ING Banking a bit wobbly lately

This sunday I wanted to order a cd and sheet music by Jules de Corte. Whereas usually this is just a matter of seconds, using iDeal, I now had to circumvent it to do electronic credit transfers via e-banking. It was clear that the ING database had some glitches, but after a couple of tries I succeeded in transferring the money.

While I could just repeat the exercise, others couldn't. The glitch turned into a major failure of ING-e-banking in the last couple of days. Today however, everything seems to be up and running again. And ING will once more regret using Oracle as the back-end database of an online payment system.

Fotograph your bill and pay it... new stuff from Denmark

With all the new apps, technology and stuff, you can just build any payment produkt you like. It appears there is a Danish bank that has developed an app that lets you photograph your bill, send it to the bank and they will transfer the money to the proper account. And for those that master the Danish language: see the instructions of the Danske bank here.

I am not entirely sure if this application will really be a killer-app that fullfills its consumers' needs. But it's interesting to see that nowadays the development burden for banks is lower than in the mainframe-days, allowing for test-trials in the field rather than extensive market research.

The euro-note now ten years in circulation...

This new year brings us a bit of a memory: ten years ago we started using the euro bank notes. For many people in the Netherlands, this was a step back in terms of quality and design. And we also notices how prices were quickly moving up. At first all economists and the central bank heavily denied this, but later research (in 2005) showed that in the first year of the euro, inflation was 3,6%, of which 0,5% due to the introduction of the euro.

In their efforts to deny the experience of the public, economists coined the term: 'experienced-inflation' ('gevoelsinflatie') to outline a situation in which the perception of price rises differed from reality. This helped the economists at the ECB discover that price rises in regularly purchased items could lead to a consumer perception of inflation that was higher than their scientifically produced price-index basket. Again a demonstration of the fact that economic models need to incoporate bounded rationality rather than assume a rational consumer.

As for the future of the euro: many experts now predict its demise in 2012 and paint a gloomy picture. When listening to those 'experts' I have the impression that it's increasingly fashionable to doubt the future of the euro. And although the politicians last year didn't do their best to help out, I do think that the future may be less bleak. With the ECB lowering cash reserve ratio, widening it's collateral policy and throwing in almost unlimited amounts of liquidity the bazooka is already out there, but some fail to recognize it as such.

So I think those ugly euro-notes will remain in circulation for quite some time to come.

Looking back on 10 years of blogging.....

These days it's about ten years ago that I started blogging: I set up the blog Retail Betaalgedachten to voice my views on the retail payments issues in the Netherlands. At that point in time a friend of mine had a personal blog, but I started to use blogs for my consultancy work, thus being one of the very early business bloggers in the Netherlands. So here's the bottle to celebrate...:

Blogging has been with me ever since those first days. The Retail-betaalgedachten became: Linkdump on Retailpayments that you are now reading. And of course, when setting up 11a2.nl, a representative organisation for e-money issuers in the Netherlands, I chose the blog as the main landing/reading platform of the website. And in addition I set up a personal blog on jazz in the Netherlands.

And now, last year marks the beginning of yet another blog, this time on the financial history of amsterdam/netherlands. It's a spin off of my passion to always take a historical approach towards analyzing todays issues in society and industry. So as of this year, every now and then you can read my views on euro-crisis, financial sector and payments on that blog.

And on that note I wish all the readers a very good new year !!

Six Pack becomes fivepack: T-mobile leaves NFC-consortium of Dutch banks and telcos

Tweakers net today reports that T-mobile is leaving the consortium of banks and telco's in the Netherlands. The sixpack consortium is also delayed in its plans (from mid 2012 to beginning of 2013) given the considerable market share that both the banks and telco's have. So they will go to Brussels to aks for exemption of competition rules.

Costs of fraud by phishing at banks doubles in 2011

The Dutch Bankers Association today starts a campaign to increase awareness of consumers that they shouldn't fall for the numerous phishing mails that flood their inbox. The reason is the fraudnumbers in banking. After the first half year of 2011, the fraud by onlinebanking had already succeeded that fraud over 2010 (9 million euro). And similarly, the number of phishing incidents in this first half year amounted to 2418 while over the whole year 2010 this number was 1383.

The NVB has also renewed the website VeiligBankieren.NL; a website that I personally helped come into existence in 2005, as it was clear that awareness on the risks of e-banking required timely communication. This still is the case and thus the campaign/trailer below was developed. It will air extensively the coming days. The commercial shows the physical equivalent of phishing and warns consumers not to open fake-mail from their bank.

Finnius conference on e-money

As some of you may know, I have had quite an interest in electronic money in the Netherlands in the past. And yesterday I had the pleasure of visiting the conference on e-money by Finnius. The conference was concise and clear with talks by Andries Doets on the regulation and a speech by the supervisor (DNB: De Nederlandsche Bank). This provided a good overview of rules, exemptions and clarified the role of DNB.

After the beautiful and energizing musical break (Duo Sottovoce) Casper Riekerk moderated a discussion that focussed on business models and the difference between paper-based and digital electronic money. The panel and audience agreed that the margins in the e-money/payments business are quite slim, certainly given the rule that the float cannot be used for other purposes (which happened when giftcards where still paper-based).

At the end, following a suggestion by DNB, the thought of setting up a representative organisation for e-money issuers in the Netherlands came up once again. So perhaps we will see a new organisation emerging as a result of this conference. Time will tell.

Personally I couldn't help thinking that quite a lot of effort by the supervisor is spent on values and amounts of e-money that are irrelevant, compared to the busloads of similar-type payments via mobile phones and Ov-chipcard (exempted from regulation). It is clear that both market and supervisors have digested and codified this exemption into their rules/system. So no one questions it (if anyone still remembers the history of this exemption).

But it remains a paradox for someone like me, who witnessed and joined the discussions on e-money dating from the rise of e-cash and Mondex. It was in particular the digital forms of pre-paid e-money that raised the awareness and need for legislation on e-money. Everyone got a head-ache when they thought of a situation in which money (and goods) were digital. Because this would create a situation in which central banks in the end will not know any more how much money is in circulation. And consumers might see their digital cash disappear if it was not secured properly.

So the headache lead to the legislation on e-money. And when introduced, supervisors decided to create an exemption for precisely that form of money that made us develop the legislation in the first place.

As such I think the whole e-money debate is quite an interesting casebook example of the Politics of the European Union.

DNB releases results of survey how Dutch consumers pay...

Today, our central bank, De Nederlandsche Bank (DNB) released survey results on Dutch payments in 2010. It showed that in 2010 consumers in the Netherlands made 4.4 billion cash payments at checkouts (shops, cafés and restaurants, petrol stations and at markets) and some 672 million between persons. So this creates an interesting benchmark for anyone doing studies on payments. If you wish to estimate the number of p2p payments in a country, just take about 16 % of the total cash transactions (but remain aware of cultural differences though...).

The study (only available in Dutch: here) also reveals that most Dutch consumers pay with the payment product that they prefer. So it appears as if everyone in the Netherlands is quite happy with the way we pay. Yet we should note that the scope of the study was limited to the classical payment products. Consumers weren't asked about their preference for strippenkaart, the payment means for public transport:

I would bet that when asked, many would prefer to continue using the strippenkaart over the OV-chipcard with its cumbersome operational flaws and failures. But as of today consumers have no choice, because the strippenkaart has been taken out of circulation. Paper tickets are now only available in trains but the National Railways are planning to scrap these at the end of 2012.

The cultural side of payments: Hofstede provides an interesting picture

One month ago I had a meeting with two American visitors that wished to know more about the history of payments here in the Netherlands. And as they had just arrived and had no time for the Walking tour on the history of Dutch payments we discussed those topics over a cup of coffee and lunch. And of course we came to discuss the Why-question. Why is it that the Dutch seem to be more keen on cooperating in the area of payments than other countries?

Of course there are a number of historical reasons. And one might argue that the Dutch are of a more cooperative nature given that they have to battle the water cooperatively, but it's hard to substantiate this. But then I realized that Geert Hofstede had done quite some work differences between cultures. And the funny thing is: if you chart his data, you can indeed see that the Dutch score high on uncertainty avoidance, long term orientation and low on masculinity and power distance.

So there you have it. The reflection of our cultural mindset that stimulates us to choose cooperative solutions when developing and organizing payment methods and systems. This is not to say that everything is and was collective here in the Netherlands. But in the long run there is a strong tendency to cooperate on standards.

Interesting paper on best practices for Payment Regulation

As I browsed through the programme and speakers of the E-MA conference on e-money I noticed that Rhys Bollen would present on regulatory issues. And upon googling I discovered his dissertation on best practices for Payment Regulation. Although I haven't finished reading it yet, I think it's quite a good read that deserves further attention.

E-money: an innovation revisited...

I think it is fair to say that technology and payment innovation occurs in several 'rounds'. It's sort of a boxing game where enterprises seek their niche in terms of consumer/company services but also in terms of regulatory niches. This holds true in particular for the domain of e-money.

Some fifteen years ago (I feel quite old when writing this) the buzz was all about Mondex and e-cash: two new e-money schemes. The development of these schemes coincided with the increased use of the Internet as well as the use of mobile phones. And there was a lot of debate on which rules to apply. Should e-money issues become banks or not. I remember setting up a specific branche-organisation (11a2: here's the old website) and conference on that specific issue.

While in this first round it appeared to be the case that anyone using digital coins for consumer payments needed to be regulated similarly, it turned out in a later round of regulation that some industries, notably telco's and transport companies, succeeded in convincing the regulator that their consumer money was not the same as the consumer money in banks. And this lead to a reshuffle of all kinds of regulations to allow for this.

The regulatory developments of 2011 essentially mark the conclusion of this second reshuffling round of regulation on e-money. And the industry has adapted in the meantime and is now looking forward to the new challenges, as we see the further development of mobile phone's, tablets and many other exciting new opportunities for e-money.

Should anyone be interested in the current state of affairs of the European e-money market or regulation I would warmly advise to sign up for the e-money conference of the Electronic Money Association (EMA). All players are there and all topics are on the table.

And there goes Bitcoin sinking...

These days reports are out about the sinking value of Bitcoins and we see users worried about it. And so we see yet another social/payment experiment forget that it takes quite a robust design to get a payment system going. Enthousiasm and technology are important, but no enough.

See also my previous post here.

NFC project by Dutch banks and telcos: six pack

Since some time, work is on the way between the three big banks and telco's in the Netherlands on payments with NFC. See the report in the NFC as of July and as of September. The project is named six pack by the way and time will tell if it really deserves that name...

From NFC:
The banks have agreed to put the NFC payment applications onto SIM cards the telcos will issue, so they likely have agreed to some type of model in which banks would rent space for their payment applications on the telcos' SIMs. Bol declined to discuss models. ING has been designated to speak for the rest of the partners, a bank spokeswoman said.

There are still many unanswered questions for the project, however, especially how the parties will jump-start contactless payment, since a contactless-payment infrastructure is almost nonexistent in the Netherlands. Much of the discussions among the banks and telcos the past 12 months have concerned how to get contactless terminals rolled out, NFC Times has learned. Bol said the rollout of EMV payment in the Netherlands means merchants will have newer point-of-sale terminals installed, which can more easily be upgraded to accept contactless.

But the banks and telcos still have to convince merchants to accept contactless and, according to Bol, the banks have no plans for a separate contactless-card rollout that could use the same terminals. Banks may issue contactless cards separately, however, and ABN Amro is trialing cards.

Financial History of Payments... separate log

A couple of months ago, I opened a new weblog, dedicated to the financial history of payments, banking and Amsterdam. So for those interested in the old times, do have a look at my weblog on financial history here.