1. De Nederlandsche Bank Eurosysteem De Nederlandsche Bank Payment research and statistics and the involvement of stakeholders Thijs Kettenis Third Macedonian Conference on Payment and Securities Settlement Systems Ohrid, 29 June 2010

2. De Nederlandsche Bank Eurosysteem Agenda  Objectives of payments research  Wholesale payments research General overview  Retail payments research General overview Dutch Payments Reporting Model  Involvement of stakeholders Why involve stakeholders? National Forum on the Payment System Results

3. De Nederlandsche Bank Eurosysteem Introduction (1) Mission of DNB Payments Division:  being a strong and influential central bank which promotes the efficiency, safety and accessibility of the Dutch payment system One of the ingredients = Payments Research  To support our policy and visions  DNB as a Knowledge Institution

4. De Nederlandsche Bank Eurosysteem Introduction (2) Objectives of payments research:  Monitoring and understanding developments  Analysing consequences of policy alternatives  Retail and wholesale payments

5. De Nederlandsche Bank Eurosysteem Introduction (3) Outlets  DNB policy notes  DNB Working Paper Series  DNB Occasional Studies Series  DNB Quarterly Bulletin  DNB Annual Report  DNB Statistical Bulletin  National and international journals  Presentations at national and international conferences

6. De Nederlandsche Bank Eurosysteem Agenda  Objectives of payments research  Wholesale payments research General overview  Retail payments research General overview Dutch Payments Reporting Model  Involvement of stakeholders Why involve stakeholders? National Forum on the Payment System Results

7. De Nederlandsche Bank Eurosysteem Wholesale payments research (1) Objectives  To monitor and understand interbank payment behaviour  To gain an insight into the possible consequences of payment incidents  Finding ways to detect payment stress ahead of time Types of research  data analyses  network topology  scenario analyses  experiments

8. De Nederlandsche Bank Eurosysteem Wholesale payments research (2) Data sources  TARGET2 transaction records  Behavioural experiments Close cooperation with:  Other DNB divisions  University of Amsterdam

9. De Nederlandsche Bank Eurosysteem Wholesale payments research (3) Issues of interest:  How to detect stress in the interbank market  Behaviour of banks in stress situations  The impact of individual bank failures on the overall payment system  The current network of financial institutions and its evolvement over time

10. De Nederlandsche Bank Eurosysteem References Heijmans, R. (2009), Simulations in the Dutch interbank payment system: sensititivity analysis, DNB Working Paper, No. 199, De Nederlandsche Bank NV, January 2009 Heijmans, R. and R. Bosman (forthcoming), Disruptions in large value payment systems: An experimental approach, DNB Working Paper in progress Ledrut, E. (2007), Simulating retaliation in payment systems: Can banks control their exposure to a failing participant?, DNB Working Paper, No. 133, De Nederlandsche Bank NV, March 2007 Pröpper, M., I. van Lelyveld and R. Heijmans (2008),Towards a network description of interbank payment flows, DNB Working Paper, No. 177, De Nederlandsche Bank NV, May 2008

11. De Nederlandsche Bank Eurosysteem Agenda  Objectives of payments research  Wholesale payments research General overview  Retail payments research General overview Dutch Payments Reporting Model Measuring the number of cash payments  Involvement of stakeholders Why involve stakeholders? National Forum on the Payment System Results

12. De Nederlandsche Bank Eurosysteem Retail payments research (1) Objectives  To monitor and understand payment behaviour of consumers, retailers and banks  To anticipate future developments  To analyse consequences of possible measures Overview Preview

13. De Nederlandsche Bank Eurosysteem Retail payments research (2) Issues of interest:  Costs and benefits of payment instruments  Perception and usage of payment instruments  Focus on different consumer groups  Acceptance of payment instruments by retailers  Impact of safety and security  The impact of surcharging  SEPA: Consumers’ desires and expected costs and benefits  SEPA: readiness of corporates and retailers  Competition and price-making forces  The role of non-banks  Authenticity and appearance of banknotes

14. De Nederlandsche Bank Eurosysteem Retail payments research (3) Data sources  Consumer, retailer and bank surveys Online, telephone and face-to-face questionnaires University of Tilburg (DNB Household Panel) Research agencies National Forum on the Payment System  Statistics supplied by banks, processors, creditcard companies and debitcard scheme owner Dutch Payments Reporting Model

15. De Nederlandsche Bank Eurosysteem Dutch Payments Reporting Model (1)  DNB is trusted party  8 major banks report quarterly on line to statistical department DNB  Not mandatory  Structured quality control  Strict deadlines & reminder procedures  Output: controlled individual data accumulated total data for all banks (leveled up for whole sector)

16. De Nederlandsche Bank Eurosysteem Dutch Payments Reporting Model (2)  Collected Data: Credit transfers Direct debits Debit & credit cards Accounts Infrastructure  Differentiated: Users: consumers & businesses Domestic & cross border Volume & value Choice of channel

17. De Nederlandsche Bank Eurosysteem 20052006200720082009 Q1Q2Q3Q4 Numbers of transactions in thousands Domestic payments Remote payments2,307,9442,489,4772,578,4772,683,6682,749,463676,036694,781674,911703,736 Transfers922,9071,027,1501,067,0571,115,3031,129,674279,718288,557273,568287,831 of which paper-based74,80463,00953,49347,98343,08412,10810,7409,64610,590 Standing orders88,062103,894104,536104,654104,45225,90126,18826,16526,198 Express transfers6,9526,6196,3256,2535,1701,3381,3111,2661,255 of which paper-based2,0161,7491,3451,227893248228211206 Inpayments transfers230,538208,227208,746203,954194,25951,78449,89544,68547,895 Direct debits1,059,3481,139,0611,176,9441,225,5411,272,131308,080318,695318,135327,221 Digital invoices New media payments1374,51414,81127,86543,5759,17910,09211,04013,264 POS payments1,509,1391,646,2301,796,4371,968,4062,157,049495,222546,482532,481582,863 Debit cards1,333,5581,451,2791,588,4951,756,1191,946,071441,521494,905484,656524,989 Cards with an e-money function146,925164,386174,834176,122177,04745,78043,17439,91048,182 Credit cards I 28,65630,56533,10836,16533,9317,9218,4037,9159,692 Total domestic payments3,817,0834,135,7074,374,9144,652,0744,906,5121,171,2581,241,2631,207,3921,286,599 of which paper-based (=1.1.1+1.3.1+1.4)307,358272,985263,584253,164238,23664,14060,86354,54258,691 Cash transactions524,762527,908519,950521,231499,947119,220129,999126,867123,861 ATM cash withdrawals473,075480,158474,914478,389460,043109,291119,816116,812114,124 OTC withdrawals15,97614,28313,30911,9089,8422,5372,7122,3952,198 Deposits35,71133,46731,72730,93430,0627,3927,4717,6607,539 Cross-border payments Remote payments12,82514,34716,57018,35215,4703,7473,6554,3663,702 Credit transfers12,69514,23116,46618,25215,3933,7263,6354,3473,685 of which paper-based1,12775059751241710295107112 Cheques86745539258764 Other444249615213 POS payments62,68567,10673,45381,82187,71215,77219,42431,49621,022 Debit cards11,60514,43918,03923,75032,0434,8266,36412,0048,850 Credit cards I 51,08052,66755,41458,07155,66910,94613,06019,49212,172 Total cross-border payments (4+5)75,51081,45390,023100,173103,18219,51923,07935,86224,724 of which paper-based (4.1.1+4.2+4.3)1,257866701612494123115126129 Cash transactions30,63431,04234,00939,10840,0687,6319,10515,6707,662 ATM cash withdrawals I 30,63431,04234,00939,10840,0687,6319,10515,6707,662 Numbers at the end of period Infrastructure domestic payments Bank offices3,3413,3563,5043,4213,1373,3803,2863,2543,137 ATMs7,4468,1148,5468,6548,5068,642 8,5368,506 Other cash points849798824818802798 Cash deposit machines1,7731,9602,0372,1782,3202,2642,2852,3012,320 E-moneycard loading terminals4,0544,1544,1924,1874,1344,2134,2074,1584,134 Payments terminals252,224265,779306,264316,182340,160326,391331,651325,361340,160 Current accounts23,573,53823,473,26723,746,05823,824,73524,042,53723,531,20723,694,53123,620,61224,042,537 Bank cards5,465,1335,128,7743,053,6242,717,6142,148,9522,426,9442,360,3502,283,0732,148,952 Euro cards19,939,69720,350,92522,275,09522,493,79722,241,99025,405,20725,710,57325,930,03322,241,990 Cards with an e-money function17,532,89118,203,47918,132,11018,249,65624,065,51718,212,32017,369,49317,550,26824,065,517 Credit cards I 6,048,1046,240,7766,027,0845,722,3935,808,2385,719,2305,747,9675,766,8935,808,238

18. De Nederlandsche Bank Eurosysteem Dutch Payments Reporting Model (4)  International contributions: ECB EU Wholesale & retail payments & settlement systems 15 tables Country data Comparative data Statistical Data Warehouse

19. De Nederlandsche Bank Eurosysteem Dutch Payments Reporting Model (5)  International contributions: BIS 13 developed countries (incl. US & Japan) Euro area Wholesale & retail payments, settlement data 11 tables Country data Comparative data

20. De Nederlandsche Bank Eurosysteem References (1) Bolt, W., D. Humphrey and R. Uittenbogaard (2008), Transaction pricing and the adoption of electronic payments: a cross-country comparison, International Journal of Central Banking, March 2008 Bolt, W., and S. Chakravorti (2008), Consumer choice and merchant acceptance of payment media, DNB Working Paper, no. 197, De Nederlandsche Bank NV, December 2008 Bolt, W., N. Jonker and C. van Renselaar (2009), Incentives at the counter: An empirical analysis of surcharging card payments and payment behaviour in the Netherlands, DNB Working Paper, no. 196, De Nederlandsche Bank NV, December 2009 Bolt, W. and H. Schmiedel (forthcoming) SEPA, Welfare and Payment Competition, ECB Working Paper in progress Brits, J.H. and C.C.A. Winder (2005), Payments are no free lunch, DNB Occasional Studies, vol. 3/no. 2, De Nederlandsche Bank NV, Amsterdam. EIM (2007), Het toonbankbetalingsverkeer in Nederland: kosten en opbrengsten van toonbankinstellingen in kaart gebracht, Zoetermeer Heij, de H. (2009), Banknote Design for the Visually Impaired, DNB Occasional Studies, vol. 6, no. 2, De Nederlandsche Bank NV, Amsterdam Heij, de H. (2007), Public Feedback for better Banknote Design, DNB Occasional Studies, vol. 5, no. 2, De Nederlandsche Bank NV, Amsterdam

21. De Nederlandsche Bank Eurosysteem References (2) Jonker, N., B. Scholten, M. Wind, M. van Emmerik, M. van der Hoeven (2006), Counterfeit or genuine: can you tell the difference?, DNB Working Paper, No.121, De Nederlandsche Bank NV, December 2006, Jonker, N. (2007), Payment instruments as perceived by consumers – a public survey, vol. 155, issue 3, pages 271-303 Jonker, N. and T. Kettenis (2007), Explaining cash usage in the Netherlands: the effect of electronic payment instruments, DNB Working Paper, no. 136, De Nederlandsche Bank, March. Jonker, N. and A. Kosse (2008), Towards a European payments market: survey results on cross-border payment behaviour of Dutch consumers, DNB Occasional Studies, Vol. 6, no. 1, Amsterdam. Jonker, N. and A. Kosse (2009), The impact of survey design on research outcomes: a case study of seven pilots measuring cash usage in the Netherlands, DNB Working Paper, no. 221, De Nederlandsche Bank, August 2009 McKinsey & Company (2006), Payment services in the Netherlands, an analysis of revenues and costs for banks, Amsterdam. ECB-DNB (2009), Retail Payments – Integration and Innovation, Conference proceedings of the joint conference organised by the ECB and DNB on 25-26 May 2009

22. De Nederlandsche Bank Eurosysteem Agenda  Objectives of payments research  Wholesale payments research General overview  Retail payments research General overview Dutch Payments Reporting Model  Involvement of stakeholders Why involve stakeholders? National Forum on the Payment System Results

23. De Nederlandsche Bank Eurosysteem What is benefit of stakeholders sitting around the table? A lot of market parties and financial authorities are involved in the national payment system Benefit for market parties For users: better knowledge of developments and possibilities; possibility to jointly express wishes and concerns For banks: better knowledge and understanding of wishes, needs, possibilities and developments; possibility to explain developments Benefit for central bank Not all needs are catered for in purely commercial context  Need for cooperation! Role for central bank

24. De Nederlandsche Bank Eurosysteem The National Forum on the Payment System Objective: contributing to an efficient organisation of the Dutch retail payment system from a social point of view Issues regarding:  Accessibility  Efficiency  Security  Technological developments

25. De Nederlandsche Bank Eurosysteem Mission and objectives Making principle agreements about efficiency measures and measures with respect to the security, availability and accessibility of payment services, and standardisation (e.g. joint measures to stimulate the use of efficient payment products). Open and free exchange of ideas about policy issues in the area of payment services. Holding periodic consultations on the bottlenecks and social consequences of developments in the payment system. Co-operating on the compilation, analysis and publication of numerical, non-competitive data.

26. De Nederlandsche Bank Eurosysteem Composition Chaired by DNB. Broadly composed of institutions representing providers and users of payment services. DNB also performs the secretariat function. The Forum meets twice a year.

27. De Nederlandsche Bank Eurosysteem Criteria for acceptance Organisations need to: Act on behalf of users or providers of payment services that represent the interests of a specific group Be representative Make a professional contribution to realisation of a socially efficient payment system

28. De Nederlandsche Bank Eurosysteem Participants Netherlands Bankers’ Association Council of Dutch Retail Businesses Netherlands Association of Small and Medium-sized Enterprises User Platform for the Payment System Dutch Association of Catering Establishments Dutch Home Shopping Organisation Netherlands Petroleum Industry Association The National Consumers Organisation Senior citizens’ association Dutch Council of the Chronically Ill and the Disabled Dutch Organisation of Blind and Partially Sighted People Observers: Ministry of Finance Ministry of Economic Affairs Currence

29. De Nederlandsche Bank Eurosysteem Working groups The Working Group on Availability and Accessibility:  How to safeguard and improve the physical availability and accessibility of payment services for consumers and entrepreneurs. The Working Group on Social Efficiency:  How can social efficiency in the payment system be improved  Cost structures and the effectiveness of incentives for efficient payment behaviour in the light of technological and social developments

30. De Nederlandsche Bank Eurosysteem Working groups The Working Group on Security:  How to safeguard the security of the payment system, partly with a view to enhancement of social efficiency. Its operations encompasses both personal security and the security of payment products. The Consultation Group on SEPA:  To monitor and improve the process of the realization of a uniform European payments area, and to develop a national change-over and communication plan for SEPA

31. De Nederlandsche Bank Eurosysteem Results of the National Forum Rounding-off to nearest 5 cents Solutions for bottlenecks regarding SEPA migration Agreement on speeding up EMV migration Monitoring reports on availability of banking services Guideline for user-friendly EFTPOS terminals Research Joint information brochures

32. De Nederlandsche Bank Eurosysteem Questions?