Given that over half of online transactions in the Netherlands go through it, iDEAL is at a significant stage of success. With every crucial bank involved in the solution, can any other offering truly compete? Patrick Brusnahan, with the help of Timetric’s research, takes a closer look at this giant

Now a market leader in Dutch third-party payment services, iDEAL was established by payment systems provider Currence in 2006. iDEAL offers online and mobile payments for Dutch domestic and international shoppers, and enables consumers to pay for online purchases directly from their bank accounts.

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Headquartered in the Netherlands, it provides payment services to merchants in more than 50 markets that sell to Dutch customers across the world. In addition, iDEAL also enables consumers to carry out other transactions, utility payments and mobile recharges, for example.

Supporting the company are payment providers Mollie, HiPay Direct, Datatrans, eMerchantPay, Paybox, Smart2Pay, Buckaroo, and Pay:nl. Further support comes from the banks that participate in iDEAL.

This consists of ABN AMRO, ASN Bank, bunq, Friesland bank, ING Bank, Knab, Rabobank, Regiobank, SNS Bank, Triodos Bank and Van Lanschot.

A certain level of success

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According to Timetric, in the whole of 2015, there were 222.1 million transactions, at a value of €18bn ($20bn) through iDEAL. This leads to a total of 959.2 million transactions since its launch.

Currently with 10 million active users and 100,000 merchants, iDEAL accounts for 56% of online transactions in the Netherlands as of June 2015. Over 2015, there was an average of 13 million iDEAL payments made each month.
Revenue is generated from three main types of transaction:

  • Domestic e-commerce transactions: Including e-commerce payments made in the Netherlands, they accounted for 38% of total iDEAL payments made in 2014;
  • Non e-commerce transactions: This can include utility bill payments, donations to charities, mobile top-ups, tax payments, traffic fines, and others. This accounted for 40% of tota iDEAL payments made in 2014, and
  • Cross-border transactions: This amounted for 20% of all iDEAL payments made in 2014.

Criticism

However, iDEAL has not gone without criticism. While transactions through iDEAL are widely considered to be secure, they could be regarded as cash payments between customers and suppliers, to which the bank is no party and offers no insurance.

As a result, iDEAL payments cannot be reversed when, for example, a webshop fails to deliver. If a user is suspicious of fraud, their only option to get a refund is to make a case with their bank. With this solution, the burden of proof lies with the customer and results are unsure.

Users have also complained about regular down time, but in 2014, the average availability of iDEAL was 99.5% for most customer banks.

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