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Expert opinion

How the Dutch pay online: mainly with iDEAL!

Friday 16 September 2016 | 09:22 AM CET

Max Geerling, iDEALiDEAL payments are integrated in the online banking portal and mobile banking app of all relevant banks in the Netherlands, reaching over 90% of Dutch individuals

10 years of success

iDEAL is by far the preferred payment method for Dutch consumers when buying online. In its 10 years of existence, the payment method has grown significantly each year, with figures outperforming the growth of online retail.

After its debut in 2005, iDEAL quickly became the digital payment method of choice for all sorts of digital payments, including ecommerce, ticketing, invoicing, charity donations and various top-ups. In 2015, iDEAL was used 222 million times for payments, with an average value of little over EUR 81 per transaction.

Consumers’ preference in ecommerce payments is best illustrated with usage figures. The market share for iDEAL has been over 50% for several years now, with credit cards currently in second place (Figure 1).

Figure 1 – Market shares of payment methods for online purchases in 2015

Source: E-Commerce Payment Monitor 2015 – GfK

Payment methods with a growing interest among consumers are PayPal and AfterPay. However, it must be said that both payment types are typically funded with an iDEAL payment.

Regarding brand value, iDEAL ranks top 5 in the list of indispensable brands by EURIB (European Institute for Brand Management) for the past years, being the highest rank among the financial brands. The brand value is established through an extraordinary safety and security standard showing no substantial fraud, combined with intensive involvement towards all relevant stakeholder groups.

It’s all about reach and conversion

Merchants require payment methods to have good reach among buyers and an excellent user experience, thus contributing to sales conversion. iDEAL payments are integrated in the online banking portal and mobile banking app of all relevant banks in the Netherlands, reaching over 90% of Dutch individuals.

Given buyer preference – as reflected in its market share – iDEAL is a must-have payment method for all merchants selling into the Netherlands. Regarding conversion, more than 85% of all iDEAL transactions convert to a successful irrevocable payment.

Mobile payments with iDEAL

An even better user experience has been created with iDEAL Mobile payments, where iDEAL payments initiated from a smartphone are authorised in the mobile banking app simply with a 5-digit pin. The increased ease-of-use for consumers is reflected in a higher conversion rate – 90% – for iDEAL Mobile payments.

With a blurring line between online and physical shopping, iDEAL from now on also facilitates online payments in the real world with the introduction of iDEAL QR payments. This is a secure way of initiating an iDEAL payment by scanning a QR code.

Typical use cases for iDEAL QR are:
• charity donations through an iDEAL QR code printed on flyers or on a collection box;
• transferring authorisation for a web shop payment from the computer screen to a mobile device, benefiting as a merchant from the higher conversion rate of iDEAL Mobile transactions;
• invoice payments with the iDEAL QR code printed on paper or displayed on a screen.

With an iDEAL QR app available in the Google and Apple app stores, the advantages from these type of applications are immediately available to all users of iDEAL Mobile.

Made for international merchants

Based on SEPA Credit Transfer, iDEAL payments can be done into any IBAN bank account in Europe. The iDEAL scheme is open to all registered financial institutions in Europe. We have over 60 licenced financial institutions and half of them provide services to international merchants, accounting already for 20% of all iDEAL transactions.

Dutch consumers are experienced online shoppers with a high preference for iDEAL because of its simplicity, reliability and ease of use. The same user experience model and underlying infrastructure is increasingly being used for other digital banking products – such as e-mandates for direct debit and e-identity (iDIN). Therefore, it is expected that Dutch consumers will continue their strong preference for iDEAL in the years ahead.

Figure 2 – Link to iDEAL animation video (http://vimeo.com/65631763)

 

 

 

 

 

 About Max Geerling

Max Geerling is Executive Adviser, e-Payments at the Dutch Payments Association. Max is a business expert in digital payments with a broad background in cards, online and mobile payments. He has prior experience in management positions and as a business consultant.

 

  About iDEAL

iDEAL is an Online Banking e-Payment method. The scheme management of iDEAL is vested with the Dutch Payments Association, a member organisation for credit institutions (banks), payment institutions and electronic money institutions. The association organises the collective activities in the Dutch payments landscape.

This article is part of the exclusive Ecommerce Payment Methods Report 2016, an educational overview of the global payments industry. For more insights into the latest trends in ecommerce and e-payment methods developments please download a free copy here.

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