amsterdam’s leading businesses RITUALS MOOOI PHILIPS LIGHTING KLM & SCHIPHOL CURRENCE ENZA ZADEN VUMC FAIRPHONE FEADSHIP DUS ARCHITECTS 2 CURRENCE CURRENCE CURRENCE ‘There is Cooperating to be more an attitudecompetitive, online payments system iDeal saves both here of beingconsumers and merchants money – and responsivecould perhaps only ever have come from the to your‘polder mentality’ found in the customersNetherlands text Matt Farquharson that is hugelyphotography Amke far off in other countries’ CURRENCE 3 4 CURRENCE CURRENCE A MORE SOCIAL MODEL ‘You cooperate to bake the pie, then compete for your slice,’ says Piet ‘We think in the Mallekoote, CEO of e-payment firm Currence. Netherlands that He is talking about iDeal, a remarkable system that removes the need for a credit card when you buy online. It has brought competing banks cooperation is together as partners, saves consumers money and could perhaps only needed to bake ever have come from the Netherlands. The way it works is simple. As an online shopper, when you get to the the pie and then payments page of a website that uses the service, just click the iDeal competition is there option instead of credit card payment. The next screen will be your usual internet banking service. Type in your for dividing the pie’ normal password and you’re done. No fees, and no credit card required. (Piet Mallekoote, ‘Our policy is to get it low cost for everybody, to make it efficient for the CEO Currence) merchant as well as the consumer, which is a different business model to MasterCard and Visa, whose primary purpose is to get profit out of the system,’ says Mallekoote. ‘This is more like the business model you see in the Nordic countries: a more social model.’ It first developed as ecommerce grew in the early 2000s. Back then, most Dutch banks had their own payment systems, but the fragmented nature of these caused problems. Merchants had to have separate contracts with each bank, which was costly and time-consuming. So several banks came together to create iDeal. ‘From an antitrust argument, this is a little bit delicate,’ says Mallekoote. ‘Banks could behave like a monopolist and other banks could be excluded. But if you open it to other banks, you come to a difficult situation: you have to allow competitors to use the system.’ Currence already provided a number of digital payment systems and was brought in to run iDeal. ‘We said, “The best way to organise payments is a scheme where parties work together: banks, payment institutions, consumers and merchants.” The scheme provides rules. For instance, consumers have the same rights and user interface as with their internet banking. And if you use iDeal, there is a real time payment guarantee for the merchant. As a merchant you know that independent of the bank of the consumer. And after 24 hours, you have the money in your account.’ It quickly caught on, and is now used by more than 45 payment institutions and ten banks, with around 14 million transactions per month. CURRENCE 5 CURRENCE COOPERATING TO COMPETE Cooperating to compete is a very Dutch model of innovation. ‘If you innovate, you need critical mass,’ says Mallekoote. ‘If I have a telephone but no one else does, then it is useless.’ ‘There is a history And so he returns to his earlier example: ‘We think in the in the Netherlands Netherlands that cooperation is needed to bake the pie and then competition is there for dividing the pie.’ of cooperation… It’s a simple metaphor, but one that captures the And not only philosophy of many industries in the country. Max Geerling, the head of Currence’s card products and between banks, but iDeal itself, takes the idea further. all industries. The ‘There is a history in the Netherlands of cooperation between banks, in the right balance between competition “polder model” in and cooperation. And not only between banks, but all the Netherlands is industries,’ he continues. ‘The “polder model” in the part of our culture’ Netherlands is part of our culture.’ The ‘polder model’ is a system of cooperation as (Max Geerling, head embedded in the Dutch psyche as dykes and windmills. of Currence’s card It is about consensus building for the greater good, and pervades every area of life, from labour negotiations to products and iDeal) government policy. A polder is low-laying land surrounded by dykes to hold back the sea. The story goes that these ideas of cooperation grew as villages joined together to fight the common enemy of encroaching water. Currence, in short Currence was founded in January 2005, as an in the same way that PIN (EFTPOS) terminals initiative of eight Dutch banks: ABN AMRO, are. From a peak of 170 million transactions in Rabobank, ING Groep, Fortis, SNS Bank, 2011, its use is fading, and it will no longer be BNG, Friesland Bank and Van Lanschot. valid after 1 January 2015. Its original remit was to run and maintain Dutch payment systems: to make them Acceptgiro transparent, safe and fair. But it has also been A credit transfer system that links payments something of an innovator. It helps to facilitate through a 16-digit code. Mostly used for super-quick interbank transfers for consumers, bill payments, invoices are sent out with an where in other countries a three-day wait can Acceptgiro code that the payer enters when be common. Currence now runs four main making their internet banking payment. It payment systems, which often offer solutions helps ensure that payments are immediately that are rare to find in other countries. recognised and cuts down transfer delays. In brief, these are… Incasso Chipknip The Dutch direct debit system. An electronic payments card that stores value in a similar way to a phone card or iDeal electronic public transport pass. Used for Online payments based on a bank transfer via small transactions, you load up value as an internet banking. As an online shopper, when alternative to small change for shops, car you get to the payments page, just choose the parks and anywhere else that has a terminal. iDeal logo instead of a credit card or PayPal to CURRENCE One main advantage is that terminals do not pay directly from your internet bank account 6 need to be connected to the banking system and incur no fees. Wieden+Kennedy 7 CURRENCE 8 CURRENCE CURRENCE But trade is also embedded in the national psyche, and cooperation doesn’t have to come at the expense of profit. ‘The fact is, iDeal is quite a social model,’ says Mallekoote, ‘and if we have more transactions, our receipts rise. What we then do is decrease the fee per transaction. That is immediately to the profit of the banks.’ But consumers and merchants also benefit from reduced costs The ‘polder model’ compared to credit card fees, he explains. is a system of ‘iDeal is so popular, because there is so much difference in this fee. This has to do with being low-cost, high-volume. It’s a self-fulfilling cooperation as prophecy.’ embedded in the A FINANCIAL ECOSYSTEM Dutch psyche Currence is based in one of the gleaming towers of Zuidas, a as dykes and commercial hub at the southern tip of Amsterdam that includes the World Trade Center. windmills. It is It is the nation’s main financial district and home to a cluster of about consensus international bank headquarters. building for the It has created a financial ecosystem that sees travel between meetings reduced to a stroll across a leafy square or a short ride in an elevator. greater good, and ‘The main advantage for us here in Amsterdam is that we are close to pervades every area our direct relations, the banks,’ says Geerling. ‘It’s also an advantage of the Netherlands as a whole,’ adds of life, from labour Mallekoote. ‘It’s not difficult to have several meetings a day. It’s not a negotiations to one-day trip, like in France if you have to go from Paris to Marseille. government policy So there is a big basis of knowing each other and being connected.’ So, could the iDeal model be exported? Mallekoote and Geerling are certain of its benefits, but less sure of the willingness in other markets. ‘There is an attitude here of being responsive to your customers which seems to be quite normal but its hugely far off in other countries,’ says Mallekoote. Concurs Geerling: ‘iDeal is a no-frills payment model. There are only payments: no extra services or loyalty schemes. From a Dutch perspective, we like simple design and iDeal is such a product.’ Mallekoote has presented the idea to policy makers from the EC and Asia. ‘The Asian market in mobile payments is booming and they were amazed and saw the advantage of cooperation,’ he says. ‘But they are still far behind. A lot of payment systems are in the central banks and the first step is to migrate to the private sector and then to cooperate.’ Those looking for ideas on how to make that happen could do worse that beginning in Amsterdam. .