J.P. Morgan Country Insights. THE CHANGING DYNAMIC OF PAYMENTS IN EUROPE The Netherlands

Transcription

1 J.P. Morgan Country Insights THE CHANGING DYNAMIC OF PAYMENTS IN EUROPE The Netherlands

2 Introduction The Dutch economy is performing well, driven by the positive performance of the Eurozone, as well as buoyant domestic demand that will be further supported by the government's fiscal stimulus package, which was announced by the new government in the Coalition Agreement. 1 GDP growth is expected to hit 2.7% in 2018 and 2.5% in Meanwhile, private consumption is likely to be stimulated by an improving labour market (unemployment is forecast to fall to 4.5% in 2018), 3 which could be positive for consumer spending and retail sales. One downside risk is that a strong euro could weigh on export growth. Despite this potential headwind, the overall economic indicators are encouraging for the coming two years. 4 This information is based on projected figures and is subject to change at any time. [ 2 ]

3 Netherlands: At a glance Population 17.02m Average age GDP B2C ecommerce market value 42.5 years 0.73trn 20.16bn Internet penetration 94% Smartphone penetration 64% Card penetration per capita 0.34 Source: World Bank, CIA (2016), GlobalData & Thuiswinkel, Internet Live Stats, E-commerce Foundation, Lafferty, 2016, Ficus Economics Netherlands: Consumer spending 74,000 73,500 73,000 Consumer confidence drives rapid ecommerce growth While the Netherlands accounts for just 3.8% of Europe's total ecommerce market, 5 the Dutch market is notable for its strong gains in recent years. The Netherlands' B2C ecommerce value hit 20.16bn in 2016, up from 16.45bn in representing a very healthy 22.6% year-on-year (y-o-y) growth, the fastest of a selection of countries reviewed by J.P. Morgan. 7 * The Dutch appetite for online shopping can be explained in part by increased consumer confidence, which in Q hit its highest level in a decade, coupled with a low inflationary environment. 8 This confidence translated into an eagerness to spend, particularly in the IT, footwear, fast moving consumer goods (FMCG) and toy categories, all of which enjoyed high growth rates. 9 The expansion of ecommerce in the country is also a function of a higher penetration of online consumers, with 95% of the Dutch adult population shopping online in 2016, 10 and almost 40% of ecommerce conducted on smartphones. 11 While this means the average Dutch shopper is already well versed in online shopping, there are still opportunities for retailers to make gains. The Netherlands' B2C ecommerce market value is forecasted to grow at a compound annual growth rate (CAGR) of 16.2% between 2016 and 2020, to hit 36.71bn by July July 2016 Source: Trading Economics, Statistics Netherlands 2017 July ,500 72,000 71,500 71,000 70, EUR Millions One area ripe for growth is boosting basket spend: the average annual online spend per Dutch e-shopper is 1,090, significantly less than the European average of 1, Meanwhile, the ecommerce share of the total Dutch retail market was 8.5% in 2016, 14 comparable to Sweden (8.6%) and close to the European average of 8%. 15 This is still far below the European forerunner, the UK, which leads at 16.8% 16 suggesting the Netherlands is a country with high potential for further ecommerce growth, and an opportunity for international e-tailers looking to court new customers. 17 [ 3 ]

4 ecommerce: % of total sales by segment Card penetration per capita 100% Digital Goods 58% Online travel agents (OTAs)/ Tour Operators 30% Public Transit (metro/rail/bus) 10% Consumer Electronics 3% Department Stores Source: J.P. Morgan's Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via emarketer, ecommerce Europe (2016) 95% Airlines 35% Accommodation/ Hotels 10% Fashion/ Apparel 3% Mass Merchandise 2% Grocery/ Supermarkets ecommerce penetration (%) Metric indicator DEBIT CREDIT TOTAL Debit card per capita Credit card per capita Total cards per capita Total Source: J.P. Morgan's Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Global Data & Lafferty Bank transfers are the most popular payment method When it comes to paying, the Dutch ecommerce market stands out for having one method dominate the market. Bank transfers are far and away the Dutch nation's preferred method for online payments, accounting for 62% of sales and 12.5bn in total transactions in The most popular bank transfer service in the Netherlands is ideal, which accounts for 56% of the market by value. 19 The ecommerce payment system launched in 2005 and enables shoppers to pay using bank transfers direct from their account. [ 4 ]

5 ideal's popularity is in no small part due to its large consumer coverage, but is also helped by a healthy smartphone penetration in the country, as ideal is enabled for mobile transactions. 20, 21 International alternative payment method (APM) providers hoping to acquire market share may find themselves facing a significant challenge: ideal is a homegrown product, developed by the Dutch banking community and therefore enjoys high levels of domestic support. Payment method split by value (%) 62% However, new entrants to the payment services market such as Payment Initiation Service Providers (PISPs) are now regulated under the Second Payment Services Directive (PSD2). A PISP is a third party provider that is able to initiate payment on behalf of a consumer, without them having to visit their online bank's portal. This could potentially stimulate competitors in the Dutch market. 12% 9% 6% 6% 5% Meanwhile, cards take around 12% of the payment market, 22 which is lower than in many markets studied, perhaps due to the ubiquity of ideal. The Netherlands also has a relatively low penetration of cards per capita because Maestro/V-Pay can't be used online in the country. Penetration of alternative payment methods (%) PayPal 5% Bank Transfer Card Other E Wallet Cash Direct Debit Source: J.P. Morgan's Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData and EHI-Studie (2016) High fraud rates a feature of the market ecommerce fraud is relatively high in the Netherlands. According to figures from Kount, (a fraud and risk management provider), ecommerce fraud (chargebacks) occur in 0.162% of total online sales. 24 This compares to an average chargeback rate across the region of 0.108%. 25 A growing ecommerce market, plus high card usage, may have made the country a target. 26 ideal 56% AfterPay 4% A technologically-savvy, consumer-confident nation, with the appetite to embrace new methods of shopping and payment: all of these factors make the Netherlands a country to watch. The Netherlands continues to undergo strong, double-digit growth and despite its small population is expected to eclipse Italy and Spain, both much larger countries, in terms of B2C market size by Source: J.P. Morgan's Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company [ 5 ]

6 * J.P. Morgan's The Changing Dynamics of Alternative Payments in Europe study includes the following countries: U.K., the Netherlands, Germany, France, Italy, Spain, Norway, Denmark, Sweden, Switzerland, Finland. References [1] European Commission, Autumn 2017 Economic Forecast. Accessed March [2] European Commission, Autumn 2017 Economic Forecast. Accessed March [3] OECD, Netherlands - Economic forecast summary (November 2017). Accessed March [4] European Commission, Autumn 2017 Economic Forecast. Accessed March [5] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData, Thuiswinkel.org & E-commerce Foundation, [6] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData, Thuiswinkel.org & E-commerce Foundation, [7] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData, Thuiswinkel.org & E-commerce Foundation, [8] Trading Economics, Netherlands Consumer Confidence, Accessed November [9] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via E-commerce Foundation (in collaboration with Thuiswinkel.org), Ecommerce Report The Netherlands 2017, [10] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via E-commerce Foundation (in collaboration with Thuiswinkel.org), Ecommerce Report The Netherlands 2017, [11] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista, [12] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData, Thuiswinkel.org & E-commerce Foundation, [13] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via E-commerce Foundation, Global B2C E-commerce Report 2016, [14] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista (2016), EDC Research & Analysis. [15] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista (2016), EDC Research & Analysis. [16] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista (2016), EDC Research & Analysis. [17] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista, [18] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData, Thuiswinkel.org & E-commerce Foundation, [19] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company. [20] European Payments Council. The Dutch payment landscape: One of the most cashless in Europe. _Accessed November [21] Currence.nl. Collective Payment Products. Accessed November [22] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData, Thuiswinkel.org & E-commerce Foundation, [23] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via GlobalData, Thuiswinkel.org & E-commerce Foundation, [24] Kount, Proprietary Research Q1, [25] Kount, Proprietary Research Q1, [26] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Global Data & Lafferty. [27] J.P. Morgan s Country Insights: The Changing Dynamic of Payments in Europe: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company via Statista (2016), EDC Research & Analysis. 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