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About Payment Method iDEAL, 222M transactions and Bunq.

In 2015, over 222 million iDEAL payments were processed, an increase of 23,2% compared to 2014. It is the first time that iDEAL exceeds the 200M milestone in annual transaction volume since the payment method was launched back in 2005.

iDEAL continues to strengthen its position regardless channel or consumer device. They now also have teamed with Bunq, a promising fintech start-up based in the Netherlands, and will enter the physical space with QR codes.

Records

In November and December of last year, holiday season in the Netherlands, the Dutch online payment method exceeded the 20 million transactions per month. On December 21, the Monday before Christmas, iDEAL surpassed 1 million transactions in one day (+55% in comparison to an average Monday).

It is estimated that the 1.075 million transactions accounted for 80 million in turnover, an average transaction amount of 74 euro. Based upon the average spend per payment, the total iDEAL turnover is estimated around 16.5 billion euro (~17.8 billion US Dollar). 


iDEAL Marketshare

Based upon the latest eCommerce Payment Monitor (October 2015), iDEAL increased its marketshare to 56% for the first half of 2015. In the same period last year, the payment method accounted for a 54% marketshare. The eCommerce Payment Monitor researches the use of payment methods for e-commerce purchases and is conducted by GfK in collaboration with iDEAL and Thuiswinkel.org (the home shopping association in the Netherlands).

The growth is due to the fact that more purchases initiated on mobile devices are paid for using iDEAL. In the first half of 2015, 35% of all purchases through smartphones were completed with IDEAL, compared to 25% in the first half of 2014. Also the number of payments through tablets increased: more than half of the transactions originating on tablets are paid for using iDEAL (versus 46% in 2014). 

Credit cards come second

After iDEAL, credit cards (MasterCard and Visa) are mostly used to pay for goods or services online. Its marketshare stabilises on 12%. AfterPay, the eInvoicing payment method which allows consumers to pay after delivery (also by using iDEAL!), increased its marketshare a little bit, similar to PayPal. Both have grown their marketshare with 1% (AfterPay 2%, PayPal 5%).

Important to recognize is that last year PayPal has also enabled its Dutch wallet users to top up their PayPal account by using iDEAL. Other payment methods like the eInvoicing methods Klarna and Billink also offer iDEAL as a means to pay for their invoice.

'iDEAL Mobiel' one of the drivers 

Last year, ABN AMRO Bank joined the other two leading consumer banks in the Netherlands, Rabobank and ING Bank, to enrich its iOS and Android banking app to support for mobile iDEAL checkouts. Rabobank and ING Bank already launched their iDEAL supporting bank app back in 2013. The three banks combined serve the vast majority of the Dutch consumers. 

iDEAL Mobiel allows shoppers to purchase goods on smartphone or tablets, checkout with iDEAL and directly pay the amount through the banking app without the need for extra authentication (e.g. tokens, codes or card readers) up to certain amount limits. This hugely improves the checkout experience and causes less abandonment 'on the go' or in a situation where the shopper does not have its code-generator (cap-reader) at hand. 

iDEAL adopted by new partners

Besides the organic increase through existing partnerships and channels, iDEAL is being embraced by new partners and payment initiatives. Besides PayPal, also payment solution Trustly and payment service provider Checkout.com teamed up with iDEAL in 2015 to join the 17 foreign Collecting Payment Service Providers (CPSPs) for iDEAL. In total there are 54 iDEAL Collecting Payment Service Providers. Payment processor PPRO became the first non-bank iDEAL acquirer to offer offering both acceptance and processing.

iDEAL and QR codes

Just before the end of 2015, it was announced that iDEAL will step into new channels by facilitating iDEAL payments through the use of QR codes. Mid 2016 the first merchants and businesses will start to use QR codes linking to an iDEAL payment. The QR code will redirect the smartphone user to its banking app to complete payment. Thereby iDEAL sets foot in the more face-to-face type of payment environments.

Offering iDEAL payment through QR codes could be beneficial for collectors of donations (who go from door to door), door-to-door sales companies, but also (small) retailers, and market vendors (QR codes could be printed on receipts).

iDEAL and Bunq

One collaboration to mention in particular and one to watch is the team up between iDEAL and Bunq. Bunq is a new Dutch bank independent IT start-up with a banking license. Bunq offers a simple app with all the tools to manage money: you can simply request a payment from a friend (as easy as using whatsapp by using an email address or phone number), split a bill between friends, attach photos to payments and instantly create new (joint) savings accounts for a particular goal. 

Recently Bunq was added to the list of issuing banks which the shopper can select upon checking out with iDEAL. Below you can see screenshots of the iDEAL checkout using Bunq. From experience, the checkout process is seamless. Upon selecting Bunq, a QR code is generated on your desktop which can be scanned by the in-app QR scanner (requires that the app is unlocked). You only have to press the positive confirmation check to confirm payment. 


iDEAL outlook 2016

Despite the fact that iDEAL growth slowed down a little bit - from 26,4% in 2014 to 23,2% in 2015 - it is expected that it will keep up its pace. By entering the physical world with QR codes, promising collaborations with new payment and fintech solutions, iDEAL will head for a steady and again substantial growth in 2016. Most probably breaching the 250M transactions in one year.


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About Online Payment Method iDEAL

iDEAL - basically an enhanced online bank transfer - allows Dutch consumers to use their trusted home banking to transfer money to online retailers and businesses (at no cost for the consumer). 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 (no chargeback mechanism). 

Processing costs are fairly low in comparison to other online payment options and they are fixed (20-60 eurocent). Consumers feel confident using their familiar home banking and not having to share sensitive card data. Merchants benefit from instant payment confirmation, swift and guaranteed settlement (normally +1 or 2 days) and fixed fees, regardless the transaction amount.

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Article by Erik van den Heuvel, About-Payments, 22 January 2016

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