iDEAL is mostly appreciated by Dutch consumers for the comfort and convenience it offers. Providers have the opportunity to include these features in their value proposition to increase their market share in the country.
With 94% of consumers having access to the internet, the Netherlands boasts the highest penetration rate in Western Europe. Among the available online payment methods, the most popular is domestic provider iDEAL, which accounted for more than half of e-commerce by value and more than a third by number of transactions in 2015.
Our Online Consumer Payments Analytics shows that 26% of Dutch consumers selected comfort and 31% selected convenience as the most important reason for using iDEAL. While credit cards are the most popular payment tool across the majority of markets, iDEAL is leveraging these two traits to drive usage. This is a smart strategy, as our Megatrends framework (which involves respondents ranking eight specific behaviorial trends in order of importance) found that Dutch consumers rank convenience as the second most important value. Interestingly, iDEAL users undervalue security as a reason to use this solution over others, with only 18% citing security compared to 30% for credit cards and 20% for bank transfers, implying that consumers are inclined to emphasize the positive user experience rather than the safety features of the service.
Operationally, the service makes use of the online banking environment of the consumer’s bank (with participating banks covering most of the country) and utilizes the bank’s security measures. After selecting iDEAL and choosing their bank, customers are redirected to their bank’s login page. The customer sees the transaction data on their bank’s page, enters their account number, and signs the transaction digitally using two-factor authentication. Banks authorize the transaction in real-time, deducting the amount directly from the consumer’s account, while the consumer is redirected back to the merchant page confirming the payment.
The success of iDEAL shows that providers in the Netherlands need to ensure their online payment methods are convenient and comfortable to use in order to remain competitive and increase consumer adoption rates.
By Nicolae Bacila, Consumer Payments Analyst