How do Dutch consumers pay in 2020 - trends and scenarios

HOW DO THE DUTCH PAY IN 2020

A REPORT ON TODAY’S TRENDS AND FUTURE SCENARIOS
Shopping2020 - December 2013

Table of contents
Introduction and background

Management Summary
PHASE 1: How the Dutch pay in 2013?
1.

Payment contexts

2.

How do the Dutch shop anno 2013?

3.

How do the Dutch pay anno 2013?

4.

Trends and examples

5.

Drivers for the future of payments

6.

Four possible scenarios for payments in 2020

7.

Concluding remarks and findings

ANNEX
© Shopping 2020 – Expert group Transaction

1

Introduction of the expert group Transaction
Within the industry broad initiative of ‘Shopping2020’, the Expert Group Transaction described the current state
of affairs of transactions in retail (Part 1, ShoppingToday) and explored future scenarios for retail payments (Part 2,
Shopping2020). The illustrations below clarify the structure of the entire program.

In ShoppingToday, the experts identified 9 trends that determine the development of transactions in retail
contexts. These trends, together with the current situation, have been the starting point for part two of the study:
Shopping2020. In the second part, four scenarios were created, based on two major determining forces: the
public stance towards the use personal data and consolidation/fragmentation of payment brands. The expert
group identified implications of the four scenarios and came up with a set of overarching conclusions.
Position of expert group Transaction in total program

Research questions of phase 1 and 2

Future Trends
Demographic,
Culture

Economy

Customer Journey
Orientation

Selection

Transaction

Delivery

Customer
Care

Customer
Intelligence

Technology

Future
Touchpoints

Action
Shopping
plan
2020
S2020
Vision
Netherlan
ds
Travel
Action
Actieplan plan Retail
Finance
Actieplan

other…

Ecology

Political /
legally

Key Themes
Business
Models

Omnichannel
Organisation

Security &
Fraud

New
mainstreet

Smarter
Shopping

Supply Chain

Online
enterpr

19 Expert Groups

Central Research Question Shopping 2020
How does the consumer shop in 2020 and which actions should be taken on
national, branch and company level so that Dutch B2C operating
companies can anticipate on that, nationally and internationally?

‘Shopping Today’
(2013)

‘Shopping2020’

Research Questions Expert Group ‘Transaction’
1.What is the current situation
for transactions in Dutch retail
practice?
2.What are current trends and
examples?


1.What are most important trends,
points for improvement and
opportunities in transactions?
2.What are the most likely future
scenarios?

2

Main findings:
retail payments is about optimizing convenience and trust
Today, the Dutch retail payment landscape is dominated by cash and Maestro (‘pinnen’), offline, and iDEAL, online. Both contexts
remain largely separated, although they converge slowly. The expert group identified nine trends that are currently shaping the
future of retail payments. Among them are the emergence of digital identities, convergence of channels and, for certain consumers, a
stronger desire to protect their personal data (full set of trends: Part 1).
Four scenarios were described and assessed (Part 2), based on the current state of affairs and trends. The scenarios are built along
the axis of privacy and control by consumers and the number of payment service (s / providers).
The expert group is aware of a shift towards scenario 2 (many
payment services, decreasing privacy awareness), that deviated
by an incident or new regulation to arrive at the other scenarios

1

High privacy
Awareness and
3
control

t=0

2

Low privacy
awareness
4 and control
(Consolidation)

Few payments methods (providers)

Four future scenarios for retail payments

2

1

Many payments methods (providers)

Incident +
regulation!

Each of the scenarios will demand a different strategy from retailers
and service providers. Four observations and best practices transcend
the scenarios and hold for all four:

Because transaction
services are part of two-sided
markets, with sophisticated
dynamics and network effects,
new developments are
expected to be incremental

In all scenarios, trust is a
key element for providers of
transaction services. Consumers
are asking for more
sophisticated services but never
at the expense of trust

3

4

The internet has become an
integrated part of the total
shopping experience. Payment
services should be available
across contexts and offer a
consistent UX

The development of digital
identity services has the
potential to radically change the
retail and payment landscape.

If we want to realize a truly seamless, omni-channel shopping experience, there is a challenge for the payment industry to come up
with an infrastructure that enables the exchange of digital identities in a convenient and trusted manner and that provides the
necessary reach on both sides of the ecosystem.

3

Expert group ‘Transaction’: well-grounded with 21 payment
experts from diverse backgrounds (1/2)
Eric van Vuuren (Host)
Business Developer
Equens

Michel Drupsteen
Sr. Business consultant
ING Bank

Shikko Nijland (Chairman)
Managing Partner
Innopay

Wieske Ebben
Policy Advisor Payment
De Nederlandsche Bank

Paul Alfing
Policy Adviser
Thuiswinkel.org

Max Geerling
Director Card Products & iDeal
Currence

Simon Berende
Senior Product Manager Consumer Payments
ABN AMRO Bank

Rene Hodde
Executive Director
Chess Group

Gert Blom
Manager Strategic Alliances
Paysquare

Rob Hoitink
Productmanager iDEAL
Currence

Gijs Boudewijn
Hoofd Betalingsverkeer & Veiligheid
Nederlandse Vereniging van Banken

Rommert Jorritsma
Consultant Payment Systems
Intersolve


4

Expert group ‘Transaction’: well-grounded with 21 payment
experts from diverse backgrounds (2/2)
Marja van Kalveen
Teamleider productmanagement
Toonbankbetaalproducten
Rabobank Nederland Bedrijven

Noor Pierik
Sr. Marketeer Cards Acquiring
Equens

Gerben Klop
Strategy and Business Development
xXess360

Marja van Reijn
Regional Manager
Global Blue

Jip de Lange
Consultant
Innopay

Michel van Westen
Voorzitter
VBIN

Okke Mönking
Business Leader Acceptance
Mastercard

Dennis Wooning
Sr. Productmanager Debit- & Credit Cards
ABN AMRO Bank

Tom Nijenhuis
Head of Strategy & Development
Equens


5

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

6

Payments in NL anno 2013: cash, ‘pinnen’ and iDEAL
Offline: Maestro

Online: iDEAL

58%

93%
(market share, # electronic transactions)

(Last used online payment)

Remarks:
•
In this report we refer to “pinnen” for what is actually a Maestro transaction
Source: DNB, Currence


7

‘ShoppingToday’: nine trends that will impact the role of
transactions in the total retail experience (1/3):
Trend 1: Digital Identity
• Increasing electronic interaction
between parties leads to demand
for identification/authentication in
the virtual world, thus requiring a
trust framework and providing the
participants with clarity on rules of
engagement, risk and liabilities
• Since trust is a basic requirement for
consumers and merchants to
participate in (e-)commerce, having
an online identity which is as strong
as a real-world identity is the
ultimate solution

Trend 2: Mobile Shopping
• The share of smartphones of total
mobile phone penetration in The
Netherlands has well passed the
50% mark
• Nearly 3/4 of Dutch smartphone
users browse the internet every day,
and over 70% have used them to
make informed shopping decisions
• Currently mobile shopping is held
back from the lack of widely
adopted payment methods that are
designed for the smaller screens
(although PayPal and KNAB and
ING’s & Rabobank’s iDEAL mobile
solution are exceptions to this rule)


Trend 3: Digital Wallets
• Digital wallets offer services for
payment and loyalty, storing
consumer and payment credentials.
Wallets aim to:
₋ Increase speed and convenience
for consumers
₋ Provide conversion and customer
retention for retailers
• We currently see many parties trying
to offer wallets to consumers and
retailers, resulting in a “war on the
wallets”
• Many additional and innovative
services are expected as wallets try
to claim the primary customer and
merchant interface

8

Trend 4: Changing POS interaction
• The in-store Point of Sale terminal
(POS) is changing to new interfaces,
the classic ‘magstripe’ has been
changed to the EMV chip and a next
step is the contactless interface,
allowing consumers to tap with
either a contactless card or a
contactless mobile phone
supporting NFC
• New technologies are challenging
traditional POS terminals and the
way payments are initiated in-store
• The need for smart and secure
terminals might decrease with
security moving into the network
and shifting to the consumers
mobile device
• We also see the use of new forms of
hardware, identification and data
communication, such as mPOS
devices, Biometrics, NFC and QRcodes

Trend 5: Changing checkout
• In combination with the capabilities
of smart devices such as tablets and
smartphones, the in-store checkout
and payment flow is changing
• Some stores allow sales assistants to
freely roam the shop floor, where
checkout can be delivered from a
smart device such as a tablet and
payment is carried out by mPOS
• Others allow consumers to scan
products using their mobile device
and pay via a wallet, thus
eliminating the need for a checkout
as a whole


Trend 6: Conversion of channels
• As the internet maturity of the
Dutch population continues to grow,
consumers are by default
considering both the online and
offline channel to make purchases
• On top of this, there is a growing
possibility at merchants to go across
channels during in the shopping
experience, creating a true omnichannel customer experience
• For the consumer this means no
longer distinguishing between eCommerce, m-Commerce or
physical commerce, but just
commerce

9

Trend 7: Consumers in control
• The need to register yourself over
and over again forced consumers to
leave information across websites.
Sensitive information is left
scattered on the internet, which
makes it vulnerable to fraudsters
• This is also causing many privacy
risks especially when online or
offline personal data is being used
for big data mining
• As a reaction to this scattering and
usage of personal data and related
privacy issues an interesting trend
emerged to turn the ownership of
personal data around

Trend 8: P2P payments
• Peer to peer payments, payments
with less links in the chain and less
central control, will be an alternative
in retail contexts, when messaging
or information surrounding the
transfer of funds becomes real time
• Such payment methods could be
based on technology as used in
mobile channels because it gives
both sender and receiver an
interactive (and real time
communicating) device


Trend 9: Increased regulation
• The European Commission (EC) has
been providing the legislative
directives to harmonize payments
on a European level
• This has resulted in the initial
Payment Services Directive (PSD)
and the implementation of SEPA
payments under the European
Payments Council (EPC)
• Another relevant directive is the
Electronic Money Directive (EMD),
setting the rules on funds held in
non-bank managed stored value
accounts
• The regulations mainly aim at
creating a level playing field,
increasing innovation and lower
costs for consumers

10

‘Shopping2020’: four payment scenarios emerge from these
trends, shaping development of ‘transactions’ towards 2020
Many
payments methods (providers)
Scenario 2 - ‘Consumer Driven’1

Scenario 1 - ‘In Control’
Out of the many payments methods I can
choose the way I pay to fit my privacy needs”

“I choose from many options those that
bring me convenience and provide smooth
user experiences in a given context”
Personal data is exchanged between contexts
to provide smooth customer experiences

High privacy
awareness
and control

Scenario 3 - ‘Back to the Trust’

Scenario 4 - ‘Big Brands, Big Data’ 1

“I feel comfortable with a limited number of
payment methods where I have full control
over who is doing what with my data”

Low privacy
awareness
and control

“My payment provider knows a lot about me
and can therefore provide me with useful
services in all contexts”
• Payment providers serve as information
brokers between services
• A limited set of payment methods is
available across contexts

Few
Note 1: All scenarios reflect possible extremes. They are not reflections of the actual current attitude of consumers,
merchants or financial institutes with regards to confidential data, nor are they opinions of the experts


11

‘Shopping2020’: an incident can create an instant shift to
another scenario
Many

1
High privacy
awareness
and control

2

Incident +
regulation!

Low privacy
awareness
and control

t=0

3

4
(Consolidation)

Few
I. According to the experts, scenario 2 ‘Consumer Driven’
III. For scenario 4 ‘Big Brands, Big Data’ to unfold, the
can be recognized in some of the trends that are currently
current trend towards more payment methods /
happening. Therefore, scenario 2 can be regarded as an
providers will have to stop. However today, there are
extrapolation of current developments
only a limited number of commonly used payment
methods today, so the current situation isn’t far off from
II. For scenarios 1 ‘In Control’ and 3 ‘Back to the Trust’,
scenario 4. According to experts the number of payment
experts expect an incident combined with or followed by
methods will first still grow but will further consolidate
more stringent privacy regulation that will shake
towards 2020
consumers and change their attitude towards the use of
personal data. This will shift consumers to higher privacy
awareness

12

Impact 

‘Shopping2020’: scenario 4 ‘Big Brands, Big Data’ is most
likely

2

4

‘Consumer Driven’

‘Big Brands,
Big Data’

1
‘In Control’

3
‘Back to the Trust’
likelihood

IV

III

II

I

Likelihood
I. ‘Big Brands, Big Data’ is considered by the experts as the most likely
scenario. The current dominant position of a relatively small group
of financial institutes and big brands, combined with the high
investments involved with the embrace of new technologies might
prove difficult for newcomers to step in.
When the experts extend the current movement towards more
convenience and wider use of personal data in retail contexts, this
scenario is quite likely to occur
II. The second most likely scenario is ‘Back to the Trust’. In addition to
what is said above, the experts see the risk of a large scale incident
involving personal data as eminent. Such an incident could spark a
movement contrary to the current trend of more data becoming
available and could further enforce more stringent regulation:
people may become more aware of their privacy and put their trust
with only a small set of service providers
III. A development towards the ‘In Control’ scenario is conceivable, but
only after an incident (like with scenario 3). Even in this case, it
remains to be seen whether consumers are prepared to give away
the convenience they have grown used to
IV. An important inhibitor for scenario 2 (‘Consumer Driven’) is the
‘absorption capacity’ of users: there is doubt whether users are
capable of understanding many different payment methods and
appreciate a wild variety of check-out experiences. Although choice
is good, things might get too confusing (as is already today the case
in the abundant choice of phone subscriptions, energy contracts
and healthcare insurances)


13

Impact 

‘Shopping2020’: scenario 2 ‘Consumer Driven’ has highest
impact
Impact
The impact of the various scenarios was determined by the experts
taking the current situation as a starting point, including the trends that
we witness

4

I
II

‘Big Brands,
Big Data’

III

2
‘Consumer Driven’

1
‘In Control’

3

IV

‘Back to the Trust’
likelihood

I.

According to the experts, scenario 2, ‘Consumer Driven’ is the
scenario with the highest impact on the position of payments in the
total retail chain. Although it is commonly felt that most trends
currently push in the direction of this, the possibilities of ‘Consumer
Driven’ are endless. Currently, the number of payment methods that
is commonly used is still relatively limited and consumers and
businesses are still beginning to discover the possibilities of putting
personal data to work in retail. It is therefore hard to underestimate
the impact of this scenario
II. The second biggest impact is from ‘Big Brands, Big Data’: the
application of large quantities of personal data in retail context is
regarded as a stronger impact than the number of payment
methods
III. ‘In Control’ would halt the trend of applying more and more
personal data in retail contexts
IV. The impact of the ‘Back to the Trust’-scenario is coming from the
fact that it would reverse trends that we are currently seeing: it
would push retail in the opposite direction of where it is heading
now. However, both movements (‘right’ and ‘up’ in the graphic)
have only just started. Therefore the impact on the current payment
experience is limited


14

Observations & conclusions
1.

When it comes to shopping and paying consumers seem to want both reliability/security and convenience at the same time

2.

Furthermore, Dutch consumers are not used to pay directly for this category of services and merchants are used to low costs
for accepting electronic payments

3.

Consumers seem to consider reliability/security more like a qualifier/hygiene factor while convenience is being considered as
a differentiator/added value

4.

Payment is most likely to become increasingly a seamless part of the shopping experience whether there are many or few
payment methods and/or providers

5.

Consequently, in any scenario some sort of digital or financial identity will be a key enabler to progress the market and as a
means to more seamlessly embed payments in the shopping experience

6.

The current movement seems to be that consumers find privacy important but seem to be willing to trade it for convenience,
even though we see some momentum developing in favor of more privacy control by the consumer. Especially major privacy
incidents can turn the situation around and increase regulation, awareness and a demand for control of personal data

7.

Developing (international) rules & regulation, frameworks, infrastructures, services and products regarding digital identity and
personal data management is considered almost conditional for any scenario since this has high potential for improving the
shopping experience depending on how it will be implemented

8.

Developing more seamless shopping experiences based on new infrastructures towards 2020 in parallel with improving the
existing shopping and payment process and infrastructure seems the most logical approach for migration towards shopping in
2020

Note: The observations presented on this page were made during the process of detailing the Shopping2020 scenarios and thinking ahead about retail experiences in 7 years. They
can be regarded as remarks by the expert group across the scenarios


15

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

16

PHASE 1

HOW DO THE DUTCH PAY IN 2013?

DON’T BELIEVE THE HYPE...........YET
ShoppingToday - September 2013

Phase 1: ‘ShoppingToday’
Central Research Question to be addressed in this report:
How does the consumer shop in 2020 and which actions should be taken on national, branch and
company level so that Dutch B2C operating companies can anticipate on that, nationally and
internationally?

Phase 1:
‘ShoppingToday’ (2013)

Phase 2:
‘Shopping2020’

Research Questions expert group Transaction
1.

What is the current situation for transactions in

1.

Dutch retail practice?
2.

What are the most important trends. points for
improvement and opportunities in transactions?

What are current trends and examples?

2.

What are the most likely future scenarios?


18

Payments in NL anno 2013: cash, ‘pinnen’ and iDEAL
Offline: Maestro

Online: iDEAL

58%

93%
(market share, # electronic transactions)

(Last used online payment)

Remarks:
•
In this report we refer to “pinnen” for what is actually a Maestro transaction
Source: DNB, Currence


19

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

20

How consumers and merchants are related: a two-sided
market
Purpose of the chapter:
• This chapter illustrates the factors determining how merchants and consumers choose their preferred
payment method.
• Furthermore, this chapter shows how shopping and payments are related.

Two-sided markets:
• Two distinct user groups with different needs that are interdependent
• Network effects: benefits of usage are experienced across sides
Challenges:
• Reach is a chicken-and-egg phenomenon
• Winner takes all dynamics
• Pricing of services across both sides: often one side is subsidized by the other side. In payments, the
payer is subsidized by the payee
Source: Innopay


21

Transactions consist of three processes: agreement,
payment and delivery

Transactions are determined by contexts
• The ‘transaction context’ is the total of situational circumstances in which three processes of the
transaction take place: agreement, payment and delivery
• A successful transaction typically consists of two actors: buyer and seller
• Risk is at the heart of every transaction, for buyer and seller

Source: Innopay


22

e-Commerce changed the relative timing of the three
processes, resulting in unbalanced risks
A

P

A

P

A

P

Agree

Pay

Agree

Pay

Agree

Pay

R
Risk

D

•
•
•

RP

R

Risk

Risk

Deliver

Point of Sale
transaction

RA

R

RD

D
Deliver

Internet
transaction

D
Deliver

Context:
Relation (r)
Product (p)
Location (l)
Timing (t)

In traditional commerce, three processes are executed at one time, in one place: agreement, payment,
delivery. The Risk is balanced.
The introduction of new channels such as internet changed the dynamics of transactions. Transaction
processes are now disconnected in time and place, introducing unbalanced Risks.
These risks can be characterized by four risk factors:
• Relation (r)
Do buyer and seller know or even trust each other?
• Product (p)
What is the value and substance of the product involved?
• Location (l)
Where does the transaction take place?
• Timing (t)
In what order are Agreement, Payment and Delivery executed?

Source: “Understanding buyer and seller behaviour for improved payment product development”, C. Liezenberg, D. Lycklama, H. Smorenberg. Journal of Payment Strategy & Systems, April 2007


23

Timing determines whether Buyer or Seller bares the risks

1

time

2

time

3a

time

A

P

D

Agree

Pay

Deliver

A

D

P
Pay

Agree Deliver

A

P
Pay

Pay afterwards
Risk with seller

D

Agree

Pay in advance
Risk with buyer

Deliver

Pay and delivery at same time
Risk equally divided
3b

time

A

P

D

Agree

Pay

Deliver

Timing (t): The timeline and order in which the processes are executed. Processes can be executed
simultaneously or disconnected. In the latter case the order of Payment and Delivery can be swapped.
This leads to three generic types of timing.

Source: Innopay


24

… leading to endless payment methods to match all contexts


25

Every context has its own payment methods
Person-to-Person






Cash

Proximity



Consumer-to-Business
Debit and Credit Cards
Prepaid
Wallets
Giftcard
Cash

1







eWallet
Credit transfer

Remote




2
Online Banking ePayments
eWallet
Credit transfer
Debit and Credit Cards
PayPal
Gift Cards

3

4

Source: Innopay 2010


26

Payment and Loyalty and related fee structures are mainly
based on three or four corner models in 2013
4-corner payment model

3-corner payment model

Good/
Servicess
1.Consumer

Goods/
Services
2.Merchant

3.Issuer

•
•
•
•

1.Consumer

PSP

Periodic
Fee
Authorisation
(Clearing &
settlement)
(C&S)

3-corner gift card/loyalty model

Paymen
t

4.Acquirer

2.Merchant

1.Consument

Goods/
Services

CPSP

PSP

TRX Fee
Authorisati
on
Periodic
Fee

Payment

3.Service
provider/
Bank

2.Merchant

TRX Fee

3.Brandowner
Giftcard (C&S)
EGI
autorisatie

Most payment methods and fee structures in The Netherlands are based on a four corner model (f.i.
debit card, Maestro, Mastercard, Visa, iDEAL)
Interchange fees are relatively low in The Netherlands compared to EU
Most gift/loyalty methods are based on a three corner model
1.2B euro is paid in gift cards and vouchers in NL in 2012

Source: Intersolve, Innopay


27

Since the beginning of e-Commerce, we’ve seen continuous
evolution of the payment landscape …
3-party
model

New 3-party based challengers
4-party based challengers
3-party based challengers

5. New contexts demand new
functionality. A new wave of 3-party
models aims to fulfill these needs

4-party
model

Volume

Online Banking
based ePayment
4. In reaction, the 4-party paradigm
was translated to the web

3-party
model

1. In the beginning, there
were cards

3. New payment methods were
designed specifically for use on the web

2. Making traditional payment products
suitable for use on the internet
(...cards were never designed for the web…)

1995

•
•

4-party
model

2005

2015

Both three and four party models have adapted for usage on the internet
Ever more niches demand new functionality and therefore new payment methods

Source: Innopay


28

… but only a few new payment methods make it through
their infancy
Payment products on the Dutch market

(non exhaustive)
Cash

PIN
Maestro / V Pay
Chipknip
MasterCard / Visa
Acceptgiro
Wallie card
MiniTix
iDEAL

eWallet

emPayment!

Bill

Payter
Mobiel betalen NL

Travik
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

• As new payment methods will need reach to become successful, many do not survive for long
• As the uptake of the payment method takes too much time, merchants and consumers will loose faith
and abandon the novelty
Source: Innopay, Equens


29

Successful payment solutions provide Reach and Conversion
against fair Cost
Consumers:

Merchants:

1. REACH: Consumers choose
payment methods that are
widely accepted by
merchants  reach

1. REACH: Merchants are looking
for those payment methods
that their target audience
uses: this makes a visitor an
potential customer  reach

2. CONVERSION: From those
payment methods that
merchants accept, consumers
will choose those that they
trust, that are fast and easy to
use  conversion (ease-ofuse)

Reach
Conversion

1.

Cost

2.

3.

3. COST: Although consumers
might not be very aware of
the cost of the payment mix
they use, they do
acknowledge cost factors like
risk  cost

2. CONVERSION: Payment
methods that consumers
trust, that are fast and easy to
use increase the number of
potential customers that
actually buys  conversion
3. COST: The cost of payment
methods are primarily born by
merchants. Therefore,
merchants will offer those
payment methods that are
most economical for them.
Fraud can also be regarded as
a cost factor  cost

Source: Thuiswinkel, Innopay


30

Summary: new payment contexts demand constant
development of payment methods
•

The choice of a payment method depends on the context

•

Many factors determine the context of a payment, which leads to many different contexts

•

This could lead to many different payment methods to cater for all these contexts

•

Risk (or perceived risk: trust) is a determining factor in the choice for a payment method by consumers and
merchants

•

The rise of the internet introduced a totally new context in which new risks were introduced

•

The challenge is to balance ‘fit-for-purpose’ (a payment method should meet the requirements of the specific
context) with ‘simplicity’ (fragmentation leads to complexity for merchants and consumers)

•

Successful payment methods balance reach, conversion and cost

•

The added value of payments is to create loyalty (enable the building of client shopping profiles and provide
relevant merchant offers)


31

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

32

NL Shopping landscape: small supermarkets, historic city
centers and domestic e-Commerce
• This chapter illustrates the factors determining where and how consumers shop anno 2013

The Dutch shopping landscape is characterized by:
• Small distances and therefore relatively strong regional shopping areas, located in old city centers
• Shopping areas often restricted to (historic) city centres
• Absence of hyper markets and relatively small number of ‘big-box retailers’
• A relatively strong domestic e-Commerce sector
Source: Van der Gijp 2013, Innopay analysis


33

Online shopping is growing, while offline retail is declining
Development online vs. offline retail (NL)
+14%
100
7
90

6

8

5

9

Growth compared to the previous year
16
10

11

80

35

25

10
8

40

83

90

92

89

87

83

30

79

6
4

20

2

10

20
15
Percentage

50

30

Percentage

Turnover in Billion €

60

10
5
0
-5
-10

0

0

2007
2008
2009
% online retail / total retail

•
•
•
•

40

14
12

70

•

45

2010
2011
2012
Online retail turnover

2005 2006 2007 2008 2009 2010 2011 2012

2013
Offline retail turnover

Retail Total

Online Retail

The Dutch online market is one of the most developed e-Commerce markets in EU (after UK ~96 Bn, DE ~50
Bn, FR ~45 Bn online sales of goods & services [2012])
In NL online retail will account for 12% of total retail turnover in 2013
The double digit e-Commerce growth in NL is stabilizing at ~ 10% per year since 2013
The vast increase of online retail until 2030 is for nearly 30% at the expense of offline retail
The prices in offline retail have increased, as the amount of goods sold (i.e. volume) have decreased
substantially since 2009, while recovery is not expected in the short term (> 2015)

Source: Thuiswinkel.org, ING Economisch Bureau, Internet World Stats, Emerce, E-commerce Europe, Roland Berger, CBS, Innopay analysis


34

Stable retail landscape, in spite of declining turnover

# companies in thousands

Division of verticals in Dutch retail
+2%

120
110
100
90
80

70
60
50
40

1
3
4

1
3
4

1
3
4

1
3
4

1
3
4

1
3
4

1
3
4

5

7

7

17

21

24

10

10

10

10

10

10

10

10

10

12

12

12

12

12

7
10
10

7
11

7

7

7

13

14

10

11

10

10

12

12

30
20
10
0

6
4
3
2
1
0
-1
-2
-3

32

33

33

32

32

32

31

2007

2008

2009

2010

2011

2012

-4
-5

2013

-6

Gas station

Street trading '(no shop or market)

Shops in other articles

Shops in consumer electronics

Market trade

% growth y/y retail

Supermarkets and department stores

Shops in food products

Shops in recreational items

Shops in other household goods

• Declining turnover of total retail sector is not (yet) reflected in the number of businesses
• Number of shops over verticals is relatively stable, except for alternative (micro) retailers, ~16% yoy
• Top 10 largest retailers all active in ‘Food’ ((top 10 retailer (# shops): Ahold (759), Jumbo (685), Aldi (480),
Emté (Sligro) (130), Plus (270), Lidl (270), Super de Boer(20), Makro (17), Dirk vd Broek (99))
Source: CBS, Innopay analysis


35

e-Commerce in the Netherlands compared to Europe: high
internet penetration and uptake of online shopping …
% 100

% of online shoppers / total population

% Internet penetration (2012)
NL

80

93

UK

60

84

FR

80

40
DE

83

20
EU

0

’10 - ’11 - ’12

NL
Mn 350

’10 - ’11 - ’12

’10 - ’11 - ’12

UK

FR

’10 - ’11 - ’12

’10 - ’11 - ’12

DE

EU

Number of online shoppers

250
200
150
100
50
’10 - ’11 - ’12

’10 - ’11 - ’12

’10 - ’11 - ’12

NL

UK

FR

0%

20%

40%

60%

80%

100%

• % Online shoppers in NL as part of total
population well above EU average and
leading e-Commerce countries
• High internet penetration in NL contributes
to high share of Dutch population shopping
online
• Although a modestly sized market, the
Netherlands is seen as one of the
frontrunners in e-Commerce

300

0

73

’10 - ’11 - ’12

’10 - ’11 - ’12

DE

EU

Source: ANVED, Datamonitor, Euromonitor, Ecommerce Europe, Innopay analysis


36

… although average spending per user is relatively low
Average transaction value (’10 – ’12)
€

Average yearly online spending per user (’10 – ’12)

140

€ 3,500

120

3,000

100

2,500

80

2,000

60

1,500

40

1,000

20

500

0

’10 - ’11 - ’12

’10 - ’11 - ’12

NL

UK

’10 - ’11 - ’12

FR

’10 - ’11 - ’12

’10 - ’11 - ’12

DE

EU

0

’10 - ’11 - ’12

NL

’10 - ’11 - ’12

UK

’10 - ’11 - ’12

FR

’10 - ’11 - ’12

’10 - ’11 - ’12

DE

•
•
•

Average yearly spending is relatively low, even lagging behind EU average
Relative success of the Dutch online market is due to the high percentage of people shopping online
Next wave of growth to be expected from increased spending of experienced users

•

EU

An average spending per user in line with other EU markets would result in a growth of 35%!

Source: ANVED, Datamonitor, Euromonitor, Ecommerce Europe, Innopay analysis


37

e-Commerce in the Netherlands highly concentrated in small
number of large retailers
Note: total online turnover amounted to € 9 Bn in 2011

70%

30%

3,2

Top 10 online retailers (NL)
RFS Holland Holding
(e.g. wehkamp.nl)
Bol.com

469
358
200

Ahold

Travel

Revenue in Billion €

Distribution of (B2C) online retail revenue (NL)

130

KPN
BAS Group
(e.g. MyCom)
Coolblue

108

H&M

108

HEMA

1.8

106

110

2.0

2.0

Amsterdamgold.com
Thuisbezorgd.nl

Top 10

Top
11-100

94
83

Online retail revenue in Million €

Outside
Top 100

• In 2011 the top 100 online retailers represented € 3.8 Billion revenue (an increase of € 700 Million compared
to 2010), this exludes the large Travel websites (e.g. KLM), that accounted for € 3.2 Billion revenue
• The top 100 online retailers account for ~70% of online retail turnover and growth in online retail is primarily
claimed by larger online retailers
• The trend that large webshops will grow further and smaller players will either be acquired, remain small or
drop out, is likely to continue in the future
• Although 5 of the top-10 e-Commerce players have offline operations, channels still seem strictly separated

Source: Twinkle, Innopay analysis


38

Summary: Dutch consumers are embracing ‘online’, although
in 2013, online and offline still seem separated channels
•

Offline retail is dominant, but growth is centered in e-Commerce

•

There is a trend of retail shifting towards larger businesses. This trend is strengthened by the growth
of online, where large, professional players are dominant

•

Top 10 retailers are all supermarkets with (very) limited online activity

•

Small group of businesses sets the standard for the way people shop and pay in the Netherlands

•

Offline and online channel still seem to be strictly separated


39

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

40

Offline and Online can still be considered as two different
payment channels in 2013
• In this chapter the most important payment methods for the Dutch market are described

Offline

Online

+
Remarks:
• Payments can be initiated in the real world; Offline or in the digital world; Online
• This context determines the choice of payment method
• In our research m-Commerce is considered a type of e-Commerce and thus online
• In this report we refer to “pinnen” what is actually a Maestro/V Pay transaction

41

If the consumer is not already registered, online payments
are typically more complex than offline payments
Offline
1. Choice of
Products

2. n/a

3. Cash
Register/ Order
intake

4. Choosing
Payment
Method

5. Paymentproces/
Authorisation

4. Choosing
Payment
Method

5. Paymentproces/
Authorisation

6. Validation +
Order
Referention

7. n/a

Online
2. Filling in
Contact/
Delivery Details

1. Choice of
Products

2. Log In

3. Order Check

6. Validation +
Order
Referention

7. Order
Tracking

2. Accountregistration

2a. Filling in
Contact/
Delivery Details

2b. Log In


42

Main differences in the Transaction flow are in Checkout,
Delivery details and Payment Flow
Selection

Orientation

Delivery
details

Transaction

Payment flow

Receipt

Delivery

Service

Customer Care

Basket

Checkout

Offline

• Physical

• Loyalty card

• NA

• Pay now

• Paper
• Email

• On site
• Phone

• Law:
“Verkoop en
garanties
voor
consumenten
goederen”

• Cash
• D/C Cards
• Giftcards

•
•
•
•

Online

• Virtual

• Log-in
• Input prefs

• Input
prefs
• Stored
prefs

• Virtual
register
• PSP

• Email

• Website
• Phone

• Law: “Kopen
op afstand”
• PSD

•
•
•
•
•
•

iDEAL
Credit card
Paypal
Acceptgiro
DD/CT
Cash on
delivery
• Giftcards

• PC,
• Laptop
• Tablet

Mobile

• Virtual

• Log-in
• Input prefs

• Input
prefs
• Stored
prefs

• Virtual
register
• PSP

• Email

• Website
• Phone

• Law: “Kopen
op afstand”
• PSD

•
•
•
•

• Smartphone
• Tablet


Policies

Payment
method

DD/CT
Paypal
Acceptgiro
Cash on
delivery

Device

Kassa
Terminal
Dongle
Mobile

43

Current Account is the core funding source of basically all
payment methods
Context

Offline

Online
Wallet

iDEAL

Channel/
Paymentproduct

Funding

Cash

Cash

Debit
Card

Credit
Card

Current
Account

Prepaid
‘Card’

Credit
Account

Gift
‘Card’

Stored
Value


Loyalty
Card

SEPA
Direct
Debit

Virtual
Currency

Internet
Banking

SEPA
Credit
Transfer

Loyalty/
Points

44

A broad variety of loyalty schemes and gift cards exist as
‘alternative currencies’
Types of loyalty programs and examples
Brand

Retailchain

Brand combinations

Savings Card

Branch combination

Temporary Savings
Program

Shoppingstreet/ -mall

Gift Cards

Closed-loop

Semi-open-loop

Open-loop

Legal supervision for consumer protection (e.g. In case of bankruptcy) differs among the products: FRS,
Cadeaubox and the paper VVV bon lack legal supervision, while the consumers enjoy protection with the
electronic ‘boekenbon’
Source: Intersolve


45

Offline - Dutch still like to pay with PIN (Maestro)
Number of electronic payments in NL

Split of electronic payment methods relatively stable

3.000

# transactions (millions)

2.500

+8%

2.000
1.500

147

30 164

32 175

1.000
500

1.334

1.451

1.588

34 176

1.756

37 177

35

178

35 172

39 148

38

90%

2%

2%

2%

2%

2%

1%

2%

1%

10%

10%

10%

9%

8%

8%

7%

6%

88%

88%

88%

89%

90%

91%

92%

93%

2005

100%

2006

2007

2008

2009

2010

2011

2012

80%
70%
60%

1.946

2.154

2.285

2.474

50%
40%
30%
20%
10%

0

0%
2005

2006

2007

2008

2009

2010

2011

2012

Creditcard

Chipknip

PIN

• In this report Maestro (or V-Pay) transaction are called PIN transactions since this is the commonly used term
by Merchants and Consumers
• Chipknip was introduced in ’96 as a payment scheme to facilitate low value payments, i.e. payments under € 10
• Credit cards are in NL mainly used for high(er) value payments (travel, clothing, catering) rather than everyday
purchases, thereby explaining their limited share of total transactions in the offline context

Source: DNB, Innopay analysis


46

120

2.500

100

2.000

# of trx in Millions

140

160

Development # of credit card trx
and avg. trx value at POS (NL)

140

120

120

100

100

80

80

80

1.500
60

1.000

40

500
0
2000

140

Trx value in €

3.000

Development # of debit card trx
and avg. trx value at POS (NL)

Trx value in €

# of trx in Millions

Offline – # Debit card transactions is increasing considerably

20

2002
2004
2006
2008
Total # of Debit Card trx NL

2010

0
2012

60

60

40

40

20

20
0
2008

Avg. Debit Card trx value

2009
2010
Total # of Credit Card trx NL

2011

0
2012

Avg. Credit Card trx value NL

• Convenience, speed and (lower) costs (for merchants) have driven the increase in debit card transactions
• Phasing out ‘Chipknip’ in 2015, the intended Dutch payment method for low value payments, and campaigns
such as ‘Pinnen, ja graag!’ and ‘Klein bedrag? Pinnen mag!’ has also contributed to the increase in debit card
transactions and a decreasing value per transaction
• Low value payments represented ~ 30% of total offline debit card transactions in 2012
• Average transaction value of credit cards has been rather stable for several years at ~ €120,Source: BVN, Currence, Panteia, Innopay analysis


47

Online - iDEAL by far most used for internet payments
Prefered online payment method

Top 10 payment methods used last purchase
58%
54%
58%

iDeal

Acceptgiro
(Online)

13%
14%
13%

Acceptgiro (Online)

10%

6%
8%
8%

Credit Card
Online bank credit transfer

5%
4%
4%

PayPal

1%
1%
1%

PIN
Cash

1%
1%
1%

One-off Mandate

Buyers 2011-2 (n=1296)
Buyers 2012-1 (n=1440)

1%
1%
1%

0%

4%

One-off
Mandate

1%
1%
2%

Recurring Mandate

74%

iDEAL

4%
3%
3%

Acceptgiro (paper)

7%

Credit Card

5%
7%
4%

4%
PayPal

Buyers 2012 -2 (n=1453)

2%
Other

10% 20% 30% 40% 50% 60% 70%

20%

40%

60%

Note: the percentages indicate market shares based on surveys
• iDEAL is the most used (58%) and preferred (74%) payment method online in 2012
• Pay later payment methods are also popular in 2012 (21%)
• The Accept giro will be phased out in 2019, leaving an opportunity for other payment methods to fill the gap
Source: Blaauw, GfK 2013


48

Number of iDEAL transactions is growing rapidly
Number of iDEAL Transactions (1,000)

Why do consumers prefer iDEAL
116.870

120.000

Habit

110.000

93.063

100.000

Fast

Number of transactions

90.000

+51%

80.000

62.961

70.000

Convenient

60.000

43.575

50.000

30.000

Familiar

27.865

40.000
14.811

20.000
10.000
0

•
•
•
•

Safe
2007

2008

2009

2010

2011

2012

5%

10%

15%

20%

25%

117M transactions with a total value of 8.8B EUR in 2012
Number of iDEAL transactions has increased with a CAGR of 51% between 2007 and 2012
Number of iDEAL transactions is growing faster than e-Commerce
Consumers state that they prefer iDEAL because of high trust and convenience

Source: DNB, GfK, Innopay analysis


49

Roughly the same preferences for mobile payments as for
online payments
Payment method last mobile order 2012
iDeal

70%

54%

Acceptgiro (Online)

6%
8%

Credit Card

8%
6%
7%
5%

Online Bank credit transfer

4%

PayPal
1%

Cash
One-off Mandate

Smartphone (n=196)

7%

5%

2%
2%

Other

Tablet(n=225)

2%

Do not know

11%

0%
1%
0%

10%

20%

30%

40%

50%

60%

70%

80%

Source: Blauw 2013


50

Though electronic transactions score relatively good
compared to other EU markets, cash is still popular
Cash’s share of total transactions NL 2011 (%)
Greece

97

Poland

90

Italy

89

Spain

80

Ireland

75

Germany

69

Switzerland

66

Austria

64

UK

57

Belgium

54

Netherlands

52

France

50

Nordics

46
%
0

10

20

30

40

50

60

70

80

90

• Compared to other EU countries NL has a lower % of
cash transactions
• Merchants value cash payments due to its
ubiquitous acceptance and the direct income of
revenue streams, while consumers experience cash
payments as easy and ‘common’
• Despite the fact that average costs for a debit card
trx are lower (~€ 0.21 ) compared to cash payments
(~€ 0.24), > 50% of transactions are cash based
• For certain contexts, alternatives for cash are not
considered valid
• However, the higher costs, safety risks, counterfeit
money and the administrative handling are reasons
for merchants to revert to debit card payments
• Cashless checkouts continue to grow in NL
• Cash will also remain the number one fall-back
option in case the electronic payment system
encounters technical problems

100

Source: McKinsey, Innopay analysis


51

Summary: Dutch like to pay with Cash, ‘pinnen’ and iDEAL
•

Offline and online can still be considered as two different
and not yet integrated payment channels

•

In spite of all the fuzz around new payment methods, Dutch
still like to pay offline and electronic with Pin: 93% (2012)
and online with iDEAL: 58% (2012)

•

Pay later payment methods are also popular online since it
decreases the (delivery) risk for the consumer

•

Current account is still the core funding source of almost all
payment methods


“Cash is still king”

52

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

53

Many trends have been identified of which nine have been
selected as most likely to change the way Dutch pay

Technology

2. Mobile shopping and payments
3. Digital wallets
1. Digital identity

4. Changing POS interaction

5. Changing checkout
7. Consumer in control

6. Convergence of channels

Transaction

8. P2P payment
Legislation
&
Regulation

Economy
&
Society

9. Increasing regulation


54

Trend 1: Digital identity

Using a single digital identity throughout the shopping experience can enable seamless payments
Description

Impact on shopping

Impact on payments

Increasing electronic interaction between parties
leads to demand for identification/authentication
in the virtual world, thus requiring a trust
framework and providing the participants with
clarity on rules of engagement , risk and liabilities

•

•

Since trust is a basic requirement for consumers
and merchants to participate in (e-)commerce,
having an online identity which is as strong as a
real-world identity is the ultimate solution

•

During current e-Commerce shopping
experience, consumer identifies multiple times;
towards the shop, payment provider and
delivery service provider
Having a single digital identity decreases
customers effort of multiple identification and
minimizes effort of maintaining identification
credentials

•

•

Making payments between parties identified
and authenticated early in the shopping
experience can enable a true seamless
payments
Providing payments as an invisible step in the
shopping experience will increase consumer
demand for budget control and insight in
payments carried out
Seamless payments may affect the sense of
safeness negatively. The actual act of pushing a
button or entering a code creates awareness of
the expense

“It's wrong to say IRL means offline: Facebook is real life.”
Nathan Jurgenson (2012) The IRL fetish

"Easy access, via a single digital identity, to reliable
information about the person with whom you do business
is crucial for the continued growth of online shopping. It
may also be interesting for retailers and customers to
learn more of each other for 'tailored' services.“
Paul Alfing – Thuiswinkel.org


55

Trend 1: Digital identity
Examples

Signicat:
• To reuse existing strong authentication mechanisms for various
purposes
• Based on trusted banking technologies
Benefits:
• Bilateral agreements between banks and businesses
• Five assurance levels, tailored to set of needs
• One solution to fit various needs
http://www.signicat.com

IDchecker:
• Multichannel solution to verify ID documents
• Automated checks based on various large databases
Benefits:
• Effective, cross channel solution
• Extensive database for accurate checks

http://www.idchecker.nl

DigiD:
• Secure online identification with the Dutch government

Benefits:
• One gateway for all online services of the Dutch government

http://www.digid.nl


56

Trend 2: Mobile shopping and payments

Smart mobile devices have quickly changed the way we shop, both in-store and on the go
Description

Impact on shopping

Impact on payments

The share of smartphones of total mobile phone
penetration in The Netherlands has well passed the
50% mark. Nearly 3/4 of Dutch smartphone users
browse the internet every day, and more than 70%
have used them to make informed shopping
decisions.

•

•

•
•

Mobile devices are increasingly being used in
different contexts:
• In store: to look up product information and to
compare prices at competitors’ webshops
• On the go: mobile commerce enables users to
visualize products and offers while not in front
of a computer screen. Localized offers are also
available thanks to GPS functionalities

•

Mobile devices are increasingly being used in
store to access product information and to find
cheaper offers (also known as “showrooming”)
According to Thuiswinkel.org, in 2012, 1,2 M
Dutch consumers made at least one purchase
with their phone
Mobile based services often share the same
user profile as online counterparts. This makes
possible to continue researches and manage
lists both on the go or behind a bigger screen
Mobile internet glues together the traditionally
separated, worlds of online and offline shopping

•
•
•

•
Currently mobile shopping is held back from the
lack of widely adopted payment methods that are
designed for the smaller screens (although PayPal
and KNAB and ING’s iDEAL implementation are
exceptions to this rule)

Existing payment methods should be adapted
for use with mobile
Mobile devices require different user
interactions, due to the smaller screens and
different input methods
Users are asking for familiar online payment
methods to be redesigned for the mobile
screens
Future expected developments will allow
deeper integration between mobile phones and
POS terminals, with solutions that close the
loop of advertising, payment and loyalty points.
This will increase the need for payment
methods that are able to seamlessly integrate in
the integral shopping value chain
Mobile devices will provide new opportunities
for cheaper PoS payment terminals for
acceptance of online and offline payment
methods

“Mobile phones as successors of cards are one
part of the ‘mobile revolution’, but more profound
is the idea of smart devices bringing internet into
all contexts”
Innopay


57

Trend 2: Mobile shopping and payments
Examples

eBay:
• Scan any barcode and see the available listings and offers
• Exploits the link between online and mobile profiles
• Payments carried through digital wallet profiles
Benefits:
• Users can access competitors’ prices in store easily
• No need to manually type,
• Frictionless interaction

http://mobile.ebay.com/

OKit:
• Single brand covering market needs over multiple contexts
• Multi-channel experience, both online and offline
Benefits:
• Underlying payments via credit cards and direct debits
• Future direct connection to bank account available
• Reusability for other purposes than payments (eg: mandates)
• Integration with merchant terminals with no dedicated hardware

http://www.okit.com


58

Trend 3: Digital wallets and in-app payments

Payments are initiated from digital wallets, making payment means less relevant
Description

Impact on shopping

Impact on payments

Digital wallets offer services for payment and
loyalty, storing consumer and payment credentials.
Wallets aim to:
• Increase speed and convenience for consumers
• Provide conversion and customer retention for
retailers

•

•

•
•

We currently see many parties are trying to offer
wallets to consumers and retailers, resulting in a
“war on the wallets”. The current market shows
diversified reach & acceptance and channels
supported. There are Internet- and POS-only
wallets as well as omni-channel wallets. Wallets
can be used in a variety of contexts and from a
variety of consumer devices (PC, Tablet, mobiles).
Many additional and innovative services are
expected as wallets try to claim the primary
customer and merchant interface

•

Digital wallets providing loyalty influence
consumer shopping behavior in the orientation
and selection phase.
Wallets steer consumers in where to buy and
what to buy by providing relevant offers and
financial benefits to consumers
Digital wallets are increasingly used as quickcheckout method in web shops as alternative
for traditional PSP-checkout
Upon checkout digital wallets disclose consumer
and payment credentials

•

•

Consumer’s bank account is still the preferred
location to store funds
Digital wallets offer initiation of different types
of payments (cards, direct debit) resulting in
charging the current account, credit account
and/or stored-value
By providing a seamless payment initiation and
additional services from a Digital Wallet, the
relevance of the payment means (and it’s
provider) decreases and shifts to the provider of
the Digital Wallet

“The increasing number of parties offering digital wallets
asks for a stronger supervision of the e-money institutions
from the Central Banks to protect the stored-funds of the
consumer.”
Source: Rommert Jorritsma - Intersolve


59

Trend 3: Digital wallets and in-app payments
Examples

Minitix:
• Cash-replacement app, allows for various services to be paid
through mobile phones
• Funded with traditional payment methods (iDEAL, CT)
Benefits:
• Integration with third party platforms
• Mobile user experience adapted to users needs

http://www.minitix.nl

PayPal:
• Single brand covering market needs over multiple contexts
• Multi-channel experience, both online and offline
• Arguably the largest online 3-party model
Benefits:
• Integration of different channels
• One single user experience, brand trust
• Capability to support future payment innovations
• Targeted offers by merchants
• Enable relevant merchant offers (which will benefit customers and
merchants)
http://www.paypal.com


60


Contactless payments provide convenience and new technologies challenge the classic POS terminal
Description

Impact on shopping

Impact on payments

The in-store Point of Sale terminal (POS) is
changing to new interfaces, the classic magstripe
has been changed to the EMV chip and a next step
is the contactless interface, allowing consumers to
tap with either a contactless card or a contactless
mobile phone supporting Near Field
Communication (NFC).

•

Contactless payments
• NFC contactless payments provide consumer
with new interaction with a POS
• Using NFC enabled card or mobile phone.
• Contactless payments allow for PIN-less low
value payments

New technologies are challenging the traditional
POS terminals and the way payments are initiated
in-store. The need for smart and secure terminals
might decrease with security moving into the
network and shifting to the consumers mobile
device. Here we also see the use of new forms of
hardware, identification and data communication,
such as mPOS devices, Biometrics, NFC and QRcodes.

•

•
•

•

In the current Dutch market, consumers can
walk into a store without considering
acceptance of payment cards
Consumer and merchant interact in a two-sided
market
Both sides need to be enabled for the new
types of interaction to complete the shopping
with the preferred means of payment.
All developments aim for a smooth and hassle
free checkout
Goal is taking the pain* out of the shopping
experience

Increased use of loyalty, in combination with
contactless mobile phones will require multi-read
capabilities at the checkout, where not only
payment credentials need to be exchanged but also
coupons, vouchers, tickets, loyalty points and so
on. Providing consumers with a uniform user
experience is the challenge here

In-store alternative payments
• New technologies, enables use of non-card
alternatives
• This brings e-Commerce payment experiences,
into the physical store
• Examples; Digital Wallets and Card-not-present
(CNP) transactions

“There is a positive correlation between pain of paying
and the amount spend on the purchase. More
surprisingly, research indicates that the payment method
used influences the level of pain of paying experienced.”
Source: The irrationality of payment behavior
A DNB Occasional study, describing the ‘pain of paying’


61

Examples

Mobile NFC Leiden:
• Collaboration between banks and one mobile operator
• Banks and mobile operators to subsidize the issuing of capable
devices
• Contactless NFC retail payments from mobile phone
Benefits:
• Collaboration between different types of players
• Mobile operators providing hosting of secure banking application
http://www.mobielbetaleninleiden.nl

Octopus, Hong Kong:
• One of the world’s leading smart card payment systems
• Enables payment for transport systems as well as at retail outlets
and online transactions
Benefits:
• One single card to enable different payment services
• Reloads automatically by connecting to users’ bank accounts,
solving the loading problems
http://hong-kong-travel.org/octopus/

Snel en simpel betalen, The Netherlands:
• Enables caterers to speed up checkout
• Supports biometrics and contactless initiated payments
Benefits:
• Increasing the speed at checkout
• Providing an alternative for e-Purse (Chipknip)
• Automatic reloading of stored value by connecting to users’ bank
accounts
http://youtu.be/_o4kyCcb6to & http://www.snelensimpelbetalen.nl


62


New shop floor experiences with evolving cash registers and payment terminals
Description

Impact on shopping

Impact on payments

In combination with the capabilities of smart
devices such as tablets and smartphones, the instore checkout and payment flow is changing.

•

•

Some stores allow sales assistants to freely roam
the shop floor, where checkout can be delivered
from a smart device such as a tablet and payment
is carried out by mPOS. Others allow consumers to
scan products using their mobile device and pay via
a wallet, thus eliminating the need for a checkout
as a whole.

•
•

Shop floor experiences are evolving from new
technologies
Location based services (geo-location, in-storewifi, etc) allow for direct recognition and
identification of the consumer
Using CRM services to determine customer
preferences and sales history over all channels
maximizes cross and upselling

•
•

If user is identified and authenticated
sufficiently, the payment can be carried out as
seamless part of checkout
Using CRM to linking customer’s payment
history to checkout, decreases the merchant’s
need for a guaranteed payment
New technologies are used to initiate payments;
e.g. NFC, QR-code and biometrics

Where electronic payments used to be made based
on POS terminals, the capabilities of smart devices
allow for the customer to pay with a digital wallet
in the store


63

Examples

LevelUP:
• Platform to enable payments and loyalty solutions together
• ‘Closing the loop’ of commerce by issuing consumer app and
providing merchants with new terminals
Benefits:
• One solution for merchants’ advertising & payments needs
• Hiding the payment interaction behind a pleasant user experience

http://www.thelevelup.com

Apple Store checkout:
• Dematerialisation of the counter: mobile POS solutions allow for
payment interaction anywhere in store
• Counters can be reused for customer service purposes
Benefits:
• Better use of store space
• Customers do not have to wait in line to pay anymore
• Mobile POS terminals are less expensive than traditional

http://www.apple.com


64

Trend 6: Convergence of channels

Customers are not distinguishing e-, m- or physical commerce; the future will be commerce
Description

Impact on shopping

Impact on payments

As the internet maturity of the Dutch population
continues to grow, consumers are by default
considering both the online and offline channel to
make purchases. On top of this, there is a growing
possibility at merchants to go across channels
during in the shopping experience, creating a true
omni-channel customer experience. For the
consumer this means no longer distinguishing
between e-Commerce, m-Commerce or physical
commerce, but just commerce

•

•

•
•
•

Omni-channel integrates e-Commerce platforms
into the physical stores
Enabling sales personnel to sell products even
when they are not in stock
Delivery of goods in an e-Commerce manner.
Increasingly online orders can be picked up at
physical store or pick-up-point

•
•

Payment is specific to the context, resulting in
separate payment user experiences for the
virtual world and for the physical world
Digital wallets try to provide a generic payment
user experience across channels
Other payment means are adapting to the
variety of channels, e.g iDEAL growing to mobile

“iDEAL Mobile goes beyond channels and offers
“payments everywhere.”
Source: Max Geerling


65

Examples

Tesco Virtual Store, South Korea:
• Pilot for window shopping through QR codes in metros
• Users can scan selected products, pay in-app and get groceries
delivered conveniently at home
Benefits:
• Extension of grocery shopping spaces in creative locations
• Online shopping enables better stock management, while
payments are carried forward in-app

http://www.tescoplc.com

Clicks-in-Bricks:
• Extending online commerce experiences in-store
• Tablets are connected to terminals that allow users to ‘self service’
checkouts
Benefits:
• Merchants can still sell goods when not in stock
• Buyers can browse through merchants catalogs in store and
purchase directly

http://www.clicks-in-bricks.com


66

Examples

xXess360°. Scan & Shop Around, The Netherlands:
• Online multi-channel, loyalty and e-Commerce platform. Providing
consumers a real shopping experience through innovative ways of
product discovery (360°shopping)
Benefits:
• Turns real shopping malls into mobile and personalized shopping
environments for consumers
• Transforms smart phones into personal point of transaction
devices allowing consumers to discover, scan & buy products
• Retailers expand their stores with mobile shops allowing personal
interaction with their customers and increasing loyalty .
http://xxess360.com

MyOrder SideKick: Cookies for the physical world
• Know who’s in the shop
• Reach the customer on the smartphone and the tablet with
attractive offers
• Geo fencing technology, customer gets a reminder when in a
certain radius of the store
• Consumer gets a reward when he checks in the shop
Benefits:
• Learning to know your customer
• Cross sell possibilities
• Push offers over the air
• Instant rewards and offers
http://www.myorder.nl


67

Trend 7: Consumer in control

Increasing need to be in control of personal (payment) data
Description

Impact on shopping

Impact on payments

•

•

•
•

•

•

The need to register yourself over and over
again forced consumers to leave information
across websites. Sensitive information is left
scattered on the internet, which makes it
vulnerable for fraudsters. This is also causing
many privacy risks especially when online or
offline personal data is being used for big data
mining
As a reaction to this scattering and usage of
personal data and related privacy issues an
interesting trend emerged to turn the
ownership of personal data around
Life Management Platforms or Personal Data
Ecosystems provide users the possibility to
retain full control over their own personal data
and can basically determine what data to share
with which company

•

•

Consumers want to know if merchants respect
their privacy (transparency) both online and
offline
Increasing attention towards merchant and
third party behavior by consumers and privacy
interest groups
Need to balance shopping experience
improvement versus privacy

•

Increasing need for transparency and security
Rising need for anonymous and less centrally
controlled payments method such as Bitcoin
Consumers may have to be protected or made
aware of risks when payments are being
pushed to the background or further integrated
into the seamless shopping experience

“The Age of Privacy is Over.”
Mark Zuckerberg


68

Trend 7: Consumer in control
Examples

Qiy:
• Platform for users to control their data and privacy levels
• The Qiy Foundation is an independent organisation that
developed an infrastructure of which your personal Qiy domain
is part. This infrastructure is called the Qiy Trust Framework
Benefits:
• Qiy gives you a personal domain to manage your personal data.
That way, you decide who and when others may access your
personal data and for what purpose

http://www.qiy.nl/

Personal Data Ecosystem Consortium:
• Community: face-to-face events in Europe and North America
• Education: white papers and hold seminars explaining the
personal data economy to enterprises, investors, and
entrepreneurs.
• Advocacy: engagements with government US and European
initiatives like NSTIC to promote user-centric identity and
personal control of personal data.
• Research: research and share findings about personal data
technology, business models, ecosystems, and social impact for
our members and the public
Benefits:
• Credible organization that can provide access to global best
practices


69


Why would only merchants be able to accept payments?
Description

Impact on shopping

Impact on payments

Peer to peer payments, payments with less links in
the chain and less central control, will be an
alternative in retail contexts, when messaging
surrounding the transfer of funds becomes real
time.
Such payment methods could be based on mobile
technology because it gives both sender and
receiver an interactive (and real time
communicating) device.

The distinction between a merchant and just any
economic actor might become less obvious as
shopping contexts become more fluid. The
acceptance of a payment by just any economic
actor would enable also less formal shopping
contexts and, in the same time, embrace ‘System
D’: the informal economy
The informal economy is currently responsible for
about $ 10 trillion and completely dependent on
P2P payment methods. Because of the lack of
alternatives, this part of the economy is 100% cash
based

•
•

•

•

The development of a P2P payment method
would create a payment method that is
applicable to a wide variety of contexts
Card schemes add value because they enable
real time trade between actors that do not
know each other, in a world where funds travel
at less than real time speed. Real time
messaging around a P2P payment method
would challenge this functionality
The business case in most retail payment
contexts is based on fees paid by the receiver.
A P2P payment method is likely to find its
business case more equally distributed
between payer and payee
This could result in fragmentation of payment
methods and thus additional complexity for
regulators and end users

“The ultimate payment method is aP2P payment method”
The experts from the Transaction working group discussed
about this statement and found that there may be some
truth in it as any ‘economic actor’ might be wanting to
accept payments.“


70


Examples

Bitcoin:
• First ever decentralised virtual currency
• Monetary policies do not exist, an algorithm keeps the system in
balance
• Funds are stored decentralised in enduser’s bitcoin wallets
Benefits:
• Immediate, worldwide transfers between users and businesses
• Zero or low-cost payment processing
• Added benefits of anonymity and limited traceability

http://bitcoin.org/

Mobile Payments, UK:
• Coordinated by the Payments Council, allows users to send money
between bank accounts
• Using mobile phone number as alias to the bank account, providing
high ease of use
Benefits:
• Instant payments, via trusted provider (bank)
• Payments carried through Faster Payments for quick settlement
http://www.paymentscouncil.org.uk/current_projects/mobile_payments/

mPesa:
• Mobile money remittance service. Launched by Vodafone in 2007
• Became most successful domestic P2P payment service, forced
merchants to accept it as well
Benefits:
• Money messages sent through mobile devices, via Telco operators
• Instant transfers, with immediate notification that helped uptake
with businesses
http://www.safaricom.co.ke/personal/m-pesa


71

Trend 9: Increasing regulation

A clear direction towards a digital economy, increased competition and innovation in payments
Description

Impact on shopping

Impact on payments

The European Commission (EC) has been providing
the legislative directives to harmonize payments on
a European level. This has resulted in the initial
Payment Services Directive (PSD) and the
implementation of SEPA payments under the
European Payments Council (EPC). Another
relevant directive is the Electronic Money Directive
(EMD), setting the rules on funds held in non-bank
managed stored value accounts.

•

•

Parallel to this the EC is working on the Digital
Agenda for Europe (DAE) to help European citizens
and businesses to get the most out of digital
technologies. In general, the EC is focusing on
increased competition and innovation in payments
as well as safeguarding the trust and reducing
fraud and cybercrime.

•

Banks will implement XS2A in the payments
portfolio offered to the account holders
XS2A is expected to trigger a broad range on
new and innovative payment user experiences

•
•

The PSD2 only drafted legislation on XS2A, it is now
up to the market players to continue to come to a
mutual understanding and further detailing of the
framework. Depending on the speed generated,
the ultimate date of implementing the legislation
into national laws of EU member states is 2017.

XS2A payments will use SEPA Credit Transfers
for settling funds between payers and payees
Consumers will be able to initiate payments
with greater convenience
Increasing complexity and possibly the cost
structure of commerce and payments

There is a risk of diversification, leading to confused
consumers and a lack of trust in XS2A payment
solutions. A clear understanding on consumer
dispute handling and related liabilities is crucial for
the trust in and adoption of XS2A services.

Mid July 2013 a new legislative pack has been
released with regards to payments; PSD2. This
drafted legislation sets out new rules on Access-tothe-Account (XS2A). As a result of this Third-party
Payment Providers (TPPs) can get access to the
consumer’s payment account for informational
services and payment initiation. This will lead to
merchants seeing new providers of payment
services.

“XS2A is a clear example of opening up of the payments
industry. Banks can either see this as a threat or an
opportunity, but when done properly, linking the
innovation capacity of new entrants to the reliable and
trusted payment capabilities of banks can be a
tremendous boost for Commerce.”
Eric van Vuuren - Equens


72

Trend 9: Increasing regulation
Examples

SEPA:
• 2014 will be the end date for the SEPA migration
• Trough unified standards, Europe is making payment systems
effective and reducing their costs
Benefits:
• Common standards across the region
• Cost effective solutions for maintenance of systems

http://www.europeanpaymentscouncil.eu/

PSD2:
• Opening up access to the payment account for informational and
transactional services
• Linking innovation to standardized payments

Benefits:
• New services to become available using bank accounts
• Payment account’s access will develop in services including cash
management and investment advisory

http://ec.europa.eu/


73

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

74

PHASE 2

HOW DO THE DUTCH PAY IN 2020

A STORY ON CONTROL, CONSUMERS, TRUST AND BRANDS
Shopping2020 - December 2013

Phase 2: ‘Shopping2020’
Central Research Question to be addressed in this report:
How does the consumer shop in 2020 and which actions should be taken on national, branch and
company level so that Dutch B2C operating companies can anticipate on that, nationally and
internationally?

Phase 1:
‘ShoppingToday’ (2013)

Phase 2:
‘Shopping2020’

Research Questions expert group Transaction
1.

What is the current situation for transactions in

1.

Dutch retail practice?
2.

What are the most important trends. points for
improvement and opportunities in transactions?

What are current trends and examples?

2.

What are the most likely future scenarios?


76

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

77

Scenario planning: working from uncertainties
Two uncertainties create four possible futures
• Scenario planning is intended to prepare organizations on future developments that are (1) uncertain and that (2) have large
impact (see illustration below, left)
• The approach to create scenarios for possible futures has been to determine two uncertainties that are independent from each
other and both are of high impact on the position of payments in retail contexts
• Based on an assessment of trends, developments and risks the following two main uncertainties have bee selected:
1. Consumers’ attitude towards privacy
2. The number of payment methods consumers can choose for as the second uncertainty (see next slides)
• The four possible combinations of two alternative outcomes for these uncertainties create four possible futures: scenarios
• Subsequently, the expert groups described these scenarios reasoning both from 2013 towards 2020 and from further in the future,
backwards to 2020 (see illustration below, right)

‘Plan for…’

‘Develop scenarios
on…’

‘Develop tactics
and policies for …’

‘Keep an eye on …’

Uncertain effect

Certain effect

Large impact

Small impact

Different categories of uncertainties demand different preparation

Scenarios can be approached directly (from our current position)
or indirectly (from a future perspective)


78

Uncertainty 1: Consumer attitude towards Privacy
HIGH privacy awareness and control:

HIGH privacy
awareness and control

LOW privacy
awareness and control

• People are conscious and want to control about what
happens with their personal data and who makes use of it.
This does not mean that everybody always wants to be
anonymous, but people want to remain in control
• Dedicated services can be developed to support people in
making themselves known in the way they want to: Digital
Identity
• A move into this direction can be sparked with an incident
or examples of data breaches that harm peoples’ trust in the
institutions (both public and private) that gather data about
them

More or less privacy awareness

LOW privacy awareness and control:

This axis is about the degree to which the general public is
concerned with their personal data. ‘Less privacy awareness’
does not imply that there are no
boundaries to what one can do
with personal data,
but only that people
are less concerned
in this respect

• Currently, experts observe a trend of decreasing privacy
awareness: people are less and less hesitant about sharing
their personal data: they are willing to share a lot when this
leads to increased convenience or brings additional benefits
• The adagio ‘I don’t have anything to hide’ is still strong in
the public opinion towards public authorities gathering data
and towards private businesses, people are willing to ‘trade’
their data for additional benefits like a smoother user
experience or promotions


79

Uncertainty 2: Number of payment methods (providers)
MANY payment methods (providers)

MANY payment methods:
• With the maturing online channel, dedicated payment
methods have arisen
• This may grow even further when user experiences of
various channels are more and more optimized and provide
payment methods that are developed specifically for that
context
• The wallets we see currently arising may well develop into
payment methods in their own right in order to provide a
uniform customer experience, trust and security within the
mass of different payment methods

FEW payment methods (providers)

Consolidation and fragmentation

FEW payment methods:

• Experts see the variety of payment methods as important
uncertainty. Currently, two trends are showing:
₋ Large schemes consolidate and replace smaller (local)
brands (local credit transfers & direct debit  SEPA and
PIN  Maestro)
₋ More and more payment methods are developed on top
of existing ones, to cater for specific contexts.
• Although it is not likely that many more global schemes
(‘infrastructures’) appear, from the consumer perspective
the number of service providers or separate products
(‘payment methods’) can grow

• With different channels converging, demand for a
omnipresent payment method (and brand) increases
• From various initiatives, a few will eventually gain the
traction that is needed to cater for all contexts and provide
universal reach and a consistent user experience
• This scenario will be supported by the limit on a consumer’s
absorption level (how much different methods can I
handle?) and stakeholder’s ability to manage change on
their infrastructures
• A force that may support this, are schemes that restrict the
use of their brand to support other payment services (for
reasons of uniform customer experience, trust and security)


80

Based on two selected uncertainties four payment scenarios
have been worked out from the perspective of the consumer
Many
Scenario 1 - ‘In Control’

Scenario 2 - ‘Consumer Driven’1

“Out of the many payments methods I can
choose the way I pay to fit my privacy needs”

“I choose from many options those that bring
me convenience and provide smooth user
experiences in a given context”
Personal data is exchanged between contexts
to provide smooth customer experiences

High privacy
awareness
and control

Scenario 3 - ‘Back to the Trust’

Scenario 4 - ‘Big Brands, Big Data’ 1

“I feel comfortable with a limited number of
payment methods where I have full control
over who is doing what with my data”

Low privacy
awareness
and control

“My payment provider knows a lot about me
and can therefore provide me with useful
services in all contexts”
• Payment providers serve as information
brokers between services
• A limited set of payment methods is
available across contexts

Few
Note 1: All scenarios reflect possible extremes. They are not reflections of the actual current attitude of consumers,
merchants or financial institutes with regards to confidential data, nor are they opinions of the experts


81

Table of contents

Management Summary
1.

Payment contexts

2.


3.


4.

Trends and examples

5.


6.


7.


ANNEX

82

Experts evaluated the four scenarios on related trends,
implications for stakeholders and enablers/barriers

General description of the
scenario

Current trends shaping the scenario

Expected path for this scenario

Which of the trends from ShoppingToday are
applicable to this scenario and how?
Highlights show the trend most relevant.

What are the early warning indicators?
How do we arrive to this scenario?
What stages can we pass?
Etc.

Stage 2
Stage 1

Enablers and barriers for the
scenario

Implications of the scenario for
various stakeholders

ENABLERS
BARRIERS

Merchants

Consumers

In each scenario, the
consumer
perspective will be
presented by a
different character
and presented in
blue boxes

Banks

PSPs
Regulators


83

SCENARIO 1

In Control

1
3

‘In Control’: self-conscious consumers

2
4

‘In Control’
• Consumers are aware of their privacy and want to maintain
control over ‘who knows what’, ‘who uses what’ and ‘who
shares what’
• Consumers understand and appreciate various choices of
payment methods and providers
There is a growing market for supporting consumers in managing
the complexity that comes with this scenario. Dedicated
e-Identity services or ‘personal data stores’ where personal data
is securely stored and made available for reliant parties are
examples of such services
Lots of choice, but the consumer decides what he wants


1
High privacy
awareness
and control

2

In Control

Out of the many payment methods
I can choose the way I pay to fit my
privacy needs

Consumer Driven

Low privacy
awareness
and control

3

4

Back to the Trust

Big Brands, Big Data

Few payments methods (providers)

I want to be able to control my
personal data; who uses it, how and
when it is used and who shares it with
others
I want to be able to separate different
parts of my ‘identity’


85

Trends related to ‘In Control’ scenario

1

2

3

4

#

Trend

Relevance for Scenario:

1

Digital identity

Crucial for identification and controlling privacy

2

Mobile Shopping

Applicable in all scenarios

3

Digital wallets

The wallet will combine payments products, added value services and (big) data
collection

4

Changing POS interaction

Less personal data will lead to less services,
no optimal shopping experience available

5

Changing Check-out

Check out can be seamless only with use of a
consumer ID (or more guest accounts which
will lead to less conversion)

6

Convergence of channels

Cross and omni-channeling will gives extra
pressure on a central identity

7

Consumers in control

Consumers want in our scenario control of
payment method and privacy

8

P2P payment

Is one of the payment methods in the scenario
and will become more used and relevant

9

Increasing regulation

In my daily shopping, I use
many different payment methods
without leaving my credentials
behind

My e-ID service provider
supports me to control the
complexity that comes with this

Regulation on privacy and data use is in this
scenario starting point


They help me to manage what
attributes are being disclosed to
which service providers

86

1
3

Possible path to ‘In Control’ scenario

2
4

Gaps with current situation
The expert group identified gaps between the scenario and the current situation. Also a possible staged development towards the
scenario was outlined. During the different stages, more and more of the gaps with 2013 are closed. These events can function as
‘early warning indicators’: signals that one particular scenario is unfolding. Strategists should be watchful for these signals and adjust
their operations accordingly
• Privacy legislation
outdated
• Access to the
account not yet there

• Mobile not yet trusted device
• The ‘Omni channel’ and ‘Big
Data’ trend is not beneficial to
privacy and control

2013

• Wallets not yet
adopted and
unavailable with
trusted banks
1. Jungle of wallets
and payment
options

5. Evolving privacy
legislation

• No identity framework
available (eID)
4. Access to the bank
account is regulated

2. Privacy incident
involving Big Data
resulting in more
privacy awareness

3. Trusted framework
with identity
authentication and
management

After we heard of what
could go wrong when you no
longer have control over you
personal data, me and my
friends changed radically our
online behavior
We started to look differently
at merchants that wanted to
know details about me and I
began to appreciate anonymity


87

1
3

Enablers and barriers for ‘In Control’ scenario

2
4

ENABLERS
• Wallet availability will increase and this gives more control
and payment options if issued by a trusted party
• Mobile (app) development enables control
• Identity framework for authentication (regulation)
• Privacy demand of society and legislation of privacy
• Shopping without having to create an ‘account’ (guest
account)
A big incident really served as a wake-up
call for many people. This did not only
change my internet behavior, but also how I
shop

BARRIERS

• Unsuccessful business models and unclear propositions
by many providers
• Big players dominating the marketplace, no Dutch
wallets available with debit card / iDeal
• Advantages of Commercial Wallets for merchants are the
building of shopping profiles and targeted merchant
offers, which conflicts with control of privacy (all in one
hand)
• One Digital Identity not available

I trust my mobile device and my e-ID
provider to arrange my things and use lot’s
of payment methods to separate between
different contexts: I don’t want to mix the
different parts of my persona
It is not always convenient though: abroad,
I don’t know who or what to trust and I am
largely dependent on the brands I know


88

Implications of ‘In Control’ for various stakeholders

1

2

3

4

Regulators
• Are confronted with huge demand for privacy
regulation
• Are sponsor and stakeholder for a trusted identity
framework

Banks
• Are able to leverage their trusted imaged and
will therefore have the opportunity to offer
wallets or other payment methods that are easily
adopted
• Must invent new business models with value added
services because competition will grow from new players
making use of “opening up the bank account”
• Are forced to invest in advanced and dynamic security models

Consumers
• In first 2 phases will be puzzled with choices of
wallets and lots of incidents, who to trust
• Slowly but gradually will adopt the options and
control services
• Will make use of various wallets for travelling, pleasure
& ticketing and payment transactions
• Smart phones can provide and store personal data easily ;
precondition that a consumer is able to manage his level of
control/privacy

PSPs
• Have limited consumer access
• Need a mobile strategy
• Uncertain position unless invest in new ecosystem between mobile and wallets

Merchants
• Will first go only for major payment methods
• Later will see the advantages of accepting
wallets because of the merchant-consumer
interaction; value added services.
• Privacy and control is not beneficial for development of
shopping profiles (store and analyze big data)

Other stakeholders
• Identity Service Providers enter into the market (can be public
and Private organizations)


89

SCENARIO 2

Consumer Driven

1
3

‘Consumer Driven’ scenario

2
4

Description of the scenario
• Many payment methods (e.g. many different customer
experiences for different devices and channels on top of a
limited number of payment schemes and infrastructures)
• More seamless shopping experience: the consumer accepts less
privacy over his personal data in return for more convenience,
‘perks’ or promotions.
• This is a possible extreme scenario and thus not a reflection of
the actual attitude of consumers, merchants or financial
institutes with regards to confidential data


1
High privacy
awareness
and control

2

In Control

Consumer Driven

Low privacy
awareness
and control

3

4

Back to the Trust

Big Brands, Big Data

Few payments methods
(providers)

Merchants now recognize me both
offline and online and optimize my
shopping experience accordingly
I feel like I have much more choice of
how I want to pay; some payment
solutions reward me with
considerable loyalty points
Paying has become even more easy
and fun and is now a seamless part of
my shopping experience
I probably have to share personal data
but I don’t mind as long as I get
convenience in return

Note 1: As with all scenarios, this description reflects a possible extreme and thus not a reflection of
the actual current attitude of consumers, merchants or financial institutes with regards to confidential data


91

1
3

Trends related to ‘Consumer Driven’ scenario

2
4

#

Trend

Relevance for Scenario:

1

Digital identity

• i.e. decentralized identity scheme or ‘management of identities’ per merchant (group).
Two types of identities, one for profiling providing benefits and ease of use and one
(financial ID) for linking it to the payment transactions
• Interoperable/trusted framework

2

Mobile Shopping

Applicable in all scenarios

3

Digital wallets

Manifestations of the different user experiences

4

Changing POS interaction

Towards a more harmonized user experience for
online and offline shopping

5

Changing Check-out

Idem: when consumers’ IDs are known by the
merchant, check out can change considerably

I can choose how and when I
want to pay and I even get
loyalty points

6

Convergence of channels

Channels will converge: when merchants are
offered more/better tools to recognize their
customers across channels, UX will converge

Finally a true seamless shopping
experience

7

Consumers in control

Apparently less important in this scenario: merchants
will be more in the driver seat

8

P2P payment

n/a

9

Increasing regulation

A large number of payment methods can be the result of increased
regulation from a competition point-of-view. More transparent
control for the consumer over his privacy / personal data will be
the result from less stringent regulation

It is okay to provide my
personal data since I get
convenience in return

92

Possible path to the ‘Consumer Driven’ scenario

1

2

3

4

Gaps with current situation
The expert group identified various gaps between the current situation in 2013 and the scenario. Three stages can be distinguished to
arrive at the eventual scenario. The scenario describes a situation in which data is used by all kinds of service providers, to offer
consumers more convenience and services that are matched with their preferences. An important gap with this scenario is a
comprehensive legal framework around personal data and the usage of it in commercial contexts

2013

• No clear/too traditional role of banks, banks
are currently not acting to play a role in this
scenario
• Merchant conscious of providing relevant
(dynamic) content to consumers
• Limited transparency
regarding the type,
usage and storage of
personal data

• Regulation and public opinion are not in sync
with technology, e.g. geo-fencing
• No unified financial ID (including personal data)

3. Definition and use of transaction
models (revenue, exchange)
Regulation brought in line with
technological possibilities

2. Definition of business models
(value definition of personal data)

1. Consumers have limited awareness
towards property, usage and
storage of personal data

I am relieved merchants now personalize my
shopping experience based on my on- and offline
behavior and making the payment a seamless part of
my shopping experience
Although at first I was afraid of missing out on relevant
information, this has proven not to be the case


93

How do Dutch consumers pay in 2020 - trends and scenarios

How do Dutch consumers pay in 2020 - trends and scenarios

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