iDEAL ready for the future
Piet Mallekoote CEO
Amsterdam November 2015 Content
• An example for other countries? • Cooperation and competition • What is next? • Summary
iDEAL ready for the future November 2015 | 2 How it works
iDEAL ready for the future November 2015 | 3 iDEAL: 4-corner Online Banking e-Payment based on SEPA Credit Transfer
€
SEPA Credit Transfer
iDEAL protocol Online & Mobile Banking
iDEAL ready for the future November 2015 | 4 Advantages Online Banking e-Payments
• Independence from cards
• Leverage investments in existing online banking infrastructure
• Security-sensitive data stay inside the banking environment
• Infrastructure re-usable for new, other services
• Replacement of high-cost paper-based payments
iDEAL ready for the future November 2015 | 5 iDEAL outpaces growth of online retail
180 million transactions 26,4% growth
20% mobile
iDEAL ready for the future November 2015 | 6 iDEAL most popular payment method in Dutch eCommerce
Market share payment methods 2014 (nr of online purchases)
2% 5% 4% iDEAL 3% Credit card 4% Acceptgiro (paper) 5% Direct Debit Credit transfer 7% 54% PayPal Gift card 6% Debit card (in store) Cash 11% Other
Source: eCommerce Payment Monitor 2014, GfK iDEAL ready for the future November 2015 | 7 Not only for eCommerce payments iDEAL usage category Volume shares e-Commerce - Consumer goods, travel, tourism 50% Ticketing and other services - Tickets: concerts & events, trains - Top-up: mobile phones, e-wallets
B2C e-billing - Utilities, insurance premiums 50% - AfterPay, Klarna, PayPal
Account verification - Mandates, agreements
iDEAL ready for the future November 2015 | 8 iDEAL participants
9 Buyer Banks (issuers)
7 Seller Banks (acquirers)
56 Payment Institutions (acting as aggregators)
100.000 Accepting merchants
iDEAL ready for the future November 2015 | 9 iDEAL success factors in the Dutch market
• Institutional factors - Low use of credit cards - High penetration of broadband internet and online banking
• Merchant benefits - Immediate payment guarantee / non-revocable payment - Easy integration in web shop
• Consumer benefits - Integrated in secure online banking / no separate sign-up
iDEAL ready for the future November 2015 | 10 Summary of benefits for all parties involved
| Cooperation and competition
iDEAL ready for the future November 2015 | 12 iDEAL is based on “co-opetition”
Cooperation: to create the biggest pie possible Technical standards Scheme (with a brand) Active stakeholder management (consumer & merchants)
Competition: to share the pie most efficiently Scheme roles open to any credit or payment institution Value-added services
iDEAL ready for the future November 2015 | 13 Cooperation is essential in payments
• Cooperation is essential in payments innovation
because …
• Divergent solutions lead to market fragmentation - High(er) transaction costs - Insufficient reach and trust
and …
• From two-sided markets we learned: - Cooperation constrains fragmentation, and creates reach and trust - Cooperation goes hand in hand with competition
iDEAL ready for the future November 2015 | 14 What is next?
iDEAL ready for the future November 2015 | 15 iDEAL mobile
• ‘App’ and ‘web’ usage at merchant and/or bank • Same protocol & messages • In the mobile banking app: 5-digit pin • Enabling “payments everywhere” via QR codes
iDEAL ready for the future November 2015 | 16 iDEAL QR
• Major trend in shopping: convergence of online and physical commerce • iDEAL QR facilitates “real-world online” payments
Use cases Channels
• Infrequent payments • Paper invoice • Video-on-demand • Television screen • Restaurant • Bill • Charity donation • Poster, sticker • Pop-up store • iPad • ... • ...
iDEAL ready for the future November 2015 | 17 E-Mandates
• Offers the same rights as a paper-signed mandate - Operational risk for refunds reduced from 13 months to 8 weeks
• E-mandates increase the chance of success for direct debit - White- and black list are incorporated in the system (core) - Mandate registered by Debtor Bank (B2B) - e-Mandate provides validated data from the bank domain, such as IBAN and registered account name and the name of signatory
• E-mandates based on familiar iDEAL process - Convenient, safe and trusted by the consumer
iDEAL ready for the future November 2015 | 18 E-Mandates
iDEAL ready for the future November 2015 | 19 E-Mandates
iDEAL ready for the future November 2015 | 20 Bank ID service
Scope Log in using e-Identity service - Tax authority - Insurance company - E-commerce “Logging in via your bank” • Anonymous log-in Banking authentication customer agrees to share data • Provide data with merchant e-Identity • Validated Routing Service • Customer consent Provider
Issuing Domain Acquiring Domain Pilot Q1 2016
iDEAL ready for the future November 2015 | 21 Bank ID – built on 4 pillars
Initial Means of Quality of Infrastructure and identification authentication customer data legal framework (in bank (desktop + (Wwft+, ISO (messages, screens branch) mobile) standards) + R&R + contracts)
• Requirement for banks: maximum reuse of resources • Scheme and brand: connect to existing infrastructure • Brand is important for consumer recognition (operation, terms and conditions)
iDEAL ready for the future November 2015 | 22 Seamless payments
• Recognise your customer • One-click buy • From check-out to check-in
Check-out
ORIËNTATION SELECTION LOYALTY TRANSACTION DELIVERY
Check-in
iDEAL ready for the future November 2015 | 23 Access-to-the-account (XS2A)
• PSD2 opens possibility for payment initiation services and account information services • These services (may) disrupt existing banking services • Challenges for banks - ‘wait and see’: banks will loose customers and will be disrupted in the end - act with sense of urgency: banks disrupt themselves with new services (iDEAL may be an example) • iDEAL is ready for PSD2
iDEAL ready for the future November 2015 | 24 Summary
iDEAL ready for the future November 2015 | 25 iDEAL ready for the future
• Convergence of online and physical payments - iDEAL Mobile - iDEAL QR
• Retaining customer-bank relation with relevant value-added services - E-mandates - Bank ID
• Seamless payments - BankiD - iDEAL ready for XS2A
iDEAL ready for the future November 2015 | 26 Merchant Acquiring Forum
LUNCH
PSE – SME Strategy Workshop July 2015 v0.1