (which is also the supervisor of banks) is quite embarrassed of course. And will undoubtedly step up its supervisory efforts even more.
As a final touch of irony, the Hoop in the name 'van der Hoop', means hope.
Well, there's little of that left for the customers that held more funds/deposits than the 20.000 euro of the Dutch Deposit Guarantee System.
Sunday, February 19, 2006
Judge fines bank for not warning customers sufficiently for debit-card fraud
Financieele Dagblad reports that a judge in Amsterdam fined a large retail bank for not compensating customers who where tricked into losing their debit-card (the exchange-trick, where at the ATM someone diverts attention to quickly exchange the owner's card for another one). Before the trick, the crooks were of course sure to observe the pin-code so that they could cash-in quickly afterwards.
The arguments of the judge are not entirely clear. On the one hand it appears that it finds that the bank has not warned its customers sufficiently, on the other hand the idea was that customers should not be obliged to be suspicious at all times for the possibility of an exhcange-trick fraud.
The verdict does reflect a trend where victims of fraud take the case to the judge rather than to the customer redress committee for banks.
The arguments of the judge are not entirely clear. On the one hand it appears that it finds that the bank has not warned its customers sufficiently, on the other hand the idea was that customers should not be obliged to be suspicious at all times for the possibility of an exhcange-trick fraud.
The verdict does reflect a trend where victims of fraud take the case to the judge rather than to the customer redress committee for banks.
Saturday, February 18, 2006
And the ESCB looks at SEPA slightly different... or not?
In what appears to be a collaborative effort with the European Commission, the ESCB has published the fourth progres report on SEPA. But their mantra may be slightly different, with SEPA focusing on the euro-area:
* SEPA will eliminate national barriers
* SEPA will focus on the euro area
* SEPA will be future-oriented
* SEPA will be user-friendly
* SEPA will require a communication strategy
* SEPA will also benefit banks
* The time frame of the SEPA process will be upheld
* SEPA objectives will focus on establishing common standards and procedures
It is interesting to note that the report does acknowlegde that there is a dependency wih the TARGET2 effort of the ESCB. But it does not point out the resource dependencies of the private sector. EPC-payment infrastructure needs to build on Target or TARGET2, but as this project delays, so will EPC.
It is also quite interesting to note that the ambitions that the ESCB sets out for the private sector seem to exceed those that the ESCB itself will achieve. If TARGET2 were to eliminate the national barriers just as SEPA does, there would be a single functionality with a single price for banks, regardless of their location. Yet, that dream will not come true until way after 2010....
Could it be possible that ESCB and EC suffer from a case of projection? And that the appeal to the outside world (private sector) to do single European stuff in a minimum time frame with a maximum reach is an outward projection of inner desires and fears? And that the outward projection shifts the attention from the inward realization that exactly that same goal is what the EU-institutions are looking for themselves but what appears to be out of reach?
We can see that while the discussion on the Eu constitution is halted, the services directive is being downgraded (not leading to a full EU) and Target2 remains a hybrid domestic/EU settlement system. And we may even fear that the outward projection will not make place for the realisation that the European ambition and/or timeframe should be re-assessed. Will the private sector then be obliged to prematurely do away with previous investments? And will the citizen/customers need to pay for new pan-European payment stuff that they didn't want in the first place?
If I were to bet on commercial led institutions or government organisations to understand what a market wants, I would go for the commercial sector. Still, if we feel that EU en ESCB have a better idea on what the citizens/customers want (and their willingness to pay for it) one could choose to implement their idealistic goals. But we shouldn't be surprised if a new referendum then has 15 states turning a EU constitution down.
* SEPA will eliminate national barriers
* SEPA will focus on the euro area
* SEPA will be future-oriented
* SEPA will be user-friendly
* SEPA will require a communication strategy
* SEPA will also benefit banks
* The time frame of the SEPA process will be upheld
* SEPA objectives will focus on establishing common standards and procedures
It is interesting to note that the report does acknowlegde that there is a dependency wih the TARGET2 effort of the ESCB. But it does not point out the resource dependencies of the private sector. EPC-payment infrastructure needs to build on Target or TARGET2, but as this project delays, so will EPC.
It is also quite interesting to note that the ambitions that the ESCB sets out for the private sector seem to exceed those that the ESCB itself will achieve. If TARGET2 were to eliminate the national barriers just as SEPA does, there would be a single functionality with a single price for banks, regardless of their location. Yet, that dream will not come true until way after 2010....
Could it be possible that ESCB and EC suffer from a case of projection? And that the appeal to the outside world (private sector) to do single European stuff in a minimum time frame with a maximum reach is an outward projection of inner desires and fears? And that the outward projection shifts the attention from the inward realization that exactly that same goal is what the EU-institutions are looking for themselves but what appears to be out of reach?
We can see that while the discussion on the Eu constitution is halted, the services directive is being downgraded (not leading to a full EU) and Target2 remains a hybrid domestic/EU settlement system. And we may even fear that the outward projection will not make place for the realisation that the European ambition and/or timeframe should be re-assessed. Will the private sector then be obliged to prematurely do away with previous investments? And will the citizen/customers need to pay for new pan-European payment stuff that they didn't want in the first place?
If I were to bet on commercial led institutions or government organisations to understand what a market wants, I would go for the commercial sector. Still, if we feel that EU en ESCB have a better idea on what the citizens/customers want (and their willingness to pay for it) one could choose to implement their idealistic goals. But we shouldn't be surprised if a new referendum then has 15 states turning a EU constitution down.
Friday, February 17, 2006
Interpay to join hands with German Transaktion-Institut
Yesterday, Interpay announced that it had signed a MoU with German Transaktionsinstitut to establish a merger later this year. The completion of the deal is expected in the middle of 2006 and it is considered a sign of the further consolidation that will occur in the move to a single panEuropean processing/payments market.
Tuesday, February 14, 2006
SEPA Incentives.... or quite the opposite?
Yesterday, the Commission released a new version of the so-called Incentives Paper. The industry now have 5 weeks to respond to 72 questions on issues such as: SEPA-governance, SEPA=products, adoption, standards, competition, migration cost, repositioning of cash/cheques, customer choice and mobility and e-invoicing.
The timing is impeccable, as the industry is already contemplating:
- the content of EPC-rulebooks, card-framework and settlement mechanisms,
- the new legal framework for payments in the internal market
- the revision of the e-money directive,
- the evaluation of regulation 2560,
- the delay and renewed planning for Target2,
- the implementation of an upcoming regulation to implement FATF-recommendation 7.
Needless to state that given the above agenda, it is rather naive to expect the industry to be able to react properly to this document. And interestingly: while the Commission stresses in its White Paper on Financial Services the principles of better regulation, it ignores the standard 8 weeks response time, suggested by those same principles.
So what does the document do? It describes the Commissions preference for self-regulation and at the same time lists a huge number of concerns that the Commission has with respect to the SEPA-project of the European Payment Council. It also describes the vision of the Commission:
As the main goal of SEPA is economic, its overall success will be judged by the
economies it delivers. It will be deemed a success when the full potential of economies of scale and scope and competition are realized with the euro-zone. This means savings for users and lower costs for providers. This vision does not allow for developments that will only take us half the way. A mini-SEPA that only delivers solutions for cross-border payments in Europe is not acceptable. This will only add an extra payment system on top of the 25 national systems that we already have and thus increase cost and not create great benefits, or realize economies of scale and scope. Competition on the European level will not be possible as all payment systems remain nationally fragmented. It will result in a situation where there are new SEPA products on offer, but very few users will adopt them for domestic transactions. A real SEPA will change substantially current domestic payment markets to the benefit of both users and providers.
So what happens here is that, even before the Commission has grasped or awaited the effects of all pending projects and regulation, it already outlines its concerns as to the outcome of those developments and the future competition in the payments market. Anyone who reads this ambiguous document will conclude that the Commission effectively expects nothing to change as a result of the SEPA-efforts and merely is already contemplating ways/angles to hammer in their vision of a perfect payment market by an additional regulation. And all this to ensure that Commissioner McCreevy may add that result to his track-record just before retiring in 2009.
Which leaves us with the question: is this document supposed to be an incentive?
The timing is impeccable, as the industry is already contemplating:
- the content of EPC-rulebooks, card-framework and settlement mechanisms,
- the new legal framework for payments in the internal market
- the revision of the e-money directive,
- the evaluation of regulation 2560,
- the delay and renewed planning for Target2,
- the implementation of an upcoming regulation to implement FATF-recommendation 7.
Needless to state that given the above agenda, it is rather naive to expect the industry to be able to react properly to this document. And interestingly: while the Commission stresses in its White Paper on Financial Services the principles of better regulation, it ignores the standard 8 weeks response time, suggested by those same principles.
So what does the document do? It describes the Commissions preference for self-regulation and at the same time lists a huge number of concerns that the Commission has with respect to the SEPA-project of the European Payment Council. It also describes the vision of the Commission:
As the main goal of SEPA is economic, its overall success will be judged by the
economies it delivers. It will be deemed a success when the full potential of economies of scale and scope and competition are realized with the euro-zone. This means savings for users and lower costs for providers. This vision does not allow for developments that will only take us half the way. A mini-SEPA that only delivers solutions for cross-border payments in Europe is not acceptable. This will only add an extra payment system on top of the 25 national systems that we already have and thus increase cost and not create great benefits, or realize economies of scale and scope. Competition on the European level will not be possible as all payment systems remain nationally fragmented. It will result in a situation where there are new SEPA products on offer, but very few users will adopt them for domestic transactions. A real SEPA will change substantially current domestic payment markets to the benefit of both users and providers.
So what happens here is that, even before the Commission has grasped or awaited the effects of all pending projects and regulation, it already outlines its concerns as to the outcome of those developments and the future competition in the payments market. Anyone who reads this ambiguous document will conclude that the Commission effectively expects nothing to change as a result of the SEPA-efforts and merely is already contemplating ways/angles to hammer in their vision of a perfect payment market by an additional regulation. And all this to ensure that Commissioner McCreevy may add that result to his track-record just before retiring in 2009.
Which leaves us with the question: is this document supposed to be an incentive?
Giropay launch in Germany: looks like the Dutch iDeal
Yesterday, Germany witnessed the launch of Giropay. This is an e-commerce payment application (with a heavy involvement of the German Postbank) that brings the customer from the merchant's website to its own bank, where the traditional Internet-banking payment can be made. It's functionality is therefore similar to that of the Dutch I-deal.
What is different, is the introduction strategy. Giropay have chosen to make a deal with e-bay, so that customers can choose on e-bay whether to use Paypal (e-bay's payment mechanism) or Giropay. Quite a strong proposition actually, where the banks will benefit from e-bay's reach and vice versa.
What is different, is the introduction strategy. Giropay have chosen to make a deal with e-bay, so that customers can choose on e-bay whether to use Paypal (e-bay's payment mechanism) or Giropay. Quite a strong proposition actually, where the banks will benefit from e-bay's reach and vice versa.
Sunday, February 12, 2006
SEPA as a flipper-game...?
Interpay has chosen an interesting way to promote itself and its SEPA-ambitions. It does so by putting a SEPA-pinball game on its website. I haven't played it completely, so I don't know if there are hidden goodies or surprises in the game. But then again, that's quite a good metaphore for SEPA, isn't it?
Rabo speeds up interbank payments
A couple of days ago, Rabobank informed its customers that all payments entered into its systems before 13.00, will be immediately (meaning the same day) be forwarded to other banks for crediting. The time it takes for the payment to arrive therefore depends more on the receiving bank than on Rabo.
Other banks may be bound to follow. Thus, well before 2010 we will see that payments in the Netherlands are already processed in the so highly desirable D+1 timeframe.
Other banks may be bound to follow. Thus, well before 2010 we will see that payments in the Netherlands are already processed in the so highly desirable D+1 timeframe.
Friday, February 10, 2006
Mastercards steps up to SEPA...
MasterCard hosted 250 leading European bankers at its fifth Annual Debit Conference. See the press release here. Among the announcements/findings...:
* taking effect from 1 January 2008, MasterCard SEPA pricing structure will deliver a single, harmonised and transparent set of prices for both intra-SEPA and national transactions,
* MasterCard publicly announces a coherent, sustainable and straightforward SEPA interchange solution, applicable from January 2008. There will be a single SEPA interchange structure that will apply to all SEPA debit transactions,
Furthermore, Dr Laura Rinaldi, KU Leuven, Centre for Economic Studies, estimated the potential efficiency for the European economy just through cost based pricing at about 0.14% of GDP (across 19 markets modelled), With some more 0,09% of gDP coming up if we eliminate the black cash markets altogether.
* taking effect from 1 January 2008, MasterCard SEPA pricing structure will deliver a single, harmonised and transparent set of prices for both intra-SEPA and national transactions,
* MasterCard publicly announces a coherent, sustainable and straightforward SEPA interchange solution, applicable from January 2008. There will be a single SEPA interchange structure that will apply to all SEPA debit transactions,
Furthermore, Dr Laura Rinaldi, KU Leuven, Centre for Economic Studies, estimated the potential efficiency for the European economy just through cost based pricing at about 0.14% of GDP (across 19 markets modelled), With some more 0,09% of gDP coming up if we eliminate the black cash markets altogether.
Tuesday, February 07, 2006
Regulation for payments via the phone
Minister Brinkhorst told TV-programma Radar this week that it is evident that self-regulation by phone companies does not achieve the desired result to shield consumers from the payment frauds with 'betaalnummers' (fixed line premium payment services, which are billed via the phone account). Alone at KPN there are 7000 complaints involving unduly billed € 2 million. The Minister's aim is to have rules in place by mid 2006.