Time for investment in modernisation and innovation

The sector has therefore undertaken to continue to invest in new technologies, products and applications, and in so doing support the dynamic and competitive character of the Belgian economy. 

Security, speed, transparency and customer-friendliness are central to Belgian payment services. In addition, new products must be cost-effective. In other words, they must create lasting value in the current context of low profitability. Especially in a competitive landscape, in which non-banking players such as department stores or oil companies also offer means of payment, this is a prerequisite for innovations to be successful. The fact is it is not self-evident that the financial sector will be able to continue obtaining sufficient sustainable income among all those players for whom the means of payment is not the primar y activity, and which can therefore also finance the means of payment through their other activities.

Because, however, sustainable innovation in electronic payments is crucial for a financial sector that wishes to prepare for the future, one of the strategic agenda working groups focused on developing ways of promoting electronic payments and reducing and optimising the use of notes and coins. Both elements create clear economic and social added value: more efficient electronic payments and a fall in the use of cash avoid unnecessary social costs, increase the security of the payment system and improve the fiscal transparency of economic transactions. 

The working group developed an action plan to further modernise the financial architecture and to innovate. This action plan consists of four pillars:

  • promotion of electronic payments
  • development of new payment instruments
  • dialogue and cooperation with the public authorities
  • measures to discourage the use of notes and coins and optimise cash handling

The action plan is designed to help the financial sector realise its ambition and reach the target of 2 billion electronic payment transactions per year by 2015.

Promotion of electronic payments

Various measures have already been taken in recent months to promote electronic payments. These include:

  • In the summer of 2012, Comeos (the Belgian sector federation for trade and services), and the Belgian federation of the financial sector, Febelfin, launched a promotional campaign for electronic payments. “Pay? By card obviously!” is a campaign with a recognisable logo that can be found on the websites and in the branches of financial institutions, but also wherever a card can be used for payment: in shops and department stores, at pharmacies, in hospitals, etc.
  • The price merchants pay for transactions involving small amounts (less than EUR 10) with Bancontact/MisterCash was significantly reduced.
  • The possibility of paying small amounts without having to enter a PIN was introduced.
  • The national Bancontact/MisterCash payment scheme was brought into line with European SEPA (Single Euro Payments Area) rules. This standardisation and the competition between the various European players will ensure that the prices for terminals drop further and that market players are able to offer merchants attractive package terms.

Development of new payment instruments

The sector is also fully committed to developing mobile and contactless payments, for example with smartphone linked terminals or smartphones-as-terminal.

With the smartphone linked terminals a user can make payments with his smartphone, but he does need a terminal to process the payments. One example here is the i-Zettle system. In such cases, a small card reader is fitted to the smartphone in which a payment card is inserted.

With the smartphone-as-terminal systems the user does not need to be near a terminal to pay, only to have his own smartphone. One example is payment via QR codes. In Belgium, activities involving both systems have been launched or are in preparation.

Financial institutions are also investing in expanding the possibilities for e-commerce. In Belgium, there is still significant potential for growth for the online shopping market. The new generation will be less attached than the old to physical points of sale and will use electronic payment methods more frequently. Belgium still has ground to make up on Europe’s leaders in this area.

Dialogue and cooperation with public authorities

The financial sector is inviting the public authorities to sign up with it to initiatives to promote electronic payments. In this connection, public authorities could set an example and provide stimulus for generalising electronic payments, for example by:

  • providing tax incentives for payment terminals
  • banning cash payments above a certain amount (e.g. EUR 1,000)
  • promoting electronic billing

It is in the public authorities’ interest to take up this role, as there are high social costs associated with the use of notes and coins. By optimising the circulation of cash, the financial sector could operate more efficiently and become more profitable. This would create added value for the banks as well as for consumers and society.