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The Dutch pride themselves on their entrepreneurship, but they are notoriously frugal when it comes to money.
So it is little wonder that many organisations in the Netherlands are eyeing the growing number of mobile transactions taking place and the potential gains to be made.
There is little doubt that mobile payments will become the norm. According to market research by MasterCard, it is still early days for the global adoption of mobile payments, but some countries are leaping ahead.
The research covered large European countries including Germany, France and the UK, but excluded the Netherlands, Belgium and Luxembourg. However, figures from research company Telecompaper reveal that smartphone penetration in the Netherlands is more than 80% of the 16.8 million Dutch population.
Last year, the About Payments database put the number of smartphones in the Netherlands at 11.5 million and tablets at 8.1 million. Some 10.9 million Dutch people shop online, partly through their mobile devices. In 2015, online sales generated an estimated turnover of €18bn for the country’s businesses, up from €14bn in 2014, the year when mobile commerce sales passed €2bn.
According to About Payments, the Netherlands is one of the countries where mobile commerce has really taken off.
This is partly because the major Dutch banks – Rabobank, ING and ABN AMRO – have updated their banking apps to enable swift checkouts using iDEAL. This bank-developed payment system is the most popular in the country with a market share of 54%, according to research by Dutch market information firm Gfk.
Dutch banks were keen to get into payments technology early, possibly driven by the fact that they lagged behind in the early days of e-commerce, when credit card companies became the default payment method.
ING, for example, now offers contactless mobile payments via a smartphone app. This app, which is separate from the regular ING banking app, was launched in December, when it was immediately usable in more than 100,000 stores throughout the country.
Coverage will continue to increase as shops replace older payment terminals with newer wireless versions that also support mobile payments through NFC (near field communication).
ING prides itself on being the first bank in the Netherlands to offer mobile payments on a variety of smartphones. This is partly thanks to Hungarian Android developer Krisztián Vizsy, who was headhunted by ING.
NFC and digital wallets
Vizsy and other developers in ING’s innovation teams explored the possibilities of host-based card emulation (HCE), which debuted in Android’s KitKat release (version 4.4). HCE removes the need for a separate secure chip, which would be either in the smartphone or in a special SIM. Any NFC-enabled Android phone can now be used to make mobile payments securely.
In March this year, ING confirmed that it had no plans for an iOS version of its mobile payments app, for which support from Apple is required. However, Apple’s mobile platform is covered by ING’s newer app for peer-to-peer mobile payments, Twyp (The Way You Pay), which debuted in the Netherlands in January.
This app enables friends to pay each other back, split a bill, and send payment requests to all involved. It also connects to accounts from other banks.
ING is not the only Dutch bank to blaze a trail for mobile payments. Rabobank co-operates with Dutch telecoms company KPN to allow its customers to use the Rabo Wallet via their standard NFC SIM. This free Android app by Rabobank also has the capacity to process loyalty cards, store offers and mobile payment of parking fees.
Bracelets as unifying link?
Although the term ‘mobile’ is usually interpreted as meaning ‘smartphone’, the definition is actually a bit broader, also applying to mobile payments. An example is the payment bracelet that festival-goers in the Benelux countries can use to pay for beverages and merchandise at events run by Apenkooi Events, such as Amsterdam Open Air, which took place in June.
Why a bracelet rather than the ubiquitous smartphone? “The bracelets have multiple uses other than payments – entrance control, social links, and so on,” said Apenkooi’s Tom de Louw. The bracelets are universal for all festival-goers and enable rapid transactions at the bar, he added.
Apenkooi has also teamed up with Belgian firm PlayPass, which provides RFID (radio frequency identification) and NFC solutions for events. Their offerings include cashless payments via smart bracelets. PlayPass has attracted international attention, including a Swiss investment of €2m.
The Belgian company has, in turn, partnered with US e-commerce provider PayPal to makes it possible for users to automatically add money to their bracelet at the bar if its current credit level is insufficient. Another big advantage over the special event coins that Apenkooi used to use is the automatic payback of unspent coins within 48 hours.
Just the beginning
PayPal sees music festivals as just the beginning for such technology. “This form of payment is also very suitable for other events, like sports games and concerts,” said PayPal Benelux CEO Jan-Willem Roest.
Smartphone payments can, and probably will, be used alongside this alternative mobile method. PayPal has no preference – it just wants to be involved where payments are made. Currently, about 30% of all PayPal transactions (1.4 billion in the first quarter of 2016) are mobile in one form or another. Roest said there is a yearly growth of 41% in such transactions.
But there is a downside to the scramble to innovate in mobile payments. Research company Telecompaper warns that multiple mobile payment options might confuse consumers. Apart from chip-enabled smartphones and NFC SIM cards, there are also QR codes, Bluetooth connections and in-app payments, for example.
Ultimately, it is not the technology that will make the difference, but rather which one gains broad adoption. Ease of use for consumers and the lure of extras, such as discounts, are key to this. And that, in turn, depends on broad support by shops, banks and other enterprises.
A crucial condition for the take-off of mobile payments is the right mix of market forces and consumer acceptance, according to MasterCard’s research. And the Netherlands is working hard to concoct a winning mobile mix.