Netherlands

ACI’s Take

The Netherlands is a nation that strongly favors debit payments over credit. That means immediate debit schemes play well to consumers generally, which has helped real-time payments to become well established in the market. Nowhere is this better illustrated than in the eCommerce space, where the iDEAL payments scheme was used for 70% of payments in the first half of 2021 and was used by 96% of online shoppers. But, more broadly, real-time payments for P2P transactions have been in widespread use for two years already and the corporate market is also showing strong growth, although additional use cases are required to make further inroads.

Chief among those use cases would be real-time batch payments. This would immediately make real-time payments more relevant to businesses and provide a high-value revenue stream for banks that would also — potentially — set them on the longer-term path to retiring significant legacy architectures.

the Netherlands has less to gain by modernizing its payments infrastructure (whereas markets that are only just standing up real-time payments also have the opportunity to launch with a broader range of use cases from day one). In the Netherlands today, real-time payments are settled in their place in the payments ecosystem, meaning there’s little appetite to implement new services like Request to Pay. That is a reasonable decision given current market conditions, but banks should be mindful of the risks around imported innovations from international competitors or the emergence of new market entrants. (PSD2 not only makes the latter more likely, but it also gives rise to opportunities for banks to build their own premium services.)

Finally, financial institutions in the Netherlands are pioneers of payment processing in the cloud. The market’s leading banks are sold on the vision of winding down much of their own data center commitments to increase efficiency and scalability, and transition much of their IT cost base to an operational expense. To that end, we see these organizations making concrete steps to migrate payment processing to the cloud by the end of 2022. This will be the first step on a wider transformation journey towards adopting payment processing as a service.