Thirteen years of progress towards safer, more efficient point-of-sale payments

Payments Covenant concludes with strong results

At the end of 2005, banks and retail organisations—including retailers, hospitality venues and petrol stations—agreed the Payments Covenant. Since then, they have worked together to make payments in the Netherlands more secure, efficient and reliable. The Covenant comes to an end this year. Tomorrow, a conference at the De Nederlandsche Bank auditorium will present the results of thirteen years of cooperation. The joint efforts led to substantial growth in both the number of payment terminals and the number of debit card payments. The Netherlands leads the euro area. The cost of debit card payments for Dutch businesses has also fallen sharply. Banks and retail organisations are pleased with the results achieved.

The following video provides an overview of thirteen years of activities by the Foundation for the Promotion of Efficient Payments, together with entertaining clips from debit card payment commercials broadcast on television (in Dutch):

https://vimeo.com/299392144

Debit cards accepted almost everywhere

There are more than 360,000 payment terminals in the Netherlands. Debit card payments have been commonplace for years in retail and at petrol stations. Acceptance has only grown strongly more recently among street traders and in hospitality. Debit cards are now accepted at 92 per cent of hospitality venues, compared with just 50 per cent in 2005. Among street traders, 85 per cent now accept debit cards, up from 21 per cent in 2005.

60 per cent debit card and 40 per cent cash target achieved

The number of debit card transactions has tripled since 2005, from 1.3 billion in 2005 to more than four billion in 2018. Large-scale campaigns such as ‘Debit cards welcome’ and ‘Small amount? Debit cards accepted!’ helped debit card use grow strongly in the Netherlands. Signs announcing surcharges for small card payments are now rarely seen. Contactless payments also encourage consumers to pay small amounts by debit card more often. Two-thirds of debit card payments are now for amounts below €20. The number of debit card payments has comfortably surpassed the number of cash payments. By mid-2018, the ratio was 61 per cent debit card and 39 per cent cash, comfortably achieving the Foundation’s target of 60 per cent debit card and 40 per cent cash payments by the end of 2018.

Life became more difficult for criminals

The decline in cash use is making payments in the Netherlands safer, because empty tills are less attractive to criminals. The number of robberies at retailers, hospitality venues and petrol stations fell from 1,171 in 2008 to 377 in 2017. Losses from skimming fell from €39 million in 2011 to €1.5 million in 2017, mainly thanks to the introduction of EMV debit card payments at the end of 2011. Consumers no longer paid using the magnetic stripe, but with the EMV chip in their debit card. The Foundation helped businesses replace their payment terminals more quickly. Promotional material and commercials informed the public, while banks equipped every debit card with an EMV chip.

Payment costs fell for businesses

Increased debit card use and innovations such as contactless payments reduced the average cost of a debit card transaction from 27 cents in 2002 to 17 cents in 2017. An average cash payment now costs a business 29 cents. Compared with 2002, the average cost of cash payments has risen by 93 per cent, while the cost of debit card payments has fallen by 58 per cent. A cash payment is now 70 per cent more expensive than a debit card payment. Increased debit card use saved Dutch businesses €1.2 billion over thirteen years.

How do retailers, banks and stakeholders look back on thirteen years?

The following video contains their reflections (in Dutch).

https://vimeo.com/301875753

Reliability has improved

More electronic payments increase dependence on infrastructure. Banks, telecommunications providers and transaction processors have therefore worked hard to improve the reliability of their systems. Susceptibility to disruptions has fallen sharply. Certified data communications services for debit card payments currently have an availability of 99.9 per cent.

Book

View the book about thirteen years of the Foundation for the Promotion of Efficient Payments (in Dutch).