Are Instant Payments becoming the new normal in the Netherlands?

In February 2019, a pilot for Instant Payments started across various banks within the Netherlands. Participating banks include ABN AMRO, ASN Bank, ING, Knab, Rabobank, RegioBank, and SNS Bank.

This Instant Payments infrastructure has been developed under the auspices of the Dutch Payments Association and with the support of clearing organisations.

What is the Dutch approach to Instant Payments? How are Instant Payments implemented in the Netherlands?

Seven leading Dutch banks joined forces to collectively introduce an infrastructure for Instant Payments in 2019: ABN AMRO, ASN Bank, ING, Knab, Rabobank, RegioBank and SNS. The commitment of the involved banks ensures that over 95% of the Dutch payment accounts are reachable from the start. An Instant Payment between the seven participating Dutch banks is available to the payee within 5 seconds (24/7) after the final approval by the payer. As long as the balance of the payer’s account is sufficient for the payment, there is no intrinsic limit for the amount.

As from the start of the programme, the Dutch community has taken the view that Instant Payments is the new normal. Customers, both consumers and business, expect to be serviced 24/7 and instantly by their PSP’s. We expect that by the summer of 2019 Instant Payments will be the normal day-to-day payment method for single electronic credit transfers with online banking on mobile devices and with internet banking on laptops and desktops. The expected annual volume for 2020 will be about one billion. Since the start of the controlled rollout in February 2019, over 30 million Instant Payments have been made.

Is the Instant Payments programme in the Netherlands aligned with the European developments? How is the programme performing? What are the latest figures for growth across the Netherlands since rollout?

The Dutch programme is fully aligned with European developments, following all relevant European standards for SCT Inst. On top of this, banks committed on a higher speed (maximum 5 seconds) and no amount limit.

The programme is so successful that within four months after the start of the gradual rollout, the participating seven Dutch banks already handle more Instant Payments on a daily basis than any other euro country: over half a million transactions per day. This will grow to one billion on an annual basis in the next months.

What is the market response to Instant Payments? What are some new use cases of Instant Payments in the Dutch market?

We expect the market to respond with tangible propositions after the summer vacations, when the rollout is fully concluded. Obvious use cases vary from safe and reliable pay-on-delivery for used items between consumers, to a more efficient cash flow with corporate Instant Payments for large amounts. However, creative banks, fintechs and users may very well come up with unexpected and innovative other applications.

On the matter of SEPA Credit Transfer Inst in Europe and cross-border payments – how far are we from offering a European (SEPA) cross-border instant proposition? 

Interoperability within the SEPA area has proven to be more of a challenge than expected, leaving banks with the burden of costs connecting to more than one CSM to secure reach across Europe. However, cross-border payments represent only a small fraction of all Dutch credit transfers, less than 4%. Realising full interoperability and reachability should however be top of mind to ensure that Instant Payments matures in the European payments market.

About Piet Mallekoote

Piet Mallekoote is chairman of the executive board of the Dutch Instant Payments project. Piet started his career at the Dutch Central Bank. He held several senior management positions in economic research, economic and monetary policy and payments, lastly as a member of the Payments and Settlement Committee of the Eurosystem. In 2004 Piet joined Currence, the then newly established Dutch entity for ownership of the Dutch collective payment schemes, including iDEAL. He became CEO in 2006. Since 2011 Piet is also CEO of the Dutch Payments Association, the member association of regulated payment service providers in the Netherlands. As CEO of Currence Piet Mallekoote is a member of the Payments Systems Market Experts Group of the European Commission.

About the Dutch Payments Association

The Dutch Payments Association is committed to the collective infrastructure, standards and shared product features of the Dutch payment system. The members of the association provide regulated payment services in the Netherlands: banks, payment institutions and electronic money institutions. The Payments Association helps to ensure efficient, reliable, accessible and safe collective payment methods in the Netherlands, in close cooperation with its members and stakeholders.