Thursday, May 11, 2006

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.