Bank-retailer agreement signed: pinnen gets cheaper...

Yesterday an important agreement was signed at the central bank. It involves three bits:
1-all banks will lower the fee for acquiring debit-card transactions with at least one cent; retailers will drop all pending law-suits on this topic;
2-the banks will setup a fund of 10 million euro so that banks and retailers may use the money to further promote innovation and efficiency in payments
3-banks, retailers and all parties involved will work together to determine which measures, communication, positive and negative incentives can be used to make Dutch payment more efficient.

Mr Zalm, the Dutch Minister of Finance commented on the agreement in his speech, explaining that it confirms that the market functions properly. He stated that it also confirms that the so-called Social Platform on Payments (a halfyearly round table forum of representatives of all users and supliers in the payments market) proves its use.

Zalm also outlined the challenge ahead. He noted that the often quoted low Dutch fees in the World Banking Report are only the visible fees to consumers. The real costs however are larger. Therefore he suggested that the market should work towards more transparent and direct pricing of payments. This statement is similar to that of numerous central bank speeches of the last years.

The final good news is that, contrary to popular belief, the competition authority has no fundamental objections to this agreement (see their informal view here); it does want to see the details of further collective actions of course.

So onwards to further efficiency and direct pricing it is...

SEPA rears its head....

Today the Financieele Dagblad reported on the upcoming changes as a result of SEPA. The article covers both legal changes as a result of the new legal framework and the changes as a result of using EPC-standards based on IBAN and BIC. Interestingly the article suggests that as of January 1, 2008 the IBAN will be used for domestic payments as well as cross-border payments. This suggestion appears not to be the first item on the agenda of Dutch banks themselves but rather that on that of the central banks (as reflected in this speech of ECB Board Member Tumpel Gugerell).

Further on in the same newspaper EPC-chair Hartsink outlines that he feels that further legal rules are inevitable to arrive at SEPA. Mr Hartsink furthermore announces that the EU government treasurers may meet in the coming months to decide how they may use EPC-based payment mechanisms to kickstart the use of panEuropean payments.

Finally, we are there: Microsoft points to be issued as a means of payment !!!

VNUnet reports in this article that as a part of the further delivery and expansion in the gaming segment, Microsoft will launch its own e-money system, known as Microsoft Points. Cards will be sold for �13 containing 1,600 points which can be used online to pay for games ranging from 150 to 800 points.

At last I would say. This is an example of an issuer of digital value which is so big, that it does make sense to only spend the value at the issuer. As such Microsoft does not have to deal with financial legislation. The Microsoft Points are simply a prepayment of goods.

The concept of company points (or similarly: MacDonald points, Virgin points; Easypoints in the case of the Easy-imperium) is a further step towards an economy in which it becomes quite explicit what it is that consumers trusts. It has been expected for a long time, and now it is here.

Why could we expect it? Well, in short because there is no theoretical reason why a consumer would not trust a large brand as much as a central bank (that issues currency on behalf of government). In practice however most companies do not have a consumer base that equals a complete population in a country; so the use of company points will then alway be limited.

This changed with the Internet and the increased irrelevance of national borders. As a result, e-gold for example, now has a goldreserve bigger than a whole lot of small central banks. And similarly, the user base of Paypal equals the size of large EU-countries. So the real worldspanning brands and companies do have sufficient critical mass for their company-currency to become useful to the consumer.

Q.E.D. (by Microsoft).

The infancy of the market for m-payments.....?

In the course of the review of the e-money directive, it is often stated that m-payments or e-payments are in its infancy. This press rrelease of LogicaCMG explains that the Mobile content market is set to triple to more than 7.6 billion euros within a year. With an average of ? 6.32 per user.

Meanwhile operators in Australia earn more with data and content than with voice.
See the article in PC World (Mobile report: Multimedia leaves voice behind). So let's not kid ourselves into believing that all those small payments via mobile are neglectable...

Dutch Parliament wants to await further investigation into costs of contactless payments for public transport

See the article in Automatisering Gids. Parliament has decided not to spend further money on the contactless payment system for public transport, until the Ministry of Transport has investigated the amount of extra investments needed....

Yet, the Minister has said she was unable to explain how much was needed until the beginning of 2006.... when things are much much clearer.....

Rabobank Renews Outsourcing Contract with Unisys

See this article in business wire to find out that Rabobank extended its existing business process outsourcing contract with Unisys Payment Services and Solutions (UPSS) for all paper-related payment transactions for two additional years through December 31, 2010.

Future billing via cards instead of direct debit ?

This article point the way to card-based bill payments instead of the old diect debit stuff that we designed in the 1960s.....

Not a bad idea, remote card payments over the wb are protected in Europe under the e-commerce directive; thus providing for the revocation options that we have in direct debits.

Ideal start for iDEAL

Planet multimedia reports that since its start last month, the iDeal e-payment functionality of Dutch banks has now reached a level of 8% acceptance. That is, 8 % of all payments processed by payment service processor Ogone is now an iDeal payment.

That is an ideal start for iDeal !

E-money via SMS: the SMS voucher

This Dutch site is called sms-bon. It specialises in sending pre-paid gift vouchers via sms. From the looks of it, the Dutch supervisors have not yet noticed this supplier.

Google Wallet May Debut Soon

See this RED HERRING article.

....Google CEO Eric Schmidt has said Google Wallet will not be a PayPal clone. Unlike PayPal, analysts speculate that transactions would be limited to ones between businesses and consumers. The service would probably not allow more personal uses, such as a friend sending money to a friend. But like PayPal, it would likely be a stored value account.

Dan Schatt, an analyst with Celent, a research and consulting firm, predicts the search giant will release the service by the end of the first quarter, if not for the holidays.

The price of safety

An interesting statement of the Consumer Union in the Dutch opinion magazine Elsevier. While in previous years consumers did not have the option to pay safely over the web (banks should work on that) the Consumer union now advises its customers to not use the now developed product iDeal for payments below 10 euro. Their main reason is that the price to the merchant for those payments would be too high. And this fee will have to be borne by the consumer eventually.

Quite an interesting line of resoning. Similarly they could advice consumers not to buy at merchants that use Microsoft servers rather than Unix alternatives. The reason being that the higher cost of merchants that use Microsoft eventually needs to be borne by the consumer.

Or am I missing something here?

FATF: Looking in the wrong places

The economist has this article on financing terrorism and the use of measures such as proposed by the Financial Action Task Force on Fraud (FATF). Essentially those measures cost a lot of money and don't create any added value.

Which lead to the conclusion:
For KPMG's Mr Dillon, the resources already spent on the effort have handed a victory to the terrorists. “The cost to our global economy is so large, they've already had the effect they wanted,” he says. “The increasing costs of compliance and technology are a form of terrorism. We're damaging ourselves.”.

Payments and Settlements News - 28

is out now and links to:
* EBA – Luxembourg's banks to move national retail transfers to EBA Clearing's STEP2 platform,
* Leo Van Hove's reference database on e-purses: more than 2,000 records,
* ECB – Second progress report on TARGET2,
* the European Commission – Report on the application of Regulation 2560/2001: Preparatory studies,
* FRB of Chicago – Forces shaping the payments environment: A summary of the Chicago Fed's Payments Conference 2005.

Great flash-promo for Chase blink

I stumbled accross this website that introduces the Chase Blink contactless card. It's a very graphic and appealing website that invites the consumer to change its payment behaviour towards contactless payments.
"Watch and we'll show you how..."
"In a blink you're done,... go ahead and try it yourself'.

Now, if you don't do anything after having looked at the introduction you get this woman voice saying stuff like:
- Come on, blink already.....
- Are you afraid to blink?...it's easy, just click on a the card...
- Blink if you're still there.....
- Go ahead, blink away...
- Are you still there...?

Mastercard goes public: definitive Proxy Statement with SEC

Being sued by merchants, Mastercard needs cash.
So they sell of some shares and do the administrative thing.
See the document here.

...the Board of Directors of the Company has approved plans for a new ownership and governance structure that will broaden our ownership to include not only customer financial institutions, but also public investors and a foundation to be incorporated in Canada known as The MasterCard Foundation. These plans will also result in a new board of directors with a majority of independent directors. Approval of the proposals to be acted upon at the Special Meeting is necessary for the Company to transition to the new ownership and governance structure.

We believe that the proposed changes will give us a more stable base on which to implement our customer-focused strategy and bring value to our customers’ businesses. We believe this is a positive development for you as both a stockholder and a customer. We intend to continue to leverage our global strength and presence to the benefit of customers while remaining sensitive to regional needs. Through the MasterCard charitable foundation, we also intend to make a significant contribution to the societies in which we operate.

KPN signs exclusive deal with web-PSP Triple Deal

Planet Multimedia reports that KPN has signed an exclusive cooperation agreement with web payment service provider Triple Deal.

As a result Triple Deal will incorporate the payment mechanisms of KPN (Switchpoint, payment via premium SMS, payment via 0900-services) and KPN will incorporate the payment mechanisms of Triple Deal (iDeal, Wallie Card, Paypal, credit-cards, credit transfers etc).

My guess is that KPN realises that it can't stay out of the payment business if they are to make money with selling content via whichever channel. So their best move is the first move towards a payment consolidator. This allows them to cut a good deal on payment fees. And if this works for both of them, the next move may eventually be that KPN takes over Triple Deal altogether.

Doubts for the contactless OV-chipcard...?

Automatiseringsgids reports that this monday the Ministry of Transport has discussed with local government representatives (provinces and city councils) the extra cost of the contactless chipcard for public transport.

The goal is to know exactly what the expected cost will be for the new system. The Ministry has reserved 90 million euro for the scheme but rumours are that an additional 100-150 million euro is needed as the systems does not appear to function properly.

While in principle the contactless chipcard appears a good idea to the Ministry, the goal is to be able to inform parliament in december about the outlook for the OV-chipcard. As long as the new system is not as good as the current paper-based ticketing system for public transport (strippenkaart), the Minister of Transport does not want to throw away the old system.....

eBay Buys VeriSign Unit

Redherring reported this week that eBay is buying VeriSign’s payment gateway business. The press-release was wrongly interpreted by many Dutch journalists as: EBay buys the payment system Verisign. But then again, it is not that easy.

eBay and Verisign will in the future work together to combat identity theft issues. VeriSign will equip eBay and PayPal with security services that include a system called a two-factor authentication, which gives users a one-time password or digital certificate to help protect against online identity theft.

So eBay gets acquiring business which is merely risky non-core business to Verisign. But it's what eBay and Paypal can handle and are good at. And Verisign gets to sell more security stuff and solutions (which is what Verisign is good at.

Looks like a win win thing. Does'nt it ?

Interpay system complies with central bank standards

Read this press release to discover that Interpay, the Dutch ACH, complies with central bank standards.

That is, the release should read that one of the systems of Interpay (rather than Interpay itself) complies with central bank standards. It appears from the DNB report in its Quarterly bulletin from September 2005 that Interpay's Clearing & Settlement System (CSS) complies with the BIS standards for system-critical retail payment systems. This covers ten Core Principles that relate to all aspects of an organisation: from security and management efficiency to control of financial risks and legal matters.

Too bad that this unique system, with features as half-hour settlement periods during the day, may have to be adapted / downgraded to fit the unified Target2 environment... just to show how European harmonisation experience in payments may result in improvements in Europe generally, but not for the Dutch in particular....

McCreevy on the future of payments in Europe

See this speech to ddiscover:
But I also want to be clear that I am ambitious for the successful delivery of this project. In order to sustain its political backing the Commission will need to be convinced that certain objective standards are met. For example:
* It would be unacceptable if the Single Payment Market results in a general price increase and price convergence at the top of the current range;
* It would likewise be unacceptable if the Single Payment Market results in less competition, fewer providers and governance and scheme rules that are not conducive to competition;
* User expectations have to be met.

Note the word objective standards, which is used in one sentence with user expectations... And note the plans for a New Legal Framework. This includes a light supervisory regime of payment service providers. But anyone may assume that supervisors will even make light supervision a heavy burden. So this will most likely raise costs and diminish competition...

Those objective standards sound more like incompatible mathematic functions to me...

ECB: Keeping up the momentum: achieving the SEPA objectives on time

On 3 October 2005, Gertrude Tumpel-Gugerell, Member of the Executive Board of the European Central Bank, gave a speech about how to achieve the SEPA objectives on time at the Off-site strategy meeting of the Coordination Committee of the European Payments Council in Durbuy. The first part of the speech comprised the ECB’s assessment of the status of the SEPA project today. The second part focused on the SEPA and the promotion of financial integration in the euro area.

Essentially, the ECB acknowledges that the previous idea that SEPA infrastructures would be completely migrated by 2010, is unrealistic:
I will therefore present the 2010 objective in a slightly different way than I did last year by acknowledging that SEPA for infrastructure will rather evolve gradually in the following three phases:

First, the adjustment of infrastructures by 2008 for the processing of SEPA payments in parallel to national payments (in this respect, it is important to focus specifically on how to ensure technical reachability for the pan-European direct debit scheme);

Second, the irreversible migration of a critical mass of national credit transfers, direct debits and cards to SEPA instruments by 2010 and the achievement of complete interoperability between SEPA-compliant infrastructures;

Third, and beyond 2010, I expect a reduction of the number of retail systems in operation in the euro area by means of competition and the phasing out of national instruments.

SWIFT - Conferences - Sibos 2005

S.W.I.F.T. has prepared an online version of the official Sibos 2005 Copenhagen Wrap Up Report. Available on the website are all the speeches, videos, photos, conference and exhibition summaries from Sibos, documenting the gathering of over 6500 attendees from the global financial community on 5-9 September 2005.

See the payment systems session overview
here.