The Dutch AD.nl has the news that there will be test case before the UK courts as to overdraft penalties. This relates to Tom Brennan's litigation on that matter. Despite an 80 minute judgment, rejecting his arguments he will take the matter up with the High Court.
AD also referred to the last week's announcement from the Office of Fair Trading that it will push for a High Court declaration to find out whether the unfairness rules contained in the 1999 consumer contracts regulations applies to overdraft charges.
Tuesday, July 31, 2007
Viral commercial by Postbank to promote speed of payments
Since today Postbank has a link on its website to a special viral site with the name snelgeldovermaken.postbank.nl, meaning paying fast with Postbank. It shows a teacher that wishes to pay icecreams but hasn't sufficient funds on the account. And in order to pay or the icecreams she calls you; the viewer sends some virtual money and voila, the kids can have their icecream.
Interesting example. And completely accurate. Actually I did this same trick with my brother who also has a Postbank account. Last year I asked him to get a specific coat in his town, as it was sold out in my hometown. So when he found my coat was still available in the shop, he phoned me and I transferred the money via Postbank; 10 seconds later he paid for the coat in the shop, using the money I just sent him.
Whether or not the viral will work is to be found out. Theory has it that payments are a complete and utter dissatisfier, so no one is getting hot about payments, unless something goes wrong. Becoming more happy because of a super-fast payment may appear to be neat now, but in this always online world, the feeling will soon wear off. Then again, let's wait and see the spin-off.
Interesting example. And completely accurate. Actually I did this same trick with my brother who also has a Postbank account. Last year I asked him to get a specific coat in his town, as it was sold out in my hometown. So when he found my coat was still available in the shop, he phoned me and I transferred the money via Postbank; 10 seconds later he paid for the coat in the shop, using the money I just sent him.
Whether or not the viral will work is to be found out. Theory has it that payments are a complete and utter dissatisfier, so no one is getting hot about payments, unless something goes wrong. Becoming more happy because of a super-fast payment may appear to be neat now, but in this always online world, the feeling will soon wear off. Then again, let's wait and see the spin-off.
Sunday, July 29, 2007
Brussels agrees on roaming regulation and closes competition investigations ....
Sometimes, the news comes in bits of pieces and only makes sense if you put the two together on a later date. Take for example the EU regulation to establish more modest roaming fees for mobile operators. At last the mobile industry stopped battling the initiative, understanding that it wouldn't make sense, given their pricing practices in the consumer domain.
And then a couple of weeks later, the Commission suddenly announces that it drops the competition investigation for mobile operators. Quite unusual as the FT notes:
The decision to draw a line under the high-profile cases is unusual because EU competition regulators rarely stop such inquiries without either securing a settlement or imposing a fine.
So where was the deal/settlement...?
My guess is that one and one makes two. The agreement between Commission and mobile operators clearly was that if they stopped resisting the roaming regulation, the Commission would stop the competition investigation in roaming.
Now, let's compare that deal to the situation in the banking sector. Already for 5 years there is the regulation that bank chargs should be equal (whether paying inside or to another euro-country). Which is effectively worse than the current roaming regulation (that allows for some higher prices in cross-border phoning). And at the same time there are still all kinds of threats and rulings to be expected with respect to interchange fees (the bank's equivalent of roaming agreements). With no one ever considering to drop those actions...
So why would it be that the Commisison continues to the debate on interchange rulings and interbank practices while completely dropping the roaming investigation?
My guess is that the Commission and EU Member States' governments, rationally distinguish between industries that are making them money and those that aren't. Any government would of course be more likely to be friendly to an industry that makes/has made you a lot of income (by buying some air/frequencies to do phoning) as opposed to an industry that is constantly ripping you of income (by killing cash seigniorage which is a nice source of government revenue).
Perhaps just another one of those cases of Schizophrenia?
And then a couple of weeks later, the Commission suddenly announces that it drops the competition investigation for mobile operators. Quite unusual as the FT notes:
The decision to draw a line under the high-profile cases is unusual because EU competition regulators rarely stop such inquiries without either securing a settlement or imposing a fine.
So where was the deal/settlement...?
My guess is that one and one makes two. The agreement between Commission and mobile operators clearly was that if they stopped resisting the roaming regulation, the Commission would stop the competition investigation in roaming.
Now, let's compare that deal to the situation in the banking sector. Already for 5 years there is the regulation that bank chargs should be equal (whether paying inside or to another euro-country). Which is effectively worse than the current roaming regulation (that allows for some higher prices in cross-border phoning). And at the same time there are still all kinds of threats and rulings to be expected with respect to interchange fees (the bank's equivalent of roaming agreements). With no one ever considering to drop those actions...
So why would it be that the Commisison continues to the debate on interchange rulings and interbank practices while completely dropping the roaming investigation?
My guess is that the Commission and EU Member States' governments, rationally distinguish between industries that are making them money and those that aren't. Any government would of course be more likely to be friendly to an industry that makes/has made you a lot of income (by buying some air/frequencies to do phoning) as opposed to an industry that is constantly ripping you of income (by killing cash seigniorage which is a nice source of government revenue).
Perhaps just another one of those cases of Schizophrenia?
Saturday, July 28, 2007
Payter™: another nfc-phone payment pilot aiming to become a product
See the Payter™ website to find out that:
- Payter is a new pre-paid nfc-phone payment application,
- which will start as a pilot in Rotterdam,
- where pilot-participants use a special Nokia phone that they get on loan during the trial,
- and surfers can preview a slick demo,
- but currently no one can apply, due to massive sign-up (as it says on the website).
So, we have a C1000 trial being postponed as well as this pilot not marching on. And Rabo's minitix being also able to do NFC-payments. So these are definitely interesting times for innovation.
If we realize that there were some 6 years between the first trial with an IC-e-purse (Woerden, 1990) and the first product (Chipknip,1996) my guess is that we will be well beyond 2012 before we will have a standardized nfc-phone payment system in the Netherlands. That is, unless retailers will want to boycot this product as well...
- Payter is a new pre-paid nfc-phone payment application,
- which will start as a pilot in Rotterdam,
- where pilot-participants use a special Nokia phone that they get on loan during the trial,
- and surfers can preview a slick demo,
- but currently no one can apply, due to massive sign-up (as it says on the website).
So, we have a C1000 trial being postponed as well as this pilot not marching on. And Rabo's minitix being also able to do NFC-payments. So these are definitely interesting times for innovation.
If we realize that there were some 6 years between the first trial with an IC-e-purse (Woerden, 1990) and the first product (Chipknip,1996) my guess is that we will be well beyond 2012 before we will have a standardized nfc-phone payment system in the Netherlands. That is, unless retailers will want to boycot this product as well...
DNB helps ABN AMRO by withdrawing supervisory action
See the newssite nu.nl to find out that DNB has withdrawn its supervisory measures with respect to ABN AMRO (see also the previous post and explanation here). In doing so they release ABN AMRO of a grip that would have otherwise also been a burden to the new buyer(s) of ABN AMRO.
This new buyer could well be the RBS-consortium. Rumour in the Dutch press has it that even ABN AMRO itself is now slowly distancing itself from Barclays (who announced this week that they would draw in some Chinese banks to increase their bid). But then again, Mr Groenink also suggested that the RBS bid would have been based on incorrect and old data of the wholesale market for ABN AMRO. To which the consortium replied by explaining that it was ABN AMRO who had given that data in the first place....
Meanwhile pension funds massively regain ownership of their Fortis shares that hey leased out to equity funds. This is all in order to prevent them to bid/choose wrongly during the shareholders meeting of Fortis. So the thing that might happen is that those funds would block a sale to the consortium by blocking the Fortis shareholder vote.
Well, that's the workings of a free market in all its beauty..... ;-)
This new buyer could well be the RBS-consortium. Rumour in the Dutch press has it that even ABN AMRO itself is now slowly distancing itself from Barclays (who announced this week that they would draw in some Chinese banks to increase their bid). But then again, Mr Groenink also suggested that the RBS bid would have been based on incorrect and old data of the wholesale market for ABN AMRO. To which the consortium replied by explaining that it was ABN AMRO who had given that data in the first place....
Meanwhile pension funds massively regain ownership of their Fortis shares that hey leased out to equity funds. This is all in order to prevent them to bid/choose wrongly during the shareholders meeting of Fortis. So the thing that might happen is that those funds would block a sale to the consortium by blocking the Fortis shareholder vote.
Well, that's the workings of a free market in all its beauty..... ;-)
PSP Global Collect sold for € 200 million
See the (paid access) FD-article. Global Collect is a Payment Service Provider, born out of the need to collect magazine subscription fees worldwide. This service used to be an inhouse service for TNT Post. But is was spun off and sold for € 14 million two years ago. And now it's been sold again for € 200 million to private equity firm General Atlantic.
GlobalCollect processes and reconciles payments for KPN, Skype, Nike, HP, Apple and so on. It's turnover was € 23 million in 2005 and € 37 million in 2006. And its net result last year was € 5 million. Lehman Brothers advised during the sale of GlobalCollect.
I'm curious if they would ever imagined this price to be paid....
GlobalCollect processes and reconciles payments for KPN, Skype, Nike, HP, Apple and so on. It's turnover was € 23 million in 2005 and € 37 million in 2006. And its net result last year was € 5 million. Lehman Brothers advised during the sale of GlobalCollect.
I'm curious if they would ever imagined this price to be paid....
Thursday, July 26, 2007
Paypal Netherlands has 1 million customers
This article in BN/DeStem reveals that Paypal has 1 million Dutch customers. The article compares the features of the bank-based iDEAL payments system and Paypal. Essentially the main difference is that Paypal has international payment/acceptance features (with customers/merchants being able to both received and pay) while iDEAL serves mainly domestic Dutch transactions allowing customers to pay merchants but not to pay each other. Furthermore Paypal is fully webbased, with a lot of software controls to secure payments, whereas most banks secure the iDEAL payment with a bit of hardware or a separate sms-verification effort.
If the personell ads were something to go by the Paypal efforts should not be underestimated. They will be building a base here and will remain to have their international and peer-to-peer advantage, even if iDEAL would become a European standard. So there appears to be quite a sustainable advantage for them.
If the personell ads were something to go by the Paypal efforts should not be underestimated. They will be building a base here and will remain to have their international and peer-to-peer advantage, even if iDEAL would become a European standard. So there appears to be quite a sustainable advantage for them.
Wednesday, July 25, 2007
Central Banks and Payment Instruments: a Serious Case of Schizophrenia
There's an interesting article out there: published by IDATE, Institut de l'Audiovisuel et des Télécommunications en Europe. It's written by Leo van Hove from Belgium and concerns the dual role of central banks. I can only read the abstract, but it sounds quite interesting:
Central Banks and Payment Instruments: a Serious Case of Schizophrenia
This article analyses the competition between cash and payment cards against the backdrop of the dual role of central banks - as issuers of cash and as institutions with a mandate to foster the efficiency of payment systems in general. It is argued that this dual role results in a number of policy dilemmas, namely concerning pricing, traceability of banknotes and the choice of denominations of coins and banknotes. On a general level, the article argues that central banks should place greater emphasis on improving the efficiency of retail payments and less on protecting their self-interest. More concretely, the article repeats the suggestion - originally put forward in VAN HOVE & VUCHELEN (1996) - that the ECB should place the upper limit of its banknote series at EUR 50 instead of EUR 500. It is also argued that policy makers should explicitly foster the use of cost-based pricing and in particular create a legal environment that makes it possible for commercial banks to start using it.
Central Banks and Payment Instruments: a Serious Case of Schizophrenia
This article analyses the competition between cash and payment cards against the backdrop of the dual role of central banks - as issuers of cash and as institutions with a mandate to foster the efficiency of payment systems in general. It is argued that this dual role results in a number of policy dilemmas, namely concerning pricing, traceability of banknotes and the choice of denominations of coins and banknotes. On a general level, the article argues that central banks should place greater emphasis on improving the efficiency of retail payments and less on protecting their self-interest. More concretely, the article repeats the suggestion - originally put forward in VAN HOVE & VUCHELEN (1996) - that the ECB should place the upper limit of its banknote series at EUR 50 instead of EUR 500. It is also argued that policy makers should explicitly foster the use of cost-based pricing and in particular create a legal environment that makes it possible for commercial banks to start using it.
Monday, July 23, 2007
ECBS 5th progress report on SEPA: from concept to reality (and right back again...)
Last Friday the European Euro central banks (ECBS) published their fifth progress report on SEPA: from concept to reality. My direct response after reading it was that the title suggest a realism that the report completely lacks. That's why I would redefine the title as: From concept to reality with the EPC and right back to the concepts with the Eurosystem.
The report contains many pages of statements, desires, objectives, recommendations that are mainly addressed to the payment industry: banks, EPC, national migration organisations, card schemes, processors, 'infrastructures' and can be summarized as 'please hurry up with the EPC-work and do include a lot of extra goodies while you're at it'. It also urges public authorities to ensure that regulation and legal clarity is quickly provided, so that the payment industry quickly knows the rules of the game (and whether or not there may be an interchange fee in the future).
The report claims to be based on a gap analysis between what banks and EPC deliver now vis a vis the requirements of a successful SEPA. As such the report is a 180 degree turn from good old central banking traditions. Usually, the central banks would do some solid analysis and explain that the market would work well and no intervention is necessary. And they would do without the political dimension. But not this time.
The reports is a above all a political document with a number of inconsistent and questionable statements. Of course there is the now well familiar statement on a third card scheme that ESCB considers necessary given the existing 'duopoly'. Quite misplaced one could argue, as the ESCB has nowhere near the competencies of a competition authority.
Also, suddenly the EPC (which does bank-bank standardisation) is required to do an end-to-end security threat analysis for credit-transfers, e-payments. And ACH's are required to abide with a newly developed set of criteria for sepa compliant infrastructures.
There should be a though and quick time schedule for moving to SEPA and those who don't wish to migrate should be forced. And the domestic debit-cards only (remember the Postbank announcement) are no longer allowed to exist after 2010. And while all this happens prices may not rise, which by the way may well be monitored by the central banks.
Another nice one. There is no formal position on interchange fees (Eurosystem is neutral) but the report does day that existing geographic interchange fee structure may only exist in a conversion period, not in the final SEPA-end game. And, by the way, all changes in the interchange fee arrangements may not have as a result that consumers suddenly choose more inefficient means of payments. Meaning that if banks would -hypothetically- eliminate the interchange fee and ask direct fees from both consumer and merchant, this would not be OK for the Eurosystem, because it would drive the customers to cash rather than to electronic payments.
So in sum: this doesn't make any sense any more other than political sense. the European central banks are no longer objectively analysing the world; they just join in the political game and produce papers that they think may get them a good press.
So, would this be the right time to remind the Eurosystem of its formal statute and of the difference between the goal and the means to achieve a goal?
As for the goal, we can read in article 2 of the ESCB statute that the primary objective of the ESCB is to maintain price stability. So that is all the stuff about keeping the interest rate and € exchange rate stable. In doing so, the ESCB shall support the general economic policies in the Community and it shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources....
Now article 3 states that in order to maintain this price stability, the actual tasks of the ESCB are:
- to define and implement the monetary policy of the Community;
- to conduct foreign-exchange operations consistent with the provisions of Article 111 of this Treaty;
- to hold and manage the official foreign reserves of the Member States;
- to promote the smooth operation of payment systems.
One could ask: why all the involvement in retail payments? Whether or not banks do SEPA will not imminently impact the interest rate nor price stability in Europe. So that would justify a bit of distance rather than the current involvement.
But then again, it is of course possible to reverse the order and state that the main objective of the ESCB is to promote smooth operation of payment systems and price stability also. Thus, by making the means an end in itself one could try to justify an ECBS role in retail payments. Still the tax payer may have a hard time understanding how one would really think that the objective to not have price rises in retail payments stems from the ESCB-task of price stability or fits the goal of preserving the value of the euro.
What the tax payer might understand is the concept of commercial expansion or institutional drift (where companies and regulators wish to dominate their respective markets and increase their market beyond original boundaries). And one could argue that the ESCB is now taking things a bit too far now with their continued and expanding involvement in retail payments. They are drifting out from their original territory into the domains of prudential supervisors, the European commission, local legislators and competition authorities. And while some of the involved policy makers at other institutions may raise the eyebrow, nobody is effectively stopping them.
What's also interesting? The ESCB don't apply their own one-SEPA-size fits all-reasoning to their own product: cash. In the cash area they go out of their way to explain that they are unable to harmonize cash rules in Europe:
At the same time, it was underlined that the Eurosystem does not envisage developing a “one size fits all” cash supply system. The different national economic and geographical environments need to be taken into account and the process of convergence will require some flexibility regarding customer requirements, cash infrastructure and transitional periods for implementation.
And finally, the Eurosystem leave the pricing of cash undiscussed. Shouldn't the ESCB be the first to ensure and announce that all over Europe all commercial banks should change their pricing for cash (under priced and free in most countries) in such a manner that we really have an efficient allocation of resources?
Well, I guess the old style ESCB would do so. Unfortunately the new style, politically sensitive ESCB hushes the subject under the carpet.
The report contains many pages of statements, desires, objectives, recommendations that are mainly addressed to the payment industry: banks, EPC, national migration organisations, card schemes, processors, 'infrastructures' and can be summarized as 'please hurry up with the EPC-work and do include a lot of extra goodies while you're at it'. It also urges public authorities to ensure that regulation and legal clarity is quickly provided, so that the payment industry quickly knows the rules of the game (and whether or not there may be an interchange fee in the future).
The report claims to be based on a gap analysis between what banks and EPC deliver now vis a vis the requirements of a successful SEPA. As such the report is a 180 degree turn from good old central banking traditions. Usually, the central banks would do some solid analysis and explain that the market would work well and no intervention is necessary. And they would do without the political dimension. But not this time.
The reports is a above all a political document with a number of inconsistent and questionable statements. Of course there is the now well familiar statement on a third card scheme that ESCB considers necessary given the existing 'duopoly'. Quite misplaced one could argue, as the ESCB has nowhere near the competencies of a competition authority.
Also, suddenly the EPC (which does bank-bank standardisation) is required to do an end-to-end security threat analysis for credit-transfers, e-payments. And ACH's are required to abide with a newly developed set of criteria for sepa compliant infrastructures.
There should be a though and quick time schedule for moving to SEPA and those who don't wish to migrate should be forced. And the domestic debit-cards only (remember the Postbank announcement) are no longer allowed to exist after 2010. And while all this happens prices may not rise, which by the way may well be monitored by the central banks.
Another nice one. There is no formal position on interchange fees (Eurosystem is neutral) but the report does day that existing geographic interchange fee structure may only exist in a conversion period, not in the final SEPA-end game. And, by the way, all changes in the interchange fee arrangements may not have as a result that consumers suddenly choose more inefficient means of payments. Meaning that if banks would -hypothetically- eliminate the interchange fee and ask direct fees from both consumer and merchant, this would not be OK for the Eurosystem, because it would drive the customers to cash rather than to electronic payments.
So in sum: this doesn't make any sense any more other than political sense. the European central banks are no longer objectively analysing the world; they just join in the political game and produce papers that they think may get them a good press.
So, would this be the right time to remind the Eurosystem of its formal statute and of the difference between the goal and the means to achieve a goal?
As for the goal, we can read in article 2 of the ESCB statute that the primary objective of the ESCB is to maintain price stability. So that is all the stuff about keeping the interest rate and € exchange rate stable. In doing so, the ESCB shall support the general economic policies in the Community and it shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources....
Now article 3 states that in order to maintain this price stability, the actual tasks of the ESCB are:
- to define and implement the monetary policy of the Community;
- to conduct foreign-exchange operations consistent with the provisions of Article 111 of this Treaty;
- to hold and manage the official foreign reserves of the Member States;
- to promote the smooth operation of payment systems.
One could ask: why all the involvement in retail payments? Whether or not banks do SEPA will not imminently impact the interest rate nor price stability in Europe. So that would justify a bit of distance rather than the current involvement.
But then again, it is of course possible to reverse the order and state that the main objective of the ESCB is to promote smooth operation of payment systems and price stability also. Thus, by making the means an end in itself one could try to justify an ECBS role in retail payments. Still the tax payer may have a hard time understanding how one would really think that the objective to not have price rises in retail payments stems from the ESCB-task of price stability or fits the goal of preserving the value of the euro.
What the tax payer might understand is the concept of commercial expansion or institutional drift (where companies and regulators wish to dominate their respective markets and increase their market beyond original boundaries). And one could argue that the ESCB is now taking things a bit too far now with their continued and expanding involvement in retail payments. They are drifting out from their original territory into the domains of prudential supervisors, the European commission, local legislators and competition authorities. And while some of the involved policy makers at other institutions may raise the eyebrow, nobody is effectively stopping them.
What's also interesting? The ESCB don't apply their own one-SEPA-size fits all-reasoning to their own product: cash. In the cash area they go out of their way to explain that they are unable to harmonize cash rules in Europe:
At the same time, it was underlined that the Eurosystem does not envisage developing a “one size fits all” cash supply system. The different national economic and geographical environments need to be taken into account and the process of convergence will require some flexibility regarding customer requirements, cash infrastructure and transitional periods for implementation.
And finally, the Eurosystem leave the pricing of cash undiscussed. Shouldn't the ESCB be the first to ensure and announce that all over Europe all commercial banks should change their pricing for cash (under priced and free in most countries) in such a manner that we really have an efficient allocation of resources?
Well, I guess the old style ESCB would do so. Unfortunately the new style, politically sensitive ESCB hushes the subject under the carpet.
Thursday, July 19, 2007
Paypal results are out...
See the files here:
PayPal had another exceptional quarter, with accelerating Total Payment Volume (TPV) and revenue growth. PayPal’s Merchant Services business recorded outstanding results, as PayPal expanded its global footprint to new geographies and currencies during the quarter.
PayPal net revenues totaled a record $454 million in Q2-07, a growth rate of 34% over the $339 million reported in Q2-06. Global TPV was $11.69 billion in Q2-07, a 32% increase from the $8.86 billion reported in Q2-06.
PayPal Merchant Services contributed $4.92 billion globally to the $11.69 billion in global TPV in Q2-07, representing a 57% increase from the $3.13 billion reported in Q2-06.
PayPal reported a transaction revenue rate of 3.70% for the quarter, a transaction expense rate of 1.12% and a transaction loss rate of 0.29%. Interesting benchmark for those starting a business.
PayPal had another exceptional quarter, with accelerating Total Payment Volume (TPV) and revenue growth. PayPal’s Merchant Services business recorded outstanding results, as PayPal expanded its global footprint to new geographies and currencies during the quarter.
PayPal net revenues totaled a record $454 million in Q2-07, a growth rate of 34% over the $339 million reported in Q2-06. Global TPV was $11.69 billion in Q2-07, a 32% increase from the $8.86 billion reported in Q2-06.
PayPal Merchant Services contributed $4.92 billion globally to the $11.69 billion in global TPV in Q2-07, representing a 57% increase from the $3.13 billion reported in Q2-06.
PayPal reported a transaction revenue rate of 3.70% for the quarter, a transaction expense rate of 1.12% and a transaction loss rate of 0.29%. Interesting benchmark for those starting a business.
Old pin-terminals to be replaced to prevent further debit-card fraud
Parool has the news that criminals have now succeeded in manipulating a specific kind of terminal in order to skim all the data. It's an older breed of terminals and Currence, scheme-owner for PIN, has issued further guidelines and encourages shop owners to quickly replace the terminals.
The news comes at interesting times. Retailers are not keen on replacing terminals. They wish to use them as long as possible. And all kinds of replacements come with a lot of fuss, such as they kicked a couple of weeks ago on the liability shift that comes with EMV-compliant terminals. Due to previous political fuss, banks in the Netherlands even promised their retailers that they would not be unduly forced to replace terminals; thus extending the end date for full EMV-migration to 2013.
Now, what would be better for the Dutch society: retailers that keep on being pennywise and use terminals well beyond their life-span (with higher chances of skimming fraud and all involved inconvenience to their customers) or a more quick replacement of terminals by retailers, helping out in preventing fraud?
The news comes at interesting times. Retailers are not keen on replacing terminals. They wish to use them as long as possible. And all kinds of replacements come with a lot of fuss, such as they kicked a couple of weeks ago on the liability shift that comes with EMV-compliant terminals. Due to previous political fuss, banks in the Netherlands even promised their retailers that they would not be unduly forced to replace terminals; thus extending the end date for full EMV-migration to 2013.
Now, what would be better for the Dutch society: retailers that keep on being pennywise and use terminals well beyond their life-span (with higher chances of skimming fraud and all involved inconvenience to their customers) or a more quick replacement of terminals by retailers, helping out in preventing fraud?
VEB-shareholders withdraws request to replace board/commissioners ABN AMRO
In the news at BNR Nieuwsradio is the news that the association of shareholders (VEB) withdrew its request to appoint three independent commissioners at ABN AMRO to ensure a proper bidding procedure. This comes after further discussions with ABN AMRO and after having received some further assurances as to the way in which ABN AMRO will judge the two bids.
The request to do a further investigation if there was no mismanagement still stands though, so the court stuff is not entirely over.
The request to do a further investigation if there was no mismanagement still stands though, so the court stuff is not entirely over.
Monday, July 16, 2007
Trial with phone payments delayed
See this article in Eindhovens Dagblad to find out that a trial to pay with mobile phone at C1000 super market has been delayed. The technology is not entirely ready and the partners in the trial (NXP Semiconductors, Rabobank, KPN, RFID Platform Nederland en LogicaCMG) have not agreed to their cooperation and contributions. The main idea would be that the phone would be used intead of swiping the stripe. Also the revenue of savings coupons and empty bottles should be saved on the contactless application.
Payments in Europe: a Tower of Babel with Construction Problems
See this article by McKinsey on revenue structures for payments in Europe: a Tower of Babel with Construction Problems. The article looks ahead towards a situation where all countries in Europe will have a payment service directive implemented and transparancy for pricing will have to be increased (as the directive eliminates some revenue categories and demands high transparancy and cost-based pricing in payments).
McKinsey analysis outlines that there are two kinds of markets/business models in the EU:
- markets that focus on maximizing payment revenues by levying significant fees. Spain and Italy are the main examples. The United Kingdom and France also fall into this group, owing largely to their sizeable incident revenues.
-markets that focus on reducing the cost of their payments by maximizing the efficiency of their systems or by moving customers to an optimal payment mix. The Benelux and Nordic countries are in this category.
This is not to say that the profitability of any given market depends on the category to which it belongs. Some revenue-focused markets, such as Poland, lose money because the high fees on cashless payments cannot compensate for the losses made on cash transactions. Nordic markets, by contrast, are among the most profitable in Europe, even though their fee levels are relatively low, because the use of cash and cheques has been successfully reduced and overall efficiency of the payment system is high.
The analysis of revenue structures in Europe shows that three countries - Italy, the UK and Spain - together generated profit of €16.5bn, or as much as the whole of the EU9. Germany and Poland, by contrast, showed losses of €1.7bn and €0.7bn. respectively. All countries made losses on transactions and accounts, excluding balance revenues, showing that payments are a heavily interest-focused business.
And what the future will look like is quite unknown. While the trend to more cost-based pricing is clear, it is also clear that a number of important rulings/rules as to interchange fees should be made definitive next years. Without that, it is impossible to build new panEuropean schemes (direct debit or cards). And with too much business uncertainty floating around, the industry can't be expected to move in any direction.
So while it is clear that the payment industry is heading for a new equilibrium, it is quite unclear what this equilibrium will look like in the near future.
McKinsey analysis outlines that there are two kinds of markets/business models in the EU:
- markets that focus on maximizing payment revenues by levying significant fees. Spain and Italy are the main examples. The United Kingdom and France also fall into this group, owing largely to their sizeable incident revenues.
-markets that focus on reducing the cost of their payments by maximizing the efficiency of their systems or by moving customers to an optimal payment mix. The Benelux and Nordic countries are in this category.
This is not to say that the profitability of any given market depends on the category to which it belongs. Some revenue-focused markets, such as Poland, lose money because the high fees on cashless payments cannot compensate for the losses made on cash transactions. Nordic markets, by contrast, are among the most profitable in Europe, even though their fee levels are relatively low, because the use of cash and cheques has been successfully reduced and overall efficiency of the payment system is high.
The analysis of revenue structures in Europe shows that three countries - Italy, the UK and Spain - together generated profit of €16.5bn, or as much as the whole of the EU9. Germany and Poland, by contrast, showed losses of €1.7bn and €0.7bn. respectively. All countries made losses on transactions and accounts, excluding balance revenues, showing that payments are a heavily interest-focused business.
And what the future will look like is quite unknown. While the trend to more cost-based pricing is clear, it is also clear that a number of important rulings/rules as to interchange fees should be made definitive next years. Without that, it is impossible to build new panEuropean schemes (direct debit or cards). And with too much business uncertainty floating around, the industry can't be expected to move in any direction.
So while it is clear that the payment industry is heading for a new equilibrium, it is quite unclear what this equilibrium will look like in the near future.
RBS-Fortis-trio raises bid for ABN Amro to 71,1 billion euro with 93 % in cash
See the article here where it is described that the Fortis trio will keep its bid at 38,40 euro per share, even when there's no more LaSalle. Analists generally appreciate the offer, the share price for ABN AMRO now rises. Yet there is the condition that ABN AMRO should not sell any more assets.
Of course ABN AMRO is now studying the offer. Which contains the condition that ABN AMRO should not liquidate any further major assets. But ABN AMRO may still also decide to sell Banco Real (no share-votes required, as we now know), thus making themselves unattractive to Banco Santander as well....
To be continued...
Of course ABN AMRO is now studying the offer. Which contains the condition that ABN AMRO should not liquidate any further major assets. But ABN AMRO may still also decide to sell Banco Real (no share-votes required, as we now know), thus making themselves unattractive to Banco Santander as well....
To be continued...
Sunday, July 15, 2007
Answers to MP-questions on liability shift
While in considerable parts of the world chip and pin (and liability shift) is underway, the Dutch developments are a bit slower. Our move to EMV is however well discussed within the National Platform on Payments, in which in 2004 parties concluded that you cannot reasonably do a liability shift if there is no EMV-compliant terminal/infrastructure available.
With some new EMV terminals coming on the market, EMS decided to start moving towards including a liability shift in the retailer contracts (for credit-card payments). And Dutch retailers, that are keen on making every penny possible in negotiations, thought it would be a good idea to whisper some questions into the ears of an MP about how incorrect this liability shift thing is. And that the actual agreement in the National Platform would have been that rather than having a range of EMV-terminals in the market, it would be necessary for more than one terminal-provider to be active in the market. And only then would there be a liability shift.
So this week Minister of Finance answered to these questions by explaining that he had indeed been made aware of the contents of the letters of EMS to the retailers. Yet he did not wish to confirm the retailer interpretation on 'agreements in the national platform on payments'.
The answer of the Minister of Finance is a delicate 'no, you're wrong' to MP Vos. Delicate because Minister Bos is the leader of the Labour Party, while MP Vos is one of the newcomers for that party in Parliament. And 'you're wrong' because there is a free market for EMV-compliant terminals right now (which will be further expanding quickly in the future) and because in today's society retailers and acquirers are free to conclude all kinds of contracts they like.
What he forgot to mention is that also in a formal sense a commitment not to introduce a price structure is impossible, because such an agreement would have constituted a price/cartel agreement. And the National Platform, by its statute, is only there to discuss payment developments and not to do price-bargaining or arrange for price-agreements for any of its members.
The answer of the Minister is that given this freedom of contract and all other variables in the credit-card game (retailer segment, segment specific controls etc), it is not by definition the case that retailers will charge the cost of the liability shift to consumers (and I would add that it is similarly unlikely that they will pass on revenues from the liability shift and translate it in a lower price level, due to lower fraud costs...).
So, the one question that remains is: is the retailer strategy to continuously do public price bargaining by asking questions via MP's in parliament an effective one, or does it in the end just demonstrate penny-wisdom?
With some new EMV terminals coming on the market, EMS decided to start moving towards including a liability shift in the retailer contracts (for credit-card payments). And Dutch retailers, that are keen on making every penny possible in negotiations, thought it would be a good idea to whisper some questions into the ears of an MP about how incorrect this liability shift thing is. And that the actual agreement in the National Platform would have been that rather than having a range of EMV-terminals in the market, it would be necessary for more than one terminal-provider to be active in the market. And only then would there be a liability shift.
So this week Minister of Finance answered to these questions by explaining that he had indeed been made aware of the contents of the letters of EMS to the retailers. Yet he did not wish to confirm the retailer interpretation on 'agreements in the national platform on payments'.
The answer of the Minister of Finance is a delicate 'no, you're wrong' to MP Vos. Delicate because Minister Bos is the leader of the Labour Party, while MP Vos is one of the newcomers for that party in Parliament. And 'you're wrong' because there is a free market for EMV-compliant terminals right now (which will be further expanding quickly in the future) and because in today's society retailers and acquirers are free to conclude all kinds of contracts they like.
What he forgot to mention is that also in a formal sense a commitment not to introduce a price structure is impossible, because such an agreement would have constituted a price/cartel agreement. And the National Platform, by its statute, is only there to discuss payment developments and not to do price-bargaining or arrange for price-agreements for any of its members.
The answer of the Minister is that given this freedom of contract and all other variables in the credit-card game (retailer segment, segment specific controls etc), it is not by definition the case that retailers will charge the cost of the liability shift to consumers (and I would add that it is similarly unlikely that they will pass on revenues from the liability shift and translate it in a lower price level, due to lower fraud costs...).
So, the one question that remains is: is the retailer strategy to continuously do public price bargaining by asking questions via MP's in parliament an effective one, or does it in the end just demonstrate penny-wisdom?
Supreme Court allows LaSalle sale: RBS consortium renews bid and another court case for ABN AMRO underway
Friady the 13th turned out to bring bad luck for shareholders association VEB (making it a lucky day for ABN AMRO). The Dutch Supreme Court overturned a previous decision of the Enterprise Court (that blocked the LaSalle sale). And BNR reports that the RBS consortium is now considering to renew their bid for ABN AMRO (not counting in LaSalle).
Meanwhile the labour unions and the Personell Board of ABN AMRO ask Barclays the same committment as was given by the RBS Consortium: no forced resignations/labour cuts. But while the RBS Consortium dares give this assurance, Barclays only wishes to quickly specify its plans (refusing to give a job guarantee).
Add to this that the the Barclays payment for ABN AMRO shares will be done largely in their own shares, as opposed to the cash offer by the RBS consortum, and the picture becomes quite clear. The RBS Consortium know what they're doing and see added value to their businesses. As such they are willing to bet serious money on it and lend money in the market for this pro-active bid. Barclays is not willing to bet externally funded money on it and will mostly try to recoup its money by cost/labour savings of the new combination.
The bidding game is not to end quickly by the way; new court cases and filings are underway where shareholders, personell board ABN AMRO and labour unions will join hands to petition an investigation into the policies of ABN AMRO management and board of supervisors. So the whole bet is going to last beyond a long hot summer.
Meanwhile the labour unions and the Personell Board of ABN AMRO ask Barclays the same committment as was given by the RBS Consortium: no forced resignations/labour cuts. But while the RBS Consortium dares give this assurance, Barclays only wishes to quickly specify its plans (refusing to give a job guarantee).
Add to this that the the Barclays payment for ABN AMRO shares will be done largely in their own shares, as opposed to the cash offer by the RBS consortum, and the picture becomes quite clear. The RBS Consortium know what they're doing and see added value to their businesses. As such they are willing to bet serious money on it and lend money in the market for this pro-active bid. Barclays is not willing to bet externally funded money on it and will mostly try to recoup its money by cost/labour savings of the new combination.
The bidding game is not to end quickly by the way; new court cases and filings are underway where shareholders, personell board ABN AMRO and labour unions will join hands to petition an investigation into the policies of ABN AMRO management and board of supervisors. So the whole bet is going to last beyond a long hot summer.
Thursday, July 12, 2007
Rabobank wishes to increase market share in cities
See the webarticle here. Rabobank (historically being strong in the rural areas) has announced that it wishes to increase its market share from 15 to 20 % in the cities. To this end it will open new outlets and further expand its terminal/atm network in cities, pop-centres, train stations etcetera.
Monday, July 09, 2007
Supermarkets encourage use of debit-cards at POS rather than cash..!
Television programme website Kassa picked up on the news that supermarkets will further encourage the use of the debit-card for small value payments at the point of sale. The news comes about one year after the publication of the Mckinsey report on profits/loss in the Dutch retail payment sector.
The basic idea is that retailers stop charging a fee at the point of sale. This happens in 1 out of 5 shops, where the retailer charges 10 to 25 eurocents for the cost of debit-card payments, which actually cost them 5 cents to have it processed by the bank. So already one year ago, during the publication of the McKinsey results, the Dutch central bank suggested to remove those signs at the counter that announce the debit-card surcharge to the consumer.
At that point in time, the retailers did not wish to let go of this revenue source. But now, with all kinds of cheap POS-package offers and subsidies available to retailers, it is a good thing that they now publicly subscribe to the insight that cash payments may look cheaper than they really are (with all handling and checking labour involved). And that it does indeed make sense to not charge for debit-cards payments the point of sale.
The basic idea is that retailers stop charging a fee at the point of sale. This happens in 1 out of 5 shops, where the retailer charges 10 to 25 eurocents for the cost of debit-card payments, which actually cost them 5 cents to have it processed by the bank. So already one year ago, during the publication of the McKinsey results, the Dutch central bank suggested to remove those signs at the counter that announce the debit-card surcharge to the consumer.
At that point in time, the retailers did not wish to let go of this revenue source. But now, with all kinds of cheap POS-package offers and subsidies available to retailers, it is a good thing that they now publicly subscribe to the insight that cash payments may look cheaper than they really are (with all handling and checking labour involved). And that it does indeed make sense to not charge for debit-cards payments the point of sale.
Saturday, July 07, 2007
Dutch consumer not aware of the real prices...
Interesting article here outlines that the Dutch consumer actually buys on his/her price perception rather than the real price. Research of OC&C Strategy Consultants, covering 4500 participants in 5 countries shows that the Dutch (in contrast to their reputation of being penny-wise) are the worst choosers on real price. In the Nehterlands, the price perception is about 15 % apart from the real prices, with some sectors showing a discepancy of even 30 %.
While the OCC Research was done in physical retail stores, it does hold for financial services as well. Research done by CapGemini (presented mid june) shows the same effect. Consumers perceive a bank or bank service to be cheap, while the reality may be different.
This does put last weeks mini-media-hype on retail payment fees in perspective. There was bit of uproar as if banks had announced that prices for retail payments would rise, while the only thing that happened was that an analysis was presented on the effect of the Payment Services Directive. And that analysis outlined that from an analytical perspective there would be more transparancy in pricing; most likely to be percieved by the public as price hikes.
So, now it is clear that for the Dutch, the perception counts more than reality, the banks might just as well want to consider announcing that prices will fall....?
While the OCC Research was done in physical retail stores, it does hold for financial services as well. Research done by CapGemini (presented mid june) shows the same effect. Consumers perceive a bank or bank service to be cheap, while the reality may be different.
This does put last weeks mini-media-hype on retail payment fees in perspective. There was bit of uproar as if banks had announced that prices for retail payments would rise, while the only thing that happened was that an analysis was presented on the effect of the Payment Services Directive. And that analysis outlined that from an analytical perspective there would be more transparancy in pricing; most likely to be percieved by the public as price hikes.
So, now it is clear that for the Dutch, the perception counts more than reality, the banks might just as well want to consider announcing that prices will fall....?
Monday, July 02, 2007
Students discover software security error in public transport tickets
Interesting news from the Amsterdam University where students in the open source project checked if the disposable contactless public transport ticket (OV Chipkaart) could be used again. And yes, the secutiry was insufficient and it was possible...
The breach was reported to Translink and proved to be valuable. Also the education programme itself proved once again the usefulness of open source and independent public evaluation of software. The research was done in the OS3 programme, where OS3 stands for Open Standards, Open Software (which extends Open Source) and Open Security. Together these three components define Open Technology.
The breach was reported to Translink and proved to be valuable. Also the education programme itself proved once again the usefulness of open source and independent public evaluation of software. The research was done in the OS3 programme, where OS3 stands for Open Standards, Open Software (which extends Open Source) and Open Security. Together these three components define Open Technology.
Dutch central bank closes last cash-outlets....
A couple of days ago, the central bank closed its last cash-outlets. See the press release here. This marks a period of 140 years during which the central bank started out as a single office in Amsterdam, then on demand of politicians expanded its role as a provider of cash until it had a whole bunch of local offices.
And then, deciding that all this stuff be left to the market, it closed down its branches. So now the money couriers in the Netherlands must all drive to either a bank money center or Amsterdam (to deposit cash). Funny thing is that the nearby option for Maastricht banks to deposit their euro's in Aachen or Brussels is not allowed by the central banks......
... those same institutions that claim that banks have not achieved a sufficient harmonisation in European payments are unwilling to harmonize their own cash processing rules out of fear for job loss in their own house.
Some Europe this is.
And then, deciding that all this stuff be left to the market, it closed down its branches. So now the money couriers in the Netherlands must all drive to either a bank money center or Amsterdam (to deposit cash). Funny thing is that the nearby option for Maastricht banks to deposit their euro's in Aachen or Brussels is not allowed by the central banks......
... those same institutions that claim that banks have not achieved a sufficient harmonisation in European payments are unwilling to harmonize their own cash processing rules out of fear for job loss in their own house.
Some Europe this is.
Dutch pride: foundation to improve the Netherlands as a place for financial business
In the slipstream of the pensioning of one of the directors of the prduential regulator (AFM) and of the bank association (NVB) a bunch of hot shots in banks, insurance companies and regulators including the Ministry of Finance thought it would be a good idea to promote the Netherlands as a place for financial business. And parliament asked a bunch of questions on this, to which the Minister of Finance replied here.
Essentially it is a nice idea, but also too little too late. The fact that ABN AMRO becomes a take-over victim is more than telling the real state of things here. The Netherlands may not really be the best climate for doing financial business. And most certainly one could advice other banks not to enter the payments market, in which margins are even negative. So the foundation may be active in the area of education, it would surprise me if they would really eliminate the essential barriers that exist (mostly in the form of useless or inconsequent government overregulation).
Essentially it is a nice idea, but also too little too late. The fact that ABN AMRO becomes a take-over victim is more than telling the real state of things here. The Netherlands may not really be the best climate for doing financial business. And most certainly one could advice other banks not to enter the payments market, in which margins are even negative. So the foundation may be active in the area of education, it would surprise me if they would really eliminate the essential barriers that exist (mostly in the form of useless or inconsequent government overregulation).
Voca and LINK merge and launch pan-European clearing service
See the press release here to discover that the newly formed company, VocaLink, will provide domestic and international transaction services to banks and corporates. And at the same time, VocaLink is launching Europe’s first independent pan-European payment service (€CSM partnership) in partnership with 10 banks from across Europe.
In addition to core transaction processing services, banks may benefit from the development of new transaction services that include Corporate Access services, Direct Debit Mandate management, Payment Exceptions management, AML and OFAC compliance as well as non-SEPA payment processing.
So there's another move on the processing side.....
In addition to core transaction processing services, banks may benefit from the development of new transaction services that include Corporate Access services, Direct Debit Mandate management, Payment Exceptions management, AML and OFAC compliance as well as non-SEPA payment processing.
So there's another move on the processing side.....
Barclays offer delayed while Fortis personell board agrees
See the ABN AMRO Press Room for an update that outlines that Barclays will be filing the required reports a bit later. This is due to the regulatory processing at AFM. But it comes in handy as it now delays the final moment to offer documentation to after the verdict of the Supreme Court.
Meanwhile the Fortis Personell Board has given a positive advice as to the further next steps in the bidding of Fortis.
And those who go down the Dutch streets will see bill boards and ads all over the place. A part of it is from Rabobank, and says: We remain the same as always. And another part is by ABN AMRO and states that whilequite some things will change, their service will remain the same.
Meanwhile the Fortis Personell Board has given a positive advice as to the further next steps in the bidding of Fortis.
And those who go down the Dutch streets will see bill boards and ads all over the place. A part of it is from Rabobank, and says: We remain the same as always. And another part is by ABN AMRO and states that whilequite some things will change, their service will remain the same.
Sunday, July 01, 2007
Trade unions denounce governance and management policy ABN AMRO in petition to enterprrise court
See the nrc article here which outlines that the trade unions denounce the policies of board and management of ABN AMRO. This vision is identical to that of the association of shareholders (VEB) and just as the VEB the trade unions request an investigation into the board and management policy and governance at ABN AMRO. Their argument is that by selling of LaSalle, the board didn't properly take into account that the RBS-constortium does give an employement guarantee, while Barclays does explicitly not give such a guarantee.
By requesting the enterprise court to hold an investigation into the ABN AMRO policies, VEB and trade unions have used on of the few approaches available that will allow the Enterprise Court to uphold its previous verdict in the LaSalle case (obligation not to sell) yet on different grounds (bad governance). So it's look as if its going to be a long hot summer after all...
By requesting the enterprise court to hold an investigation into the ABN AMRO policies, VEB and trade unions have used on of the few approaches available that will allow the Enterprise Court to uphold its previous verdict in the LaSalle case (obligation not to sell) yet on different grounds (bad governance). So it's look as if its going to be a long hot summer after all...
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