Point of Sale payments in 2015

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1 Point of Sale payments in 2015 Results of De Nederlandsche Bank and Dutch Payments Association study into the use of cash and debit cards in the Netherlands in Use of payment instruments, Chart 1a Total number of payments ( billions) Chart 1b Total value ( billions) Cash Debit card Credit card In 2015 Dutch consumers for the first time made slightly more debit card payments than cash payments. Between 2010 and 2015 the number of cash payments went down by 27%, from 4.37 billion payments in 2010 to 3.19 billion in The total value of these payments decreased by 22%, from 52 billion to 40 billion. The average amount of a payment made in cash hovered around 12. During this period the number of debit card payments rose by 5 from 2.15 billion in 2010 to 3.23 billion in The total value of these payments increased by 14%, from 81 billion to 93 billion. There is a continuing trend of consumers using their debit cards more often to pay for smaller purchases. In 2015 the average debit card transaction value dipped below 30 for the first time. This amount decreased by 24% from to over a five-year period.

2 2 Relative use of payment instruments, Chart 2a Total number of payments by payment instrument Chart 2b Total value of payments by payment instrument % % % % % % % 3.3% % 40.4% 1.8% % 62.3% 3.2% % 38.6% 2.3% % 60.6% 3.3% % 34.5% 2.6% % 3.2% % % % Cash Debit card E-purse Credit card The share of cash in the total number of payments at points of sale fell from 53.2% in 2014 to 49.5% in 2015, a shift of 3.7 percentage points. Dutch consumers made 50. of their POS purchases by debit card in 2015, compared to 45. in In % of all payments were made by debit card and 29.7% by cash in value terms. Between 2014 and 2015 the share of debit card payments increased by 2.5 percentage points in value terms between 2014 and Use of payment instruments, by amount Chart 3 Share of payment instruments by spending range <5 43% 57% % 47% % 5% 59% % 33% % % 17% >100 Consumers used debit cards more often to make large as well as small purchases. Cash continues to be the most used means of payment for amounts up to 10. The majority of consumers use debit cards to pay for amounts over 10. The use of debit cards for small payments increased. For payments under 5, the number of debit card payments increased by 7 percentage points, from 23% in 2014 to 3 in The debit card has for many years been the preferred form of payment for amounts of 100 or more. Furthermore, there has been a slight increase in the share of these payments. In 2014 consumers made their largest purchases by debit card in 76% of cases, while in 2015 this increased by 2 percentage points to 78%. Cash Debit card Credit card

3 4 Share of contactless payment by spending range Chart 4 Share of contactless payment by spending range % < % % % % 3% 3% > saw the introduction of contactless payment in the Netherlands: In that year, the use of contactless payment was still limited, at just under 8.3 million. There was a strong increase in the number of these payments in 2015, to approximately 135 million. Over 9 of these payments were for amounts of up to 25. Consumers do not have to enter a PIN code for these amounts, which means payments can be made much more quickly and conveniently. 42% of all contactless payments were for amounts under 5. 5 Use of payment instruments, broken down by place of purchase Chart 5 Share of payment instrument by place of purchase Petrol stations 6% 25% 72% 3% Shoes & apparel 3% 29% 69% 3% Non-food high amounts 3 69% 2% Home, garden and DIY 3% 33% 66% Department stores 6% 38% 6 Vending machines 5% 4 58% Non-food low amounts 1 43% Supermarket 35% 46% 53% Services 3% 59% 4 Hotel and catering sector 14% 6 37% Food, beverages, tobacco 7% 66% 33% Recreation, culture & entertain 3% 7 29% Street merchants 4% 9 9% retail non-retail 65% 35% 46% 54% 42% 5 10 Market segment share Cash Debit card Credit card In 2015 for the first time, the share of debit card payments (53%) in supermarkets was higher than the share of cash transactions (46%). Over a third of all retail purchases are made at supermarkets. This turnaround therefore has a clear influence on point-of-sale payments as a whole. The hotel and catering sector, which is another key sector in terms of the number of payments, has also seen a clear drop in the number of cash payments. In 2014, 68% of these payments were still made in cash, while this fell to 6 in 2015.

4 6 Breakdown of contactless payments by place of purchase Chart 6 Breakdown of contactless payments by place of purchase Supermarket 4 Hotel and catering sector 28% Food, beverages, tobacco 6% Non-food low amounts 6% Vending machines 5% Department stores 4% Home, garden and DIY 2% Recreation, culture & entertain 2% Services 2% Petrol stations Non-food high amounts Shoes & apparel Street merchants 5% 1 15% 2 25% 3 35% 4 45% 5 The majority of contactless payments (68%) were made at supermarkets and hotel and catering establishments. The most payments were also made in this sector. 7 Seasonal trends in payment behaviour Chart 7 Number of cash and debit card payments per month compared to the annual average 15% 1 5% -5% -1-15% Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. Cash '14 Debit card '14 Cash '15 Debit card '15 The use of payment instruments over the course of the year is influenced by various factors, such as the weather, size of the purchase, public and school holidays, but also the introduction of new instruments such as contactless payment. These factors exert an influence on both the total number of payments consumers make and how they make them. These seasonal patterns are presented in the above chart. In both 2014 and 2015 consumers made relatively few cash payments in the months of March and June, and relatively many in the months of April, May, July and August. The chart also shows there was a relatively low number of debit card payments in the first three months of the year and in November. By contrast, consumers make relatively many debit card payments in May, in the holiday months of July and August, and in December when they make purchases connected with the festive period and larger purchases.

5 8 Use of payment instruments, broken down by demographics Chart 8 Use of payment instruments by gender, age and level of education 10 2% 5 49% 32% % 43% 34% 35% 44% 52% 57% 58% 5 48% 5 68% 39% 39% 43% 47% 52% 57% 65% 65% 48% 42% 4 Male Female No education LBO/VBO/VMBO MBO/HAVO/VWO HBO WO Gender Age Highest level of education 4% 5% 7% 5% 4% 5% 7% 5% 2% 3% 4% 5% 6% 5% Cash Debit card Credit card Contactless The increased use of debit cards in 2015 compared to the prior year is evident in all demographic groups. On average, Dutch people settle just over half of all payments with debit cards, but this does not apply to all demographic groups. Children (12-18 years old), people over 55 and people with a lower educational level use cash more than debit cards. Of all the groups, the millennials young consumers between the ages of 19 and 34 made the least number of cash payments (39%) and the most debit card payments (over 6). Compared to 2014, debit card use increased the most among young people aged and among people aged (by 7 percentage points in each group). In terms of educational level, the largest increase in the use of debit cards was among HBO/college graduates (by 6 percentage points). In contrast to previous years, gender appears to have virtually no influence on payment behaviour. Males made 5 of total payments with debit cards and females 49% of all payments.

6 9 Relative use of contactless payment Chart 9 Relative use of contactless payment by gender, age, educational level and region (figures are standardised according to the relative use of contactless payments as part of the total number of retail purchases made by the average Dutch consumer) Male Female No education LBO/VBO/VMBO MBO/HAVO/VWO HBO WO Randstad Rest West North East South NL Consumer Gender Age Highest level of education Regions In 2015 consumers made a total of almost 135 million contactless payments. Gender, age, educational level and to a lesser extent the region in which consumers live are factors that influence the use of contactless payments. The above chart provides an indication of how intensively certain demographic groups make use of contactless payments compared to the average consumer. The figures in the above chart represent the extent to which demographic groups make more or less use of contactless payments compared to the average Dutch consumer, which is represented by 1. Males made relatively many contactless payments, almost 4 more than the average consumer, while women made relatively few contactless payments (over 3 less than the average consumer). On average, the share of contactless payments to all payments was twice as high for men as it was for women. Moreover, consumers between the ages of 19 and 24 made relatively many contactless payments compared to the average consumer, followed by consumers between 25 and 34 years old. Children and people over the age of 65 made relatively few contactless payments. The data also show that the higher the consumer s educational level, the more often they use contactless payments. People living in the west of the Netherlands, but outside the metropolitan area of the Randstad, made more contactless payments than the average Dutch consumer. There was slightly lower use of contactless payments among consumers in the East or the South of the Netherlands.

7 10 Payment instrument preference in different situations Chart 10 Choice of payment instrument in different situations I have a lot of cash on me 7 13% 16% I am splitting the bill with others 27% 17% There is an additional 10 or 20 cent charge for using a debit card 54% 2 26% I already paid, but forgot something and have to pay a second time 39% 46% 15% I don't know if I have sufficient funds in my account 38% 25% 37% Difficult access to payment terminal or it is too far away 34% 34% 32% I want to keep track of my purchases 28% 52% 19% Retailer gives impression that debit cards are not welcome 2 44% 35% Long queue at point of sale 18% 6 2 Portable or wireless payment terminal 16% 62% 22% 5 10 Mostly cash Mostly debit card Don't know Although many consumers have a general preference for making debit card payments, they do not always choose to do so. When consumers were asked how they would pay in various situations, it would appear that they still favour cash under certain circumstances. If consumers have large amounts of cash on them or are required to split the bill with other people, over half would choose to pay by cash. However, if there is a long queue at the point of sale, then 6 would prefer to pay by debit card.

8 Survey characteristics Market research bureau GfK collected data among more than 44,071 respondents for the point of sale payments in 2015 study, performed by DNB and the Dutch Payments Association. Research questions: What are the total number and total value of payments made in the Netherlands in 2015, broken down by payment instrument? In 2015 which payment instruments did the Dutch use most in the three sectors with the most payments? How has the use of cash and debit cards developed since 2010? What factors influence consumers payment behaviour? What attitude do consumers adopt towards new payment methods? Survey scope: Payments made in the Netherlands by Dutch residents aged 12 and over. Payments made at points of sale e.g. shops, bars, restaurants, hotels, petrol stations, services, markets, vending machines and person-to-person payments. Internet purchases and bank transfers between consumers fell outside the survey scope. Survey method: Single-day transaction journal and web-based questionnaire or telephone inter-view. The field work was carried out between January and December Respondents represent a true reflection of the Dutch population in terms of gender, age, ethnicity, education, region and income. General comments: The estimated data for the value of cash from 2010 onwards is based on the re-vised household consumption data from Statistics Netherlands (CBS), which is why they differ from those previously reported. Debit card and electronic purse data are from the Dutch Payments Association, and credit card estimates are from the regular DNB statistics. Contact details: Lola Hernandez: L.Hernandez@dnb.nl Nicole Jonker: N.Jonker@dnb.nl Patricia Zwaan: p.zwaan@betaalvereniging.nl