Today marks the entrance of Paypal in the Dutch market. It has gone through the EU-notification procedure so that its UK e-money passport is also valid in the Netherlands. So, thanks to the e-money irective, Paypal can operate quickly and legitimately in all Eu-countries, without the need to apply over and again for local licenses. A nice demonstration of innovation, stimulated and backed by a Directive (the e-money directive).
And still, some argue that the e-money directive halted innovation......
Monday, May 22, 2006
EU: Consultation on future Internal Market policy
The EU consultation on internal market strategy has started some time ago and will end on June 15.
Fees review in Australia: consumers do not wish to see transaction prices....
Payment News had these two nice pointers to fee studies. One is from the Reserve Bank of Australia, the other from the Australian Bankers Association.
The RBA noted that the revenue feel due to lower merchant service charges, yet the overall growth in fee income that occurred was due more to increases in the use of banking services than increased charges. The Australian banks analysis confirms this and adds that:
- the user pays system allows customers to make choices about their banking and the average price of banking is falling as consumers gravitate toward low-cost options,
- expansion in the availability of free transactions, and of accounts offering an unlimited number of such transactions, means that many mainstream customers today pay little or no banking service fees at all because they transact within fee-free limit conditions on their accounts.
Most interesting is that while all theory outlines the need for transaction fees to be transparent to the user, the actual consumer quickly reverts to packaged deals which make the fee intransparant. Consumers do not want to be bothered with detailed billing for convenience services. They know they need to pay something but prefer to be not aware.
The RBA noted that the revenue feel due to lower merchant service charges, yet the overall growth in fee income that occurred was due more to increases in the use of banking services than increased charges. The Australian banks analysis confirms this and adds that:
- the user pays system allows customers to make choices about their banking and the average price of banking is falling as consumers gravitate toward low-cost options,
- expansion in the availability of free transactions, and of accounts offering an unlimited number of such transactions, means that many mainstream customers today pay little or no banking service fees at all because they transact within fee-free limit conditions on their accounts.
Most interesting is that while all theory outlines the need for transaction fees to be transparent to the user, the actual consumer quickly reverts to packaged deals which make the fee intransparant. Consumers do not want to be bothered with detailed billing for convenience services. They know they need to pay something but prefer to be not aware.
Sunday, May 21, 2006
SEPA time: Germans do interconnection pilot....
While the Belgians simply eliminate their local scheme in order to gain EU-wide acceptance by choosing Maestro, the Germans choose to pilot interconnection of existing debit-card schemes. See this press release of German Banks (Payment News). To that end the first letters of intent are signed between:
-EUFISERV, a European supplier of processing services for card payments,
-SIBS, the operator of the ATM and card payment system “Multibanco” in Portugal,
-Raiffeisen Landesbank Südtirol and Südtiroler Volksbank.
To follow are (if all goes well) EURO6000. Dutch Interpay has already announced to join the trial.
And the name of this new interconnecting animal will be: Euro Alliance of Payment Schemes (EAPS...).
-EUFISERV, a European supplier of processing services for card payments,
-SIBS, the operator of the ATM and card payment system “Multibanco” in Portugal,
-Raiffeisen Landesbank Südtirol and Südtiroler Volksbank.
To follow are (if all goes well) EURO6000. Dutch Interpay has already announced to join the trial.
And the name of this new interconnecting animal will be: Euro Alliance of Payment Schemes (EAPS...).
Saturday, May 20, 2006
Belgium chooses for Maestro to replace local brand
Belgian newspaper Standaard informs us that Febelfin, the Belgian Finance Federation, and Banksys, operator of the entire Belgian debit card system, announced that the Belgian banks chose to replace the national Bancontact/Mister Cash (BC/MC) system for domestic card payments and money withdrawals by 2008 with the issuance of Maestro cards, MasterCard's debit card mark. This is all a part of the move to SEPA.
The press release informs us of all the benefits. And there is a slight hint that the prices may rise:
It goes without saying that investments will have to be made for the switch-over from BC/MC to Maestro. The Belgian banks and Banksys will cooperate with all parties concerned in order to ensure a smooth switch-over. Good coordination between the representatives of the parties concerned will make it possible for the Belgian users to switch to SEPA without any major problem.
The press release informs us of all the benefits. And there is a slight hint that the prices may rise:
It goes without saying that investments will have to be made for the switch-over from BC/MC to Maestro. The Belgian banks and Banksys will cooperate with all parties concerned in order to ensure a smooth switch-over. Good coordination between the representatives of the parties concerned will make it possible for the Belgian users to switch to SEPA without any major problem.
Japan's Seven-Eleven operator to launch e-money service and multi-accepting terminals
Taken from this google alert:
Seven & I Holdings Co. (3382.TO) said Friday that it will set up e-money reader terminals at its group stores starting this autumn in a bid to lay the groundwork for accepting different types of electronic cash.
The Japanese retail giant, which operates Seven-Eleven convenience stores in Japan, said it will install "multi-reader writers" in registers at 11,000 of its stores. The reader system, developed by Matsushita Electric Industrial Co. (6752.TO), will allow customers to pay with Seven & I's "nanaco" prepaid e-money available next year, as well as with JCB Co.'s QUICPay pay-later e-money service.
So Japan is well up to the non-cash e-money types. And in doing so the Japanese market is living proof of the inevitable interoperability and acceptance of multiple cards at one location.
Seven & I Holdings Co. (3382.TO) said Friday that it will set up e-money reader terminals at its group stores starting this autumn in a bid to lay the groundwork for accepting different types of electronic cash.
The Japanese retail giant, which operates Seven-Eleven convenience stores in Japan, said it will install "multi-reader writers" in registers at 11,000 of its stores. The reader system, developed by Matsushita Electric Industrial Co. (6752.TO), will allow customers to pay with Seven & I's "nanaco" prepaid e-money available next year, as well as with JCB Co.'s QUICPay pay-later e-money service.
So Japan is well up to the non-cash e-money types. And in doing so the Japanese market is living proof of the inevitable interoperability and acceptance of multiple cards at one location.
ABN AMRO will issue securer debit cards as of June 2006
ABN AMRO announced yesterday that it will start equipping (as the first bank in the Netherlands) its bank debit cards with an EMV chip. Earlier this year, all ABN AMRO's Dutch ATMs were made EMV-compliant.
Friday, May 19, 2006
Another innovation on the basis of iDEAL: Paydutch...
Planet Multimedia reports that PayDutch will introduce a light-weight escrow service for securing Internet payments. The system is based on the iDEAL internet-payments functionality of Dutch banks. For 1 euro per transaction, a buyer can get added security by paying/escrowing via PayDutch. Once the goods have arrived in good shape, PayDutch will forward the money to the seller.
It will be interesting to see if this light-weight type of escrow will fly...
It will be interesting to see if this light-weight type of escrow will fly...
Friday, May 12, 2006
Dutch slow in migration to EMV, according to terminal supplier CCV
Today one of the most important terminal suppliers and processors in the Netherlands, CCV, briefed the public (see nu.nl) that the Netherlands are getting behind in the migration to EMV. And despite the fact that current fraud cost in the Dutch debit card system are still very low, CCV appears to use fear tactics and points out that we face a possibility that magnetic stripe debit-card fraud will move to the Netherlands.
While at face value there appears to be a bit of self-interest here, with CCV being one of the major terminal suppliers, CCV's self-interest will not be the major issue. No single supplier of goods will be seeking publicity to boost sales if at the same time he has no goods available. And that is the case: CCV has not a single EMV compliant terminal for the Dutch market available.
So what is happening here?
We need to keep in mind that CCV is dependent on Interpay for the certification of its terminals. So my guess is that it's more likely that CCV tries to fire up Interpay to get going with the certification.
While at face value there appears to be a bit of self-interest here, with CCV being one of the major terminal suppliers, CCV's self-interest will not be the major issue. No single supplier of goods will be seeking publicity to boost sales if at the same time he has no goods available. And that is the case: CCV has not a single EMV compliant terminal for the Dutch market available.
So what is happening here?
We need to keep in mind that CCV is dependent on Interpay for the certification of its terminals. So my guess is that it's more likely that CCV tries to fire up Interpay to get going with the certification.
Thursday, May 11, 2006
First mobile chip terminal approved in Danmark
See the press release from PBS:
Elite 8200 GPRS, which is the name of the approved mobile chip terminal, is sold by LD Betalingssystemer A/S. Using a chip the terminal's transaction time is ten seconds, which is the same level as a magnetic stripe-based transaction.
Actually, those ten seconds is a long wait from a Dutch perspective. In the Netherlands we have an option pre-authorisation meaning that you do the pin-code and stripe thing while the cashier is still checking yout items. So once the amount is known, we only have to key in YES and the transaction is on the way and approved in 2-3 seconds. But for a mobile terminal it's not so bad.
Elite 8200 GPRS, which is the name of the approved mobile chip terminal, is sold by LD Betalingssystemer A/S. Using a chip the terminal's transaction time is ten seconds, which is the same level as a magnetic stripe-based transaction.
Actually, those ten seconds is a long wait from a Dutch perspective. In the Netherlands we have an option pre-authorisation meaning that you do the pin-code and stripe thing while the cashier is still checking yout items. So once the amount is known, we only have to key in YES and the transaction is on the way and approved in 2-3 seconds. But for a mobile terminal it's not so bad.
Background paper on Dutch interbank switching service
Payments News has seen this one background paper pop up even before I did. It's a paper that describes the functionality and experiences of the so-called Interbank Switch Support Service (Overstapservice). This service started in december 2003 and aims to facilitate account holders who want to move their payments relationship from one bank to another, thus increasing customer mobility and lowering switching costs for current accounts.
As an explanation Simon Lelieveldt (of the Dutch bankers association) points out:
-In Europe bank number portability between banks is technically impossible; changing from bank while sticking with the same account number would -even if this happens within a country- mean that still the IBAN (International Bank Account Number) changes. And the IBAN is the central key for payments in Europe (most certainly for the future). For that reason even the European Commission has abandoned the idea of number portability.
-This switching service does not attempt to achieve such account number portability but a more pragmatic solution, targeted at the group that actually wishes to switch (65.000 per year on a total number of 20.000.000 accounts).
It would be interesting to know which other countries have the same experience in switching. But perhaps the EU commission will find out as a part of their work on user mobility, announced in the green paper on financial services.
As an explanation Simon Lelieveldt (of the Dutch bankers association) points out:
-In Europe bank number portability between banks is technically impossible; changing from bank while sticking with the same account number would -even if this happens within a country- mean that still the IBAN (International Bank Account Number) changes. And the IBAN is the central key for payments in Europe (most certainly for the future). For that reason even the European Commission has abandoned the idea of number portability.
-This switching service does not attempt to achieve such account number portability but a more pragmatic solution, targeted at the group that actually wishes to switch (65.000 per year on a total number of 20.000.000 accounts).
It would be interesting to know which other countries have the same experience in switching. But perhaps the EU commission will find out as a part of their work on user mobility, announced in the green paper on financial services.
Further expansion of iDEAL
Two separate initiatives were made public last week. First of all Planet reports that payment service provider Mollie has chosen to repackage the functionality of iDEAL (on-line payment via Dutch bank account on the web) so that the only thing a web-merchant pays is a percentage of the value. No set up fee, no maintainance fee, just this percentage. To make this work, Mollie has made an agreement with ABN AMRO Bank so that it ABN AMRO does the routing of the payments and Mollie does the reconciliation, contacts with merchants etcetera.
Then, a week later, Emerce updates us with the news that Rabobank will introduce an iDEAL lite version. This version has lower maintainance fees and higher transaction fees. In the article, Postbank and ING stated that they will not introduce a light version. With Postbank/ING there is no maintainance fee to start with.
Quite a nice demonstration of innovation and competition in the payments market.
Then, a week later, Emerce updates us with the news that Rabobank will introduce an iDEAL lite version. This version has lower maintainance fees and higher transaction fees. In the article, Postbank and ING stated that they will not introduce a light version. With Postbank/ING there is no maintainance fee to start with.
Quite a nice demonstration of innovation and competition in the payments market.
Wednesday, May 10, 2006
P&S News: 38 Joint statement on SEPA
Most interesting log in the P&S News 38 is the link to the Joint statement from the European Commission and the European Central Bank. As I mentioned before on this blog, it is quite alarming to note that two EU institutions claim to be fully aligned on the topic of the future of payments in Europe.
Luckily there is this last frase that outlines that in this self chosen marriage, the European Commission lies on top:
The Commission and the ECB support to the greatest possible extent continued self-regulation by the industry, but given the importance and the size of the social and economic benefits of SEPA, the Commission expressly reserves the right to introduce or propose necessary legislation to achieve it.
Meaning: the Commission doesn't care any bit aboul all the banking industry stuff and ECB-bla bla. They will regulate, no matter what reality tells them. And as to the cost of this regulation (which will sooner or later end up in banks prices): they won't hesitate to blame it to the banks anti-competitive behaviour.
Luckily there is this last frase that outlines that in this self chosen marriage, the European Commission lies on top:
The Commission and the ECB support to the greatest possible extent continued self-regulation by the industry, but given the importance and the size of the social and economic benefits of SEPA, the Commission expressly reserves the right to introduce or propose necessary legislation to achieve it.
Meaning: the Commission doesn't care any bit aboul all the banking industry stuff and ECB-bla bla. They will regulate, no matter what reality tells them. And as to the cost of this regulation (which will sooner or later end up in banks prices): they won't hesitate to blame it to the banks anti-competitive behaviour.
Tuesday, May 09, 2006
Even Chip and PIN under attack in the retail environment
In the Netherlands, the latest news is that retailer environments are subject to terminal fraud. Whereas the ATM's are now hard to tampr with, the criminals now replace and rigg the pin-terminal at the Point of Sale to collect magstripe data and PIN's. In doing so they act as legitimate technicians.
Ian informs us that the same happened in the UK, but then with chip and pin terminals. That's a bit sooner a fraud on Chip and PIN than most expected I guess.
Ian informs us that the same happened in the UK, but then with chip and pin terminals. That's a bit sooner a fraud on Chip and PIN than most expected I guess.
Monday, May 08, 2006
Is the discussion on critical mass for SEPA critical ?
In a uncanny demonstration of unity and shared vision, the European Central Bank and European Commission published this joint statement on the Single Euro Payment AREA (SEPA).
Essentially they applaud the work of the European Payments Council on SEPA but then go on to raise a warnnig finger:
The delivery of SEPA instruments is only the first step, since the introduction of the instruments as a mere cross-border payment solution would not result in a genuinely integrated market at the level of the Euro area. In particular, a critical mass of national credit transfers, direct debits and card payments should have migrated to SEPA payment instruments by the end of 2010.
Furthermore we read:
The Commission and the ECB support to the greatest possible extent continued self-regulation by the industry, but given the importance and the size of the social and economic benefits of SEPA, the Commission expressly reserves the right to introduce or propose necessary legislation to achieve it.
With the term critical mass the joint statement refers to a term that has been first used by the European Payments Council itself, in their April 05 press-statement:
We are also convinced that a critical mass of transactions will naturally migrate to these payment instruments by 2010 such that SEPA will be irreversible through the operation of market forces and network effects.
So the most critical discussion in the next years is about the understanding of the term: critical mass. Is it 2 %, 20 %, 80 %? Should this be calculated on a domestic level (at least 15 % in all euro countries) or is it already critical if some countries have irreversibly moved to epc-payments while others take their time (but are bound to follow, due to network effects....)?
And last but not least: does this topic have sufficient critical mass to interest the public whatsoever? Despite all the policy bla-bla most customers don't have a serious issue with their cross-border EU-payments. At least not since regulation 2560. So what's all this SEPA-fuss about anyway.
Essentially they applaud the work of the European Payments Council on SEPA but then go on to raise a warnnig finger:
The delivery of SEPA instruments is only the first step, since the introduction of the instruments as a mere cross-border payment solution would not result in a genuinely integrated market at the level of the Euro area. In particular, a critical mass of national credit transfers, direct debits and card payments should have migrated to SEPA payment instruments by the end of 2010.
Furthermore we read:
The Commission and the ECB support to the greatest possible extent continued self-regulation by the industry, but given the importance and the size of the social and economic benefits of SEPA, the Commission expressly reserves the right to introduce or propose necessary legislation to achieve it.
With the term critical mass the joint statement refers to a term that has been first used by the European Payments Council itself, in their April 05 press-statement:
We are also convinced that a critical mass of transactions will naturally migrate to these payment instruments by 2010 such that SEPA will be irreversible through the operation of market forces and network effects.
So the most critical discussion in the next years is about the understanding of the term: critical mass. Is it 2 %, 20 %, 80 %? Should this be calculated on a domestic level (at least 15 % in all euro countries) or is it already critical if some countries have irreversibly moved to epc-payments while others take their time (but are bound to follow, due to network effects....)?
And last but not least: does this topic have sufficient critical mass to interest the public whatsoever? Despite all the policy bla-bla most customers don't have a serious issue with their cross-border EU-payments. At least not since regulation 2560. So what's all this SEPA-fuss about anyway.
Saturday, May 06, 2006
Virtual money earned can be redeemed in real-life
Automatiseringsgids reports that on-line game-company Mindark introduces a real payment card that can be used to withdraw money which was earned in a multiplayer online role playing game. So far, there are only reports of the opposite; people making money by selling their virtual goodies via e-bay. The payment card is a more direct way of redeeming.
The consequence being ofcourse that phishing and fraud will now also focus on stealing the virtual goods in the game.... making it even more realistic.
The consequence being ofcourse that phishing and fraud will now also focus on stealing the virtual goods in the game.... making it even more realistic.
Wednesday, May 03, 2006
Postbank increases security for voice response services over the phone
Postbank has moved its voice-response banking platform (Girofoon) to a new provider. And is also shifting to the use of a premium rate service number (0900) for this service.
The interesting thing is that the first time I used the new number of the Girofoon and identified myself, the Postbank informed me that my self-chosen authentication code (which was five zeroes: 00000) is a weak code. Which is not a problem for me given that I have explicitly blocked the transaction functionality of the Girofoon.
The automated system then informed me I had to choose a new code, after proving my identity by providing:
- first digits of my debit-card number
- expiry date of debit-card
- birth date
Which I did, so the only question for all you criminals out there is: which is the next new easy-to-remember-code that I chose... ;-)
The interesting thing is that the first time I used the new number of the Girofoon and identified myself, the Postbank informed me that my self-chosen authentication code (which was five zeroes: 00000) is a weak code. Which is not a problem for me given that I have explicitly blocked the transaction functionality of the Girofoon.
The automated system then informed me I had to choose a new code, after proving my identity by providing:
- first digits of my debit-card number
- expiry date of debit-card
- birth date
Which I did, so the only question for all you criminals out there is: which is the next new easy-to-remember-code that I chose... ;-)
Postbank reports fraud to police
Emerce informs us that Postbank has reported their most recent phishing fraud (April 28) to the police for further investigation.
Whereas in the 'old' banking world, this stuff was usually dealt with by security departments of banks themselves, the 'new' internet world makes this almost impossible. Attacks come from all over the place and a single bank cannot effectively counter-attacks or prevent this. Hence the step to report the crime with the peoples best friend: the police.
Whereas in the 'old' banking world, this stuff was usually dealt with by security departments of banks themselves, the 'new' internet world makes this almost impossible. Attacks come from all over the place and a single bank cannot effectively counter-attacks or prevent this. Hence the step to report the crime with the peoples best friend: the police.
Tuesday, May 02, 2006
Transport for Oyster drops expansion plans
FT.com reports that Transport for London has abandoned initial expansion plans for its pre-pay Oyster card after failing to agree terms with a financial partner:
The transport agency had hoped to roll out a service this year that would have enabled passengers to use their Oyster cards - currently used on the London Underground, buses, and some trains - to buy low-value goods such as newspapers, coffee and sandwiches with "electronic money" that would be loaded on to the card in advance.
Apparently it's not the question if the consumer would like the product. The real dealbreaker exists on the merchant side. The price positioning of the product between credit-card and cash is the real problem. Once again an indication that regulators should not conveniently overlook the pricing of cash as the most important public policy item for the coming years.
So much for al the nonsense EU-reports of techie-stuff or lack of demand or lack of competition that stiffles innovation in payments. If politicans are unwilling to stop the sponsoring of cash, they should not complain about low innovation in payments. It's not so easy to compete against a mispriced competitive product.
The transport agency had hoped to roll out a service this year that would have enabled passengers to use their Oyster cards - currently used on the London Underground, buses, and some trains - to buy low-value goods such as newspapers, coffee and sandwiches with "electronic money" that would be loaded on to the card in advance.
Apparently it's not the question if the consumer would like the product. The real dealbreaker exists on the merchant side. The price positioning of the product between credit-card and cash is the real problem. Once again an indication that regulators should not conveniently overlook the pricing of cash as the most important public policy item for the coming years.
So much for al the nonsense EU-reports of techie-stuff or lack of demand or lack of competition that stiffles innovation in payments. If politicans are unwilling to stop the sponsoring of cash, they should not complain about low innovation in payments. It's not so easy to compete against a mispriced competitive product.
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