NETELLER Merchant Newsletter #14

The Netherlands – The high-tech hub of Europe

It might be a small Western European country, but the Netherlands is an emerging e-commerce market that can’t be ignored. With a population of 16.6 million, roughly a quarter of the UK’s, the Netherlands has an astounding 14.5 million internet users.¹

Leading the way for technology adoption, the Netherlands is one of the top 5 e-commerce players in Europe.² 2006 saw more than €3.5 billion in online retail sales, a number that is expected to reach €12 billion by 2011.

Key growth market
With industry analysts predicting both the number and average spend per online buyer to easily double by 2011, it’s easy to see why e-commerce merchants are excited about this key growth market.³

Quick facts about Dutch e-commerce

• The Netherlands tops the charts for broadband penetration with 75% of Dutch households with broadband access⁴
• 43% of Dutch consumers prefer electronic bank transfer when paying online⁵
• Online shopping is moving from an early adopter to a mainstream activity⁶
• By 2011, the average spend per online shopper will reach €1,463⁷

Prime e-commerce target
High technology adoption, strong online tenure and widespread broadband access make the Netherlands a prime e-commerce target. Oddly enough, the Netherlands wasn’t the first out of the gates, significantly lagging behind other European countries in online shopping.

The reason? A relatively small geographic footprint and low credit card adoption made the Dutch reluctant online shoppers. What changed the e-commerce landscape was the introduction of iDEAL, a payment mechanism that enabled the Dutch to securely transact online using internet banking.

The Dutch payment culture
The Dutch by far and away prefer debit cards to any type of credit or consumer charge cards. Of the 31.1 million cards in issue, an overwhelming 22.2 million are debit cards.⁸ Credit cards account for one-fifth of all cards, but most of these are seldom, if ever, used for any type of transaction with many credit cards remaining inactive.⁹

The explanation for the low credit card adoption is twofold: a lack of need and cultural preference. Advanced debit card facilities have all but eliminated the need for additional consumer credit.¹⁰ Most Dutch bank accounts come with a generous overdraft facility. Even Dutch credit cards include a debit function.

Add to that the fact that the Dutch are overly cautious by nature. Fearful of the risk of fraud and the habit of overspending that credit cards tend to promote, many Dutch are uncomfortable using credit cards as a method of payment.¹¹

Almost no fraud
The Netherlands boasts an extremely low fraud rate. According to Interpay, the security level of electronic payments is close to 100%.¹² With fewer credit cards comes less opportunity for fraudsters, who typically rely on Card-Not-Present (CNP) transactions. Debit card fraud requires intercepting PIN numbers in addition to obtaining magnetic stripe details, a risk that Dutch authorities have been successful in combating.

Capturing market share in the Netherlands
The Netherlands is a prime example of security concerns posing a significant barrier to market entry. It wasn’t until the introduction of iDEAL as an online payment option that Dutch e-commerce moved from the early adopter market into the consumer mainstream. Capturing your share of the Dutch market requires offering localised payment methods that include debit and internet banking options – their preferred payment options. Partnering with a trusted payment provider capable of offering your Dutch customers localised payments is your best bet in capturing this winning market.

NETELLER now offers Instant Bank Deposits using iDEAL. Your Dutch members will benefit from this free and instant payment option today!

Contact your Account Manager or email merchantbizdev@neteller.com today to learn more about co-marketing opportunities for your customers in the Netherlands.

End notes
1. CIA World Factbook
2. Forrester: eCommerce
3. Forrester Trends: Dutch eCommerce Forecast: 2006 To 2011 (September 2006)
4. Forrester: Western European Residential Broadband Forecast: 2008 To 2013 (December 2007)
5. Forrester: European Retailers Still Need to Offer Multiple Online Payment Methods
6. Forrester Trends: Dutch eCommerce Forecast: 2006 To 2011 (September 2006)
7. Forrester Trends: Dutch eCommerce Forecast: 2006 To 2011 (September 2006)
8. Payment Cards Western Europe 2006, Netherlands
9. Payment Cards Western Europe 2006, Netherlands
10. Euromonitor International: Financial Cards in the Netherlands (March 2007)
11. Payment Cards Western Europe 2006, Netherlands
12. Payment Cards Western Europe 2006, Netherlands