VLEUTEN, THE NETHERLANDS | iDEAL, the online payment method using online banking, is by far the preferred payment method in the Netherlands. iDEAL numbers have grown with 20-30% year-over-year. 2012 again will be a record year: for the first time over 10 million iDEAL payments in one month (October), and over 100 million transactions in one year. The total number of iDEAL transactions for 2012 will probably be around 117 million.
The success of iDEAL is mainly due to the simple and secure way of transacting online for both consumers and merchants. There is no chargeback mechanism in place, contrary to credit card acceptance, so payments are guaranteed. Processing costs are fairly low in comparison to other online payment options and they are fixed (35-70 eurocents). In other words, it is a payment method that merchants can count on. Consumers feel confident using their familiar home banking and not having to share sensitive card data.
iDEAL was perceived to be a pre-delivery online payment method only, however, 2012 has shown that more and more products have been paid for after receipt of the goods. So iDEAL is expanding its footprint in both payment areas. Pay-After-Delivery (PAD) methods like Klarna and AfterPay use iDEAL as one of their methods to complete the transaction and contribute to its growth.
Despite the tremendous growth there also remain some severe challenges for iDEAL to stay on top: it still lacks readiness for smartphone or (less prevalent) tablet use, there is no recurring functionality and still suffers from outages of the service. Only the ING Bank currently supports a customized iDEAL checkout for mobile and tab and it is unclear when the other Dutch Banks like Rabobank and ABN AMRO will follow. iDEAL is a one-time-payment and needs consumer authentication for every payment, which means it is not yet prepared for one-click-checkouts or automated re-billings.
During the important retail holiday season with 'Sinterklaas' and Christmas again some banks had problems with their iDEAL availability. Consumers weren't able to complete their purchases, merchants missed out on sales. As the eCommerce sector is heavily growing in the Netherlands and is still gaining importance in the retail landscape | around 10 billion euro in 2012 is through eCommerce | the pressure on banks and even politics is growing. The need for a stabile and robust iDEAL payment platform has never been so evident.
Via the website iDEAL-status.nl everyone is able to see real-time and historic data on the availability of the iDEAL service per bank. This initiative is taken by some professionals in the payment and eCommerce industry. Their aim is to provide insight and clarity on service interruptions and try to improve the payment product iDEAL.
iDEAL adapted for cross-border euro payments
iDEAL also needs to adopt to new standards as Europe is moving towards a Single Euro Payments Area (SEPA), which will soon allow us to pay anywhere in this area with the same set of payment instruments. SEPA comprises all EU countries, including Norway, Iceland and Liechtenstein (which are members of the European Economic Area), Switzerland and Monaco.
One of goals of SEPA is to achieve that euro payments are executed in the same manner everywhere (account numbers, payment instruments). The SEPA Credit Transfer and the SEPA Direct Debit will soon be used for domestic as well as cross-border euro payments. iDEAL is a payment standard that is currently based on the Dutch domestic transfer. The iDEAL payment standard has been adapted so that it can also be used shortly for both domestic and cross-border euro payments.
Read more about the changes to the iDEAL payment standard and find out what you need to do to have iDEAL ready on time. Click here.