The Netherlands has long been one of our “model countries” for Digital Money. Retail Payments results recently released show why. While cash withdrawals are falling, card payments have increased and there is clearly a higher value of card payments than cash. De Nederlansche Bank (DNB) worries about how to “keep the cash chain alive” unlike India, Nigeria, Indonesia, China and other emerging countries whose top priority is to go cash-less / cash-lite.
This highly developed country with a great deal of income from international trade, very early realised the importance of payments, financial expertise and cash management. Dutch banks such as ABN Amro established offices across the world to support cross-border trade. Although the Dutch economy is faltering, having contracted by 0.7% in 2012, the payment infrastructure continues to be one of the most efficient in the world. Based on 2012 results, the Dutch retail payment system is estimated to cost EUR 1 billion less per year than the European average.
So contrary to some interpretations, I don’t think DNB is against electronic payments – Far from it! Thanks to the success of iDEAL, the joint initiative of Dutch Banks, banks remain firmly in position as leaders in the online payments space, escaping the fate that has befallen banks in China, with third party providers such as Alipay, Tencent and other third party payment providers dominating the online payment scene.
As I analyse the payments results for Netherlands, I wonder - how could we possibly distil the very interesting learning from this country that has “been there, done that” to share with others that are embarking on the journey? Is there a way to make the process less painful, faster, and more rewarding for merchants and consumers alike? If there is a EUR 1 billion + advantage to be had, how can we grease the wheels to make this happen?
We remain continually in awe of the tremendous work in progress through the Alliance for Financial Inclusion (AFI) forum where Central Banks of over 80 countries are helping each other to create proportionate regulations to channel the move away from cash in the most effective manner. The Better than Cash Alliance is meanwhile promoting the move to non-cash payments for aid and Government benefits.
In our small way we aim to share what we see in each country, to help others at different stages in the development of their payments systems. We’ve built frameworks, timelines and digital payment artefacts that I hope will help. Additionally we hope this portal can play a role as a forum and meeting place for experts to come and reflect on what is happening and share their experiences from attempting similar projects. For sure, the Netherlands has shown us that every bit of efficiency that gets built into payment systems has the potential to create leverage that ultimately benefits entire ecosystems!