Financieele Dagblad reports that a judge in Amsterdam fined a large retail bank for not compensating customers who where tricked into losing their debit-card (the exchange-trick, where at the ATM someone diverts attention to quickly exchange the owner's card for another one). Before the trick, the crooks were of course sure to observe the pin-code so that they could cash-in quickly afterwards.
The arguments of the judge are not entirely clear. On the one hand it appears that it finds that the bank has not warned its customers sufficiently, on the other hand the idea was that customers should not be obliged to be suspicious at all times for the possibility of an exhcange-trick fraud.
The verdict does reflect a trend where victims of fraud take the case to the judge rather than to the customer redress committee for banks.
Sunday, February 19, 2006
Saturday, February 18, 2006
And the ESCB looks at SEPA slightly different... or not?
In what appears to be a collaborative effort with the European Commission, the ESCB has published the fourth progres report on SEPA. But their mantra may be slightly different, with SEPA focusing on the euro-area:
* SEPA will eliminate national barriers
* SEPA will focus on the euro area
* SEPA will be future-oriented
* SEPA will be user-friendly
* SEPA will require a communication strategy
* SEPA will also benefit banks
* The time frame of the SEPA process will be upheld
* SEPA objectives will focus on establishing common standards and procedures
It is interesting to note that the report does acknowlegde that there is a dependency wih the TARGET2 effort of the ESCB. But it does not point out the resource dependencies of the private sector. EPC-payment infrastructure needs to build on Target or TARGET2, but as this project delays, so will EPC.
It is also quite interesting to note that the ambitions that the ESCB sets out for the private sector seem to exceed those that the ESCB itself will achieve. If TARGET2 were to eliminate the national barriers just as SEPA does, there would be a single functionality with a single price for banks, regardless of their location. Yet, that dream will not come true until way after 2010....
Could it be possible that ESCB and EC suffer from a case of projection? And that the appeal to the outside world (private sector) to do single European stuff in a minimum time frame with a maximum reach is an outward projection of inner desires and fears? And that the outward projection shifts the attention from the inward realization that exactly that same goal is what the EU-institutions are looking for themselves but what appears to be out of reach?
We can see that while the discussion on the Eu constitution is halted, the services directive is being downgraded (not leading to a full EU) and Target2 remains a hybrid domestic/EU settlement system. And we may even fear that the outward projection will not make place for the realisation that the European ambition and/or timeframe should be re-assessed. Will the private sector then be obliged to prematurely do away with previous investments? And will the citizen/customers need to pay for new pan-European payment stuff that they didn't want in the first place?
If I were to bet on commercial led institutions or government organisations to understand what a market wants, I would go for the commercial sector. Still, if we feel that EU en ESCB have a better idea on what the citizens/customers want (and their willingness to pay for it) one could choose to implement their idealistic goals. But we shouldn't be surprised if a new referendum then has 15 states turning a EU constitution down.
* SEPA will eliminate national barriers
* SEPA will focus on the euro area
* SEPA will be future-oriented
* SEPA will be user-friendly
* SEPA will require a communication strategy
* SEPA will also benefit banks
* The time frame of the SEPA process will be upheld
* SEPA objectives will focus on establishing common standards and procedures
It is interesting to note that the report does acknowlegde that there is a dependency wih the TARGET2 effort of the ESCB. But it does not point out the resource dependencies of the private sector. EPC-payment infrastructure needs to build on Target or TARGET2, but as this project delays, so will EPC.
It is also quite interesting to note that the ambitions that the ESCB sets out for the private sector seem to exceed those that the ESCB itself will achieve. If TARGET2 were to eliminate the national barriers just as SEPA does, there would be a single functionality with a single price for banks, regardless of their location. Yet, that dream will not come true until way after 2010....
Could it be possible that ESCB and EC suffer from a case of projection? And that the appeal to the outside world (private sector) to do single European stuff in a minimum time frame with a maximum reach is an outward projection of inner desires and fears? And that the outward projection shifts the attention from the inward realization that exactly that same goal is what the EU-institutions are looking for themselves but what appears to be out of reach?
We can see that while the discussion on the Eu constitution is halted, the services directive is being downgraded (not leading to a full EU) and Target2 remains a hybrid domestic/EU settlement system. And we may even fear that the outward projection will not make place for the realisation that the European ambition and/or timeframe should be re-assessed. Will the private sector then be obliged to prematurely do away with previous investments? And will the citizen/customers need to pay for new pan-European payment stuff that they didn't want in the first place?
If I were to bet on commercial led institutions or government organisations to understand what a market wants, I would go for the commercial sector. Still, if we feel that EU en ESCB have a better idea on what the citizens/customers want (and their willingness to pay for it) one could choose to implement their idealistic goals. But we shouldn't be surprised if a new referendum then has 15 states turning a EU constitution down.
Friday, February 17, 2006
Interpay to join hands with German Transaktion-Institut
Yesterday, Interpay announced that it had signed a MoU with German Transaktionsinstitut to establish a merger later this year. The completion of the deal is expected in the middle of 2006 and it is considered a sign of the further consolidation that will occur in the move to a single panEuropean processing/payments market.
Tuesday, February 14, 2006
SEPA Incentives.... or quite the opposite?
Yesterday, the Commission released a new version of the so-called Incentives Paper. The industry now have 5 weeks to respond to 72 questions on issues such as: SEPA-governance, SEPA=products, adoption, standards, competition, migration cost, repositioning of cash/cheques, customer choice and mobility and e-invoicing.
The timing is impeccable, as the industry is already contemplating:
- the content of EPC-rulebooks, card-framework and settlement mechanisms,
- the new legal framework for payments in the internal market
- the revision of the e-money directive,
- the evaluation of regulation 2560,
- the delay and renewed planning for Target2,
- the implementation of an upcoming regulation to implement FATF-recommendation 7.
Needless to state that given the above agenda, it is rather naive to expect the industry to be able to react properly to this document. And interestingly: while the Commission stresses in its White Paper on Financial Services the principles of better regulation, it ignores the standard 8 weeks response time, suggested by those same principles.
So what does the document do? It describes the Commissions preference for self-regulation and at the same time lists a huge number of concerns that the Commission has with respect to the SEPA-project of the European Payment Council. It also describes the vision of the Commission:
As the main goal of SEPA is economic, its overall success will be judged by the
economies it delivers. It will be deemed a success when the full potential of economies of scale and scope and competition are realized with the euro-zone. This means savings for users and lower costs for providers. This vision does not allow for developments that will only take us half the way. A mini-SEPA that only delivers solutions for cross-border payments in Europe is not acceptable. This will only add an extra payment system on top of the 25 national systems that we already have and thus increase cost and not create great benefits, or realize economies of scale and scope. Competition on the European level will not be possible as all payment systems remain nationally fragmented. It will result in a situation where there are new SEPA products on offer, but very few users will adopt them for domestic transactions. A real SEPA will change substantially current domestic payment markets to the benefit of both users and providers.
So what happens here is that, even before the Commission has grasped or awaited the effects of all pending projects and regulation, it already outlines its concerns as to the outcome of those developments and the future competition in the payments market. Anyone who reads this ambiguous document will conclude that the Commission effectively expects nothing to change as a result of the SEPA-efforts and merely is already contemplating ways/angles to hammer in their vision of a perfect payment market by an additional regulation. And all this to ensure that Commissioner McCreevy may add that result to his track-record just before retiring in 2009.
Which leaves us with the question: is this document supposed to be an incentive?
The timing is impeccable, as the industry is already contemplating:
- the content of EPC-rulebooks, card-framework and settlement mechanisms,
- the new legal framework for payments in the internal market
- the revision of the e-money directive,
- the evaluation of regulation 2560,
- the delay and renewed planning for Target2,
- the implementation of an upcoming regulation to implement FATF-recommendation 7.
Needless to state that given the above agenda, it is rather naive to expect the industry to be able to react properly to this document. And interestingly: while the Commission stresses in its White Paper on Financial Services the principles of better regulation, it ignores the standard 8 weeks response time, suggested by those same principles.
So what does the document do? It describes the Commissions preference for self-regulation and at the same time lists a huge number of concerns that the Commission has with respect to the SEPA-project of the European Payment Council. It also describes the vision of the Commission:
As the main goal of SEPA is economic, its overall success will be judged by the
economies it delivers. It will be deemed a success when the full potential of economies of scale and scope and competition are realized with the euro-zone. This means savings for users and lower costs for providers. This vision does not allow for developments that will only take us half the way. A mini-SEPA that only delivers solutions for cross-border payments in Europe is not acceptable. This will only add an extra payment system on top of the 25 national systems that we already have and thus increase cost and not create great benefits, or realize economies of scale and scope. Competition on the European level will not be possible as all payment systems remain nationally fragmented. It will result in a situation where there are new SEPA products on offer, but very few users will adopt them for domestic transactions. A real SEPA will change substantially current domestic payment markets to the benefit of both users and providers.
So what happens here is that, even before the Commission has grasped or awaited the effects of all pending projects and regulation, it already outlines its concerns as to the outcome of those developments and the future competition in the payments market. Anyone who reads this ambiguous document will conclude that the Commission effectively expects nothing to change as a result of the SEPA-efforts and merely is already contemplating ways/angles to hammer in their vision of a perfect payment market by an additional regulation. And all this to ensure that Commissioner McCreevy may add that result to his track-record just before retiring in 2009.
Which leaves us with the question: is this document supposed to be an incentive?
Giropay launch in Germany: looks like the Dutch iDeal
Yesterday, Germany witnessed the launch of Giropay. This is an e-commerce payment application (with a heavy involvement of the German Postbank) that brings the customer from the merchant's website to its own bank, where the traditional Internet-banking payment can be made. It's functionality is therefore similar to that of the Dutch I-deal.
What is different, is the introduction strategy. Giropay have chosen to make a deal with e-bay, so that customers can choose on e-bay whether to use Paypal (e-bay's payment mechanism) or Giropay. Quite a strong proposition actually, where the banks will benefit from e-bay's reach and vice versa.
What is different, is the introduction strategy. Giropay have chosen to make a deal with e-bay, so that customers can choose on e-bay whether to use Paypal (e-bay's payment mechanism) or Giropay. Quite a strong proposition actually, where the banks will benefit from e-bay's reach and vice versa.
Sunday, February 12, 2006
SEPA as a flipper-game...?
Interpay has chosen an interesting way to promote itself and its SEPA-ambitions. It does so by putting a SEPA-pinball game on its website. I haven't played it completely, so I don't know if there are hidden goodies or surprises in the game. But then again, that's quite a good metaphore for SEPA, isn't it?
Rabo speeds up interbank payments
A couple of days ago, Rabobank informed its customers that all payments entered into its systems before 13.00, will be immediately (meaning the same day) be forwarded to other banks for crediting. The time it takes for the payment to arrive therefore depends more on the receiving bank than on Rabo.
Other banks may be bound to follow. Thus, well before 2010 we will see that payments in the Netherlands are already processed in the so highly desirable D+1 timeframe.
Other banks may be bound to follow. Thus, well before 2010 we will see that payments in the Netherlands are already processed in the so highly desirable D+1 timeframe.
Friday, February 10, 2006
Mastercards steps up to SEPA...
MasterCard hosted 250 leading European bankers at its fifth Annual Debit Conference. See the press release here. Among the announcements/findings...:
* taking effect from 1 January 2008, MasterCard SEPA pricing structure will deliver a single, harmonised and transparent set of prices for both intra-SEPA and national transactions,
* MasterCard publicly announces a coherent, sustainable and straightforward SEPA interchange solution, applicable from January 2008. There will be a single SEPA interchange structure that will apply to all SEPA debit transactions,
Furthermore, Dr Laura Rinaldi, KU Leuven, Centre for Economic Studies, estimated the potential efficiency for the European economy just through cost based pricing at about 0.14% of GDP (across 19 markets modelled), With some more 0,09% of gDP coming up if we eliminate the black cash markets altogether.
* taking effect from 1 January 2008, MasterCard SEPA pricing structure will deliver a single, harmonised and transparent set of prices for both intra-SEPA and national transactions,
* MasterCard publicly announces a coherent, sustainable and straightforward SEPA interchange solution, applicable from January 2008. There will be a single SEPA interchange structure that will apply to all SEPA debit transactions,
Furthermore, Dr Laura Rinaldi, KU Leuven, Centre for Economic Studies, estimated the potential efficiency for the European economy just through cost based pricing at about 0.14% of GDP (across 19 markets modelled), With some more 0,09% of gDP coming up if we eliminate the black cash markets altogether.
Tuesday, February 07, 2006
Regulation for payments via the phone
Minister Brinkhorst told TV-programma Radar this week that it is evident that self-regulation by phone companies does not achieve the desired result to shield consumers from the payment frauds with 'betaalnummers' (fixed line premium payment services, which are billed via the phone account). Alone at KPN there are 7000 complaints involving unduly billed € 2 million. The Minister's aim is to have rules in place by mid 2006.
Wednesday, February 01, 2006
Thursday, January 26, 2006
Internet shopping report by EIAA
See the report here. With a number of qualitative date on e-shopping 2005 in Europe.
Saturday, January 21, 2006
Record growth or natural growth...?
Interpay reports over 2005 a record growth in processed and authorized transactions. As good as this is, certainly if processing occurs with a minor number of glitches, these 'records' are not that stunning of course. Where economies and populations increase with a small percentage each year, the amount of payments is bound to grow as well. So as long as one processor captures the majority of such transactions, it is bound to set records. And achieve 'record growth'.
By the way, the numbers:
-3,3 billion giro transactions,
-1,75 billion POS and ATM (guest use) transactions
-peak at POS: 8 million transactions (day before Christmas).
By the way, the numbers:
-3,3 billion giro transactions,
-1,75 billion POS and ATM (guest use) transactions
-peak at POS: 8 million transactions (day before Christmas).
Wednesday, January 18, 2006
Remittances and anti-money laundering
A somewhat under-estimated part of payment business is the remittance industry. Those looking for more information and a discussion on the good, bad and ugly of anti-money laundering for this industry/the public may want to read the following:
Remittance, big business by ethan zuckerman
Remittance and money laundering by Adam
Remittances - the bane of the Anti-Money Laundering Authorities by Ian Grigg
Update... the US government also dug into the subject... by producing an overview of money laundering techniques for different sorts of players in the market (banks, money transmitters, currency exchangers etc..). The title is US Money Laundering Threat Assesment and the funny thing is that they have completely missed the channel of payments via the telecommunications bill/infrastructure.... (a blind spot that they will eventually come to appreciate.)
Update... the US government also dug into the subject... by producing an overview of money laundering techniques for different sorts of players in the market (banks, money transmitters, currency exchangers etc..). The title is US Money Laundering Threat Assesment and the funny thing is that they have completely missed the channel of payments via the telecommunications bill/infrastructure.... (a blind spot that they will eventually come to appreciate.)
Friday, January 13, 2006
Rabobank starts notabox: easier invoice payments via the web
Planet Multimedia reports that Rabobank has just launched Notabox. With notabox, the regular Dutch acceptgiro (bill payment) is sent in digital format to the e-banking environment of Rabobank. In that environment, the user may choose to pay the bill whenever it suits him/her. The services is a bank extension of TPG's longer existing Privver-service (which had a more cumbersome payment facility for which users had to sign up separately). Later on this year, more Dutch banks will follow and launch the same interface.
Thursday, January 12, 2006
PBS acquires PBS International ... the road to SEPA?
Just a week ago, PBS announced that is buying PBS International, explaining that SEPA is coming and that this is part of a move to anticipate consolidation in the European processing market. Whilst the latter argument may receive most attention, it is the first that may actually be most relevant.
We should recognize that the road to SEPA is paved with good intentions such as in development in the SEPA Cards Framework (nobody knowing exactly what to think of it). The thing that is clear however is that ECB will stick to its 'demands' to ensure that all payment cards can be accepted at all terminals.
If that demand would really stick the only sensible solution for the Danish would be to abolish the local card brands and go international. And in that case Danish banks could better own PBS international (and so influence achieving the SEPA Cards goal) than try sell it to the highest bidder.
We should recognize that the road to SEPA is paved with good intentions such as in development in the SEPA Cards Framework (nobody knowing exactly what to think of it). The thing that is clear however is that ECB will stick to its 'demands' to ensure that all payment cards can be accepted at all terminals.
If that demand would really stick the only sensible solution for the Danish would be to abolish the local card brands and go international. And in that case Danish banks could better own PBS international (and so influence achieving the SEPA Cards goal) than try sell it to the highest bidder.
Tuesday, January 10, 2006
The ultimate paper on interchange fees...
Why I ran into this paper only just now I don't know. But suffice to say that once the renowned Brookings Institution bites into any subject one can only expect an analysis that does away with al the regular mumbo-jumbo on interchange fees. This excellent paper: The Economics of Interchange Fees and Their Regulation: An Overview by David S. Evans and Richard L. Schmalensee dates from July 2005 and comes up with the conclusion that neither regulators nor market players will be able to prove that a certain interchange fee is right or wrong...
In their words:
Since there is so much uncertainty about the relation between privately and socially optimal interchange fees, the outcome of a policy debate can depend critically on who bears the burden of proof under whatever set of institutions and laws the deliberation takes place. There is no apparent basis in today's economics - at a theoretical or empirical level - for concluding that it is generally possible to improve social welfare by a noticeable reduction in privately set interchange fees. Thus, if antitrust or other regulators had to show that such intervention would improve welfare, they could not do so.
(...) ...
By the same token, there is no basis in economics for concluding that the privately set interchange fee is just right. Thus, if card associations had to bear the burden of proof - for example, to obtain a comfort or clearance letter from authorities for engaging in presumptively illegal coordinated behavior - it would be difficult for them to demonstrate that they set socially optimal fees.
The only policy relevant conclusion can thus be that whoever has the power (be it legal, be it with the public, with the judge or the power of persuasion) will win the debate on interchange fees...
Which IMHO is true for both the discussion between players in the market (setting the fee) as for the discussion of market with regulators (is the fee appropriate...).
In their words:
Since there is so much uncertainty about the relation between privately and socially optimal interchange fees, the outcome of a policy debate can depend critically on who bears the burden of proof under whatever set of institutions and laws the deliberation takes place. There is no apparent basis in today's economics - at a theoretical or empirical level - for concluding that it is generally possible to improve social welfare by a noticeable reduction in privately set interchange fees. Thus, if antitrust or other regulators had to show that such intervention would improve welfare, they could not do so.
(...) ...
By the same token, there is no basis in economics for concluding that the privately set interchange fee is just right. Thus, if card associations had to bear the burden of proof - for example, to obtain a comfort or clearance letter from authorities for engaging in presumptively illegal coordinated behavior - it would be difficult for them to demonstrate that they set socially optimal fees.
The only policy relevant conclusion can thus be that whoever has the power (be it legal, be it with the public, with the judge or the power of persuasion) will win the debate on interchange fees...
Which IMHO is true for both the discussion between players in the market (setting the fee) as for the discussion of market with regulators (is the fee appropriate...).
Friday, January 06, 2006
E-money: what the Japanese think....
Online market researcher Interwired has announced the results of a survey on electric money. The company conducted the survey of 6,430 men and women in Japan from December 7 through 12, 2005. When asked about what they associate e-money with, 1,956 of the respondents answered "Edy", followed by "Suica" (603 persons) and "mobile phones" (477). The most popular e-money type chosen by the current users was "Suica" (31.4%), followed by "Edy (card)" 21.4%) and "Web Money" (8.0%).
As for the reason for selecting the type of e-money they use now, 52.0% of the Suica users answered that "they shop frequently at train stations", and 42.0% said "it can be used as a train pass", while more than 30% of the Edy users (both mobile and card) said "there are many ways to be charged", and 36.1% of the mobile Edy users answered "it is easy to check the balance".
When asked about in which situation they wish they could use e-money, 700 users replied "at supermarket", followed by "at convenience store" (446 persons), "for public transportation systems" (427), and "for vending machines" (251).
When asked about if they want to continue using e-money, about 80% of the current users expressed a continued interest, while 36.8% of the non-users said they are interested in using e-money.
As for the reason for selecting the type of e-money they use now, 52.0% of the Suica users answered that "they shop frequently at train stations", and 42.0% said "it can be used as a train pass", while more than 30% of the Edy users (both mobile and card) said "there are many ways to be charged", and 36.1% of the mobile Edy users answered "it is easy to check the balance".
When asked about in which situation they wish they could use e-money, 700 users replied "at supermarket", followed by "at convenience store" (446 persons), "for public transportation systems" (427), and "for vending machines" (251).
When asked about if they want to continue using e-money, about 80% of the current users expressed a continued interest, while 36.8% of the non-users said they are interested in using e-money.
Webpay, another IPO coming op...
In some niches payment systems may do well. Webpay operates in the digital content domain and has just raised 20 million euro for further expansion. After which the investment company 3i will sell out to make more money. But will that actually work....?
Time will tell.
Time will tell.
E-gold under attack
For quite some years now, e-gold is operating on the web. It is a gold-deposit account with no fixed monetary value. And it allows to some extent anonymous banking (only telling the policy with a warrant, who are its customers). But now that the size of e-gold reserves are well beyond the reserves of many a small central bank, the regulators come in. Ian Grigg reports about it here.
Monday, December 26, 2005
Ideal: hickups and progress
Planet Multimedia reports that 25 % of the payments at Internet shop Coolblue occurs via IDEAL, the joint web-payment mechanism of large Dutch banks. Meanwhile Emerce reports that ABN AMRO has trouble in getting merchants online. A spokesman for ABN AMRO explains (or hopes) that this is temporary.
Friday, December 23, 2005
Dutch competiton authority re-engineers judgment on POS-case
Yesterday the Dutch competition authority NMa issued a press-release to inform the public that in the discussion on the monopoly situation for providing POS-services, it maintains its fees for banks. The eight shareholders of Interpay have to pay a collective fine of EUR 14 million. The NMa has decided to withdraw the fine of EUR 30 million for Interpay.
While the NMa remaines the opinion that it might be possible that Interpay has abused its economic market position, it feels that further research is required to make this case final. In the light of recent events (the agreement of banks and retailers which lowers POS-fees ; the restructuring of the Dutch market so that each bank now competes on POS-fees where Interpay used to be the collective agent ; the actual observations that competition is taking place in the market for POS-authorisation services) the NMa decided not to further pursue this case.
All in all, this is a quite balanced and forward-looking view of the NMa. Why keep on researching the past and determining fines etcetera if all players in the market are looking towards the future and working collectively to make payments more efficient?
Meanwhile, the press release of Interpay does twist the issue a little bit. Interpay states that the NMa withdrew its previous allegations and finds that Interpay has no position of power and does not maintain excessive rates. This is too brief a conclusion which is legally not justified. NMa has not withdrawns its allegations but has ended the work on the case and only withdrew its penalty.
Then again: try explaining such technical detail to the public..... no wonder the European Commission is seeking further guidance on the market abuse issue.
While the NMa remaines the opinion that it might be possible that Interpay has abused its economic market position, it feels that further research is required to make this case final. In the light of recent events (the agreement of banks and retailers which lowers POS-fees ; the restructuring of the Dutch market so that each bank now competes on POS-fees where Interpay used to be the collective agent ; the actual observations that competition is taking place in the market for POS-authorisation services) the NMa decided not to further pursue this case.
All in all, this is a quite balanced and forward-looking view of the NMa. Why keep on researching the past and determining fines etcetera if all players in the market are looking towards the future and working collectively to make payments more efficient?
Meanwhile, the press release of Interpay does twist the issue a little bit. Interpay states that the NMa withdrew its previous allegations and finds that Interpay has no position of power and does not maintain excessive rates. This is too brief a conclusion which is legally not justified. NMa has not withdrawns its allegations but has ended the work on the case and only withdrew its penalty.
Then again: try explaining such technical detail to the public..... no wonder the European Commission is seeking further guidance on the market abuse issue.
Wednesday, December 21, 2005
Recurring theme: on patents in payments
Ian Grigg notes that the one-click payment systems of e-cash was already there before Amazon invented (and patented) their system. Which leads to the question: is there really much to patent in payments?
Technically perhaps, but in a functional way money needs to go from A to B. So while many keep on dreaming of making money by inventing payment mechanisms, they better focus on selling something rather than doing this payment stuff.
Before you know, you end up signing your own regulatory measures.. ;-)
Technically perhaps, but in a functional way money needs to go from A to B. So while many keep on dreaming of making money by inventing payment mechanisms, they better focus on selling something rather than doing this payment stuff.
Before you know, you end up signing your own regulatory measures.. ;-)
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