European payments: looking back and ahead

European payments: looking back and ahead

25 February 21

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The views expressed in this article are solely those of the author and should not be attributed to the European Payments Council.

The European payment landscape is going through a considerable transformation due to technological developments, entry by new actors and regulatory changes. We interviewed Piet Mallekoote, soon to retire from his position as CEO of the Dutch Payments Association and Currence (iDEAL), an acute observer of and actor in the European and Dutch payments scenes for several decades. We asked him for his perspective on past, ongoing and future developments and challenges in European payments. In addition, Piet shares recent and future developments in payments in the Netherlands. 

How would you describe the last twenty years in the European payments scene? What were the most remarkable achievements as well as the main lessons learned for the future of European payments? 

Let me start by saying that the cost of payments is considerable. The European Central Bank (ECB) estimated ten years ago that the total social cost of retail payments was about one percent of gross domestic product (GDP). These costs can be reduced through cooperation. Think of standards and multilateral agreements (for example, a framework or a scheme). In a European context, this is not easy because each country has its own payment structures and habits, and payment service providers ( ) have different strategies.

Therefore, it can certainly be considered that the European Payments Council ( ) and its members have very significantly improved the efficiency and integration of European payments by jointly agreeing on the creation and development of the Credit Transfer ( ), Direct Debit ( ) and Instant Credit Transfer ( ) schemes. 

More philosophically, looking back over the last two decades, I believe that industry agreements represent a more effective solution than legislation or regulation, which may end up taking more time and costing more for everyone. Through their deep strategic and technical insights into the complexity of the payments market, players – supported by public authorities – can achieve a superior outcome for all stakeholders’ benefit through cooperation.

Building on this, what are the main future challenges facing European players?

The European Commission (EC) has recently formulated an ambitious Retail Payments Strategy for the coming years, and there are many opportunities for the industry to contribute to the EC’s vision for European payments. Also, through a pro-active attitude and good cooperation between all (e.g., banks and payment institutions) including within the , and in cooperation with European public authorities, concrete and ambitious industry initiatives can give true substance to that vision. But everyone must realise that cooperation is a matter of giving and taking, that will ultimately be for the mutual benefit of all and result in a more efficient, innovative, competitive and integrated European payments landscape.

Can you shed some light on the main recent and future developments in payments in the Netherlands?

In 2019, all major banks in the Netherlands introduced instant payments under the direction of the Dutch Payments Association. The smaller banks have now also introduced instant payments in their offerings. Since 2019, has become the standard payment method for credit transfers in the Netherlands.

In 2020, we had 400 million payments transactions. In that context, we are pleased that in July 2020, the ECB announced its project to make the full and effective pan-European infrastructure interoperability for payments a reality by the end of 2021. 

In order to make online payments on the internet even more user-friendly, it was decided last year to completely overhaul iDEAL: a new, modern and more scalable infrastructure based on application programming interfaces ( ), with new customer flows and added value services. The ‘new iDEAL’ will be completed in 2021. Besides end customers in the Netherlands, many foreign merchants will also benefit from this, as many Dutch consumers pay for their purchases with iDEAL on foreign websites. And non-Dutch issuing will be able to connect to iDEAL much more easily. Nearly ninety percent of all iDEAL payments are made by mobile phone. In addition to these developments, it is very important to limit fraud in the payment system as much as possible. Here, too, cooperation pays off. Together, we have succeeded in making good progress in limiting, for example, ‘spoofing’ and other types of fraud scams.

Finally, on a more personal note, what is your single best memory of and/or key lesson from your long career in payments?

Before I ended up in payments, I worked as a macro-economic policy researcher and advisor at the Dutch Central Bank. There, I was very close to politics and the work was challenging. However, it only led to indirect results. The payments sector is completely different. When you carry out a project at the Dutch Payments Association or with iDEAL, you see their effects immediately and directly reflected in the market. That is fascinating and, at the same time, it gives you a great responsibility and requires you to be extremely careful. After all, a wrong assessment can have major consequences for market participants and end-users. That is why proper consultation with stakeholders in the payment system is so important.

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