Results from the NFPS meeting of 17 November 2020

COVID-19 has affected consumers' payment behaviour and experiences in the Netherlands, but has not damaged confidence in banks’ ability to ensure smooth payments.

A strong recovery initially followed the sharp decline in Dutch consumer purchases at the start of the first lockdown in March 2020. Consumer spending in July and August was down slightly compared to the same period in the prior year, however, in September and October the total value of in-store and online spending was higher than in 2019.

During the pandemic, consumers paid particularly less with cash and more with debit cards. Meanwhile, the proportion of in-store cash payments increased again. At the end of October this share had recovered somewhat to 22%. At the beginning of 2020, 31% of all in-store payments were settled in cash.  

Consumers temporarily experienced more payment difficulties than usual just after the start of first and second lockdowns. There are no indications that consumers currently experience more difficulties paying with cash than with debit cards.

The proportion of consumers who have a preference for contactless payments has risen sharply. These are mainly consumers who, prior to the pandemic, had a preference for inserting their debit card into the POS terminal and manually entering their PIN. Satisfaction with payments and confidence that banks are ensuring smooth payments stayed high in these turbulent times.

Current developments in cash facilities

The accessibility of cash remains high. The 2020 Interim Report on Availability of ATMs and Deposit Facilities, shows that in mid-2020, 99.51% of households in the Netherlands had access to an ATM within a 5-kilometre radius. For deposit facilities the coverage in mid-2020 was 94.91%.  The Forum does, however, point out that due to the threat of explosive attacks on ATMs, temporary closure of approximately two thirds of all seal bag machines has not been included in the calculations for the accessibility percentage for cash disposal facilities. These temporary closures inconvenience retailers wishing to deposit their cash takings.

The Forum has been informed about the progress of converting the ATMs of the three major banks to Geldmaat ATMs. Geldmaat ATMS are equipped with extra security measures. This makes it possible, for example, to close seal bag machines at 23:00h instead of at 18:30h. Geldmaat often experiences difficulties in finding new (public) locations for its ATMs in metropolitan areas, partly due to the fear of explosive attacks. The Forum will discuss this issue with the relevant government parties.

The Forum calls on banks to keep a close eye on the agreements made to remove ATMs that are located inside bank branches (where there are also assisted services for vulnerable groups), only after Geldmaat has implemented comparable facilities in the immediate vicinity.

The same applies to cash deposit machines. The Forum generally considers it desirable for banks to maintain access to payment services for vulnerable groups. In this respect, banks have a social responsibility. According to the Forum, one of the possibilities for ensuring accessibility for vulnerable groups could be to set up local, bank neutral service points, for example in public libraries. An interim review of the accessibility of payments will be discussed at the next Forum meeting in May 2021.

At the beginning of 2021, DNB will commission an independent study into a socially efficient and secure cash infrastructure in the medium term with a structurally lower societal use of cash. Two reasons for this are the COVID-19 crisis, which has further reduced – at least temporarily – cash use, and the security problems caused by explosive attacks on ATMs. The study will be completed by the middle of 2021. The outcome may provide a basis for revising the agreements made in the Forum about the availability and acceptance of cash. 

Migration to strong customer authentication when paying online purchases

The Forum has been informed about the progress of the migration of the parties involved (banks, acquirers and online retailers) to meet the PSD2 strong customer – or two-factor – authentication requirement for online card payments by the end of 2020. This means that two out of three authentication requirements relating to possession, knowledge and biometrics must be met when making payments. In the Netherlands, this will particularly affect online credit card payments, since debit card payments and iDEAL already comply with the two-factor authentication requirement. Through intensive cooperation via the Dutch Payments Association, the parties involved aim to complete the infrastructural changes before the legal deadline of 31 December 2020. At the same time, it is important for online retailers and consumers that online purchases with credit cards are able to continue smoothly in the upcoming busy December month. Many online retailers have not yet activated strong customer authentication for online credit card payments, but around 90% indicate that they are ready to do so.

DNB and the Eurosystem explore the possibilities for a digital euro

DNB, the other euro area national central banks and the European Central Bank (ECB) - collectively referred to as the Eurosystem - have identified opportunities for a digital euro (central bank digital currency). This is in addition to cash (physical banknotes and coins), also in order to ensure the future accessibility of public money – certainly in countries where the use of cash is rapidly decreasing, such as the Netherlands.

Under ECB coordination, DNB and a number of other euro area national central banks have started the first experiments and policy and behavioural studies in this area. For example, options are being developed for the design of the digital euro. In mid-2021 the Eurosystem will decide whether and when to launch an official digital euro project. The members of the Forum have been called upon to respond to the ECB's market consultation (due to end on 12 January 2021) on the digital euro. In addition, in the first months of 2021, DNB will contact the relevant Dutch market stakeholders – including the members of the Forum – to consult and inform them further.

Forum members inform the interest groups they represent about fraudulent request-to-pay messages and bank helpdesk scams

The MOB is concerned about the recent increase in the number of fraudulent request-to-pay messages (also known as WhatsApp fraud), bank help desk scams (spoofing) and phishing and smishing. The members of the Forum representing consumers and entrepreneurs have pledged to inform the interest groups they represent about these types of fraud. Coulance policy to compensate victims of these types of fraud varies per bank.  This leads to a lack of understanding when one bank compensates consumers for the loss they have suffered in certain cases out of courtesy, while another bank does not. The Dutch Minister of Finance will discuss this issue with the banks. The banks have indicated to inform the Forum of possible developments in their coulance policy to compensate victims of these types of fraud.

The National Forum on the Payment System seeks to improve the safety, reliability, accessibility and efficiency of the Dutch payment system. It brings together a broad base of representatives from providers and users of payment services. It is chaired by DNB. For more information, please contact DNB press officer Herman Lutke Schipholt (+31 6 524 96 900).