Towards a European payments market

1. Towards a European payments market Survey results on cross-border payment behaviour of Dutch consumers Nicole Jonker and Anneke Kosse De Nederlandsche Bank Prague, 21 October 2008 The views expressed in this presentation are the presenters’ and do not necessarily reflect those of DNB

2. Outline • Research questions • Questionnaire • Results: • CBRP made in other euro countries • CBRP made towards other euro countries • SEPA: consumers’ desires and expected behaviour • Conclusions

3. Research questions • How do consumers pay when being abroad and when transferring money abroad? • What are the current obstacles with respect to cross-border retail payments? • What do consumers desire? • To what extent will SEPA benefit consumers?

4. Questionnaire DNB Household panel 1407 respondents in February 2007 (response rate 84%) • Cross-border retail payments (CBRP) made in other euro countries • Cross-border retail payments (CBRP) made towards other euro countries • SEPA: consumers’ desires and expected behaviour

5. CBRP made in other euro countries (1) Which means of payment do you possess? • Dutch debit card - For national use only 14% - For national and cross-border use 94% • Foreign euro bank account 3% - Foreign euro debit card 2% • Creditcard 55%

6. CBRP made in other euro countries (2) Travelling behaviour in 2006 • Frequency - 75% of the respondents visited another euro country - Of which 18% more than 5 times • Countries - Most visited: Germany, Belgium, France and Spain - Least visited: Portugal, Luxembourg, Ireland, Finland • Main reasons - Holidays (78%) - Shopping (20%) - A day out (17%)

7. CBRP made in other euro countries (3) How did Dutch consumers pay at … ?

8. CBRP made in other euro countries (4) General cross-border payment behaviour Dutch consumers more often use cash and their creditcard when abroad, whereas at home the debit card is more often used. Payment behaviour per country • Belgium, Germany and Luxembourg: high cash and debit card usage • France, Italy and Spain: high credit card use • Greece: mainly cash

9. CBRP made in other euro countries (5) Reasons of payment choice

10. CBRP made in other euro countries (6) Dissatisfaction by perception factor and payment instrument

11. CBRP made towards other euro countries (1) Cross-border transfer behaviour in 2006 26% of the respondents made a CBRP in 2006 Countries: • Germany (52%) • Belgium (22%) • France (11%) • Austria (6%) Main reasons: • Online purchases (42%) • Booking a holiday (26%) • Product purchases (23%)

12. CBRP made towards other euro countries (2)

13. CBRP made towards other euro countries (3) General payment behaviour • Most cross-border transfers are made via electronic transfers, followed by the creditcard • People hold and use foreign euro bank accounts for specific transactions only

14. CBRP made towards other euro countries (4) Reasons of payment choice

15. CBRP made towards other euro countries (5) Dissatisfaction by payment instrument and perception factor

16. SEPA: consumers’ desires and expected behaviour (1) Opening a foreign euro bank account Top 3 reasons: • higher interest rate on savings • long stay in another euro country • interest rate on current account balance

17. SEPA: consumers’ desires and expected behaviour (2) Switching over from the Dutch PIN debit card to a European debit card Top 3 reasons: • Lower cardholder fees • Higher cross-border acceptance • Less fraud

18. SEPA: consumers’ desires and expected behaviour (3) Switching over from Dutch credit transfers to SEPA credit transfers Top 3 reasons: • if Dutch credit transfers are no longer offered by banks • no additional payment fees • lower annual bank fees

19. SEPA: consumers’ desires and expected behaviour (4) Switching over from Dutch direct debits to SEPA direct debits Top 3 reasons: • if Dutch direct debits are no longer offered by banks • Easy reversal of incorrect direct debits • if incorrect direct debits are no longer possible

20. SEPA: consumers’ desires and expected behaviour (5) 1/3 of the respondents would not switch to SEPA payment instruments voluntarily What type of consumers are most likely nót to switch to SEPA payment instruments voluntarily? • Women > men • Elderly > young • Lower > higher income and education • People who seldom make cross-border visits or transfers

21. Conclusions (1) • Dutch consumers more often make payments in than to other euro countries • Cross-border payment behaviour differs from payment behaviour in NL (more cash and more creditcard) • Payment behaviour and appreciation depends on the country visited and on the payment situation • In general, Dutch consumers are satisfied with cross-border POS payments... • … but most dissatisfaction is related to cross-border debit card acceptance

22. Conclusions (2) • Remote cross-border payments are often made via Internet banking, followed by the credit card • In general, Dutch consumers are satisfied with all remote payment instruments… • … but most satisfied with electronic transfers and creditcards • … and least satisfied with paper credit transfers

23. Conclusions (3) • Dutch consumers would consider opening a foreign euro bank account in case of higher interest rates • Dutch consumers see advantages of a SEPA debit card in terms of increased cross-border acceptance. Pricing and safety however are crucial migration issues as well. • Safety and prices are key issues for a quick migration to SEPA direct debits and SEPA credit transfers

24. Questions?