One of the most popular alternative payment methods, iDEAL in The Netherlands, again shows strong growth for the first half of 2015. For the first time since its launch back in 2005, the number of iDEAL payments exceeded 100 million transactions in 6 months time. Compared to the same period last year, the iDEAL volume increased with over 23%.
Simplified online bank transfer
iDEAL - basically an enhanced online bank transfer - allows Dutch consumers to use their trusted home banking to transfer money to online retailers and businesses. Upon checkout the customer selects the iDEAL payment brand from the merchant's payment page and confirms payment within their home banking application (payment and beneficiary data is already pre-filled). iDEAL payments are all SEPA credit transfers - initiated by the consumer - which makes it irreversible and a guaranteed payment method to merchants.
With one of the highest home banking adoption rates in the world and wide merchant acceptance, iDEAL has really flourished the last couple of years. Back in 2011, the number of iDEAL payments reached almost 94 million transactions for the whole year with on average 7.8 million transactions per month. For the first six month of 2015, the average number of transactions is around 17.3 million. (for more background on iDEAL's succes, please read our article 'iDEAL's biggest driver').
eCommerce Payment Monitor
According to the most recent eCommerce Payment Monitor (April 2015, Dutch version only), which gathers information on online payment methods in the Netherlands, 54% of all ecommerce purchases in the Netherlands are paid for using iDEAL. The research is conducted by GfK in cooperation with the Dutch Payments Association (owner of the iDEAL brand) and Thuiswinkel.org (the Dutch home shopping association).
iDEAL is followed by creditcards (11% marketshare), 'Machtiging' (direct debit, 7%) and 'Acceptgiro' (credit transfer initiated by (online) payment slip, 6%). The remaining 23% is made up by regular bank transfers, PayPal, Maestro (PIN), Gift cards, cash-on delivery and other types of payment.
iDEAL gains marketshare in mobile
According to the same research, around 80% of all e-commerce purchases in the Netherlands are conducted on desktop or laptop. 59% of these e-commerce transactions are performed with iDEAL (9% on creditcards). Tablet and smartphone combined make up for 19% of all e-commerce transactions (14% on tablet, 5% on smartphone). Almost 96% of all tablet purchases are conducted at home.
iDEAL's marketshare on smartphone rose from 25% to 31% comparing the first and second half of 2014. iDEAL took over first place from credit cards and seems positioned to grow its marketshare further. All major Dutch banks - including ING Bank, Rabobank and ABN AMRO - now support for iDEAL payments through their banking app. By using the banks' app, and up to certain limits, consumers are allowed to pay for goods and services without the need for additional authentication (e.g. tokens, codes or card readers).
iDEAL Payments Outlook 2015
Given the average growth rate of 23.3% for the first half of 2015, it is expected that by the end of 2015 over 223 million iDEAL payments will have been processed. It is likely that iDEAL's marketshare on mobile will further increase given the fact that competitive checkout methods, like MasterPass (by MasterCard) and V.me by Visa have not yet found their way into the Dutch market.
Online Payment Method iDEAL
iDEAL is an online payment method using simplified, real-time online bank transfers (SEPA Credit Transfers) to complete for online and mobile purchases. As a key driver for the usage of iDEAL, over 10 million Dutch people have online banking capability.
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 (20-70 eurocent). Consumers feel confident using their familiar home banking and not having to share sensitive card data. Merchants benefit from instant payment confirmation, swift settlement (normally +1 or 2 days) and fixed fees, regardless the transaction amount.
Article by Erik van den Heuvel, About-Payments, July 13th, 2015