VLEUTEN | iDEAL gains more momentum and shows exceptionally strong growth in the first months of 2014. In May, iDEAL grew with 31% compared to the same month last year. The month of May outperformed last December, traditionally the best performing month for this popular Dutch online and mobile payment method, by exceeding 15 million iDEAL transactions.
iDEAL's impressive performance
The first 5 months in 2014 resulted in a total of 69 million iDEAL payments, plus 26% compared to the same period last year. Last year's growth percentage was slightly less with 21.6%. So it seems that iDEAL is not only performing better than ever in numbers, it also seems iDEAL is breaking with the trend of years of declining growth percentages. An impressive performance from this Dutch home-grown online payment method.
Update 25 July 2014: In the first 6 months of 2014 there were 82.279.800 iDEAL transactions processed (source: Currence).
iDEAL's cross-border success
iDEAL's success could be attributed to its cross-border expansion and the fact that more and more webshops from abroad allow their Dutch online shoppers to pay with iDEAL. Currence, owner of the iDEAL brand, has stated that the number of foreign payment institutions offering iDEAL to foreign webshops increased considerably in 2013. In Belgium, for example, iDEAL is accepted as a payment option more than half of all webshops. Currence states that over 100,000 webshops and other organisations offer iDEAL. One fifth of all iDEAL payments are assumed to originate from webshops and online businesses based outside of the Netherlands.
Based upon Currence's website, there are now 47 so-called Collecting Payments Service Providers (CPSPs) that have the license to process and settle iDEAL payments, including international players like Worldpay, Digital River, DataCash, WireCard, Adyen and Ingenico Payment Services (via its subsidiary Tunz.com). It is most likely that international retailers and online businesses, processing via these regional or global payment providers, have appetite for the mature ecommerce market in the Netherlands. These cross-border merchants understand they need this preferred local payment method to be successful. Last year, the Dutch ecommerce market sized 10.6 billion euro (+8.5% versus 2012) and growth for 2014 is expected between 9-10% (sourced from Thuiswinkel Market Monitor 2013).
iDEAL: more than just an ecommerce payment method
iDEAL started of as an 'ecommerce payment method' - using simplified, online bank transfers as payment mechanism - to answer to the Dutch merchants' community demand for having a swift and secure online payment method. It is quite noticeable how important iDEAL actually has been for ecommerce growth in the Netherlands. The fact that iDEAL provides guaranteed payments to merchants, has fixed costs and settles normally within one business day, has really been extremely important for its success in terms of acceptance. And still is.
Now with more and more 'non-retailers' seeking to simplify online payments for any kind of services, it seems logical that the number of iDEAL payments will increase with greater speed. Over 8 million consumers in the Netherlands have access to online banking and are able to pay with iDEAL. They are more and more used to pay with iDEAL for insurance or utility bills, membership subscriptions, donations to charities, paying taxes and even traffic bills.
'iDEAL Mobiel' further boosts ecommerce sales
Another important driver for iDEAL's growth is the breakthrough for mobile checkouts. Last year, two major Dutch banks simplified the iDEAL checkout on mobile devices, called 'iDEAL Mobiel'. Both the Rabobank and ING Bank updated their banking app to allow for easy checkout on smartphones and tablets using the mobile version of iDEAL.
Rabobank now reports that for the month of May around 12% of their iDEAL transactions originated on a mobile device, and every month this percentage seems to increase with nearly 1%. Quite substantial volumes taken into consideration that the bank launched its improved iDEAL checkout only eight months ago. It also underlines the growth and importance of mobile commerce in the Dutch online market. In 2013 already 1.3 billion euro ecommerce sales was generated via mobile devices (13% of the total ecommerce turnover in the Netherlands). Tablet commerce takes the larger share and is estimated to generate around 70% of all mobile commerce sales.
iDEAL outlook for 2014
There is room for additional growth in new segments and markets, the Dutch economy slightly improves, and new payment related initiatives like MyOrder adopting iDEAL as a payment method (for (re)charging the virtual wallet) are nation-wide introduced. It is also expected that ABN AMRO Bank will enhance its mobile banking app to support 'Mobiel iDEAL' which will definitely positively influence the uptake. Therefore About-Payments roughly estimates the growth between 28-30% for the whole of 2014 (around 184 million transactions).
iDEAL Payment Method Profile
iDEAL is an online payment method using real-time online bank transfers to complete online and mobile purchases. iDEAL's success is due to the fact that it is perceived as a secure online payment method by both customer and merchants in The Netherlands. As a key driver for the usage of iDEAL, over 8 million Dutch people have online banking capability (Eurostats). There is no chargeback mechanism and merchants benefit from payment guarantee. 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. All major Dutch banks support iDeal from both issuing and acquiring side. The acquiring licensees include ABN AMRO Bank, Rabobank, ING Bank, Friesland Bank (=Rabobank), Deutsche Bank and The Royal Bank of Scotland. More information on the preferred online payment methods in the Netherlands.
Article by Erik van den Heuvel, About-Payments, June 25th, 2014. Updated: 25 July 2014