PIN or cash? Payment trends at the checkout

1. Towards a cashless society

Consumers are increasingly opting for contactless payments. By the end of 2023, around 91% of electronic payments were contactless. But cardless payments are on the rise. Berend Jan Beugel, spokesperson for the Payments Association Netherlands, says that around 30% of all debit card transactions are cardless, using a smartphone or smartwatch.This is an interesting trend for shopkeepers and hospitality entrepreneurs, for example

2. PIN payments only, no cash

You can pay by debit card only in more and more places, such as sports clubs, museums and canteens. The number of cash payments has fallen steeply over the past years. Yet retailers and catering entrepreneurs still make 20% of their turnover in cash. At 4% of point-of-sale establishments (businesses and institutions such as municipalities), you can only pay by debit card. A small minority of entrepreneurs, such as market stall sellers, only accept cash. 

3. Banks and government restrict cash payments

The Money Laundering and Terrorism Financing [Prevention] Act (Wet ter voorkoming van witwassen en het financieren van terrorisme, Wwft, in Dutch), applies to anyone routinely managing cash flows and the sale of goods, including expensive goods. The act also applies to banks. Banks are looking to mitigate the risks of money laundering by reducing the volume of cash transactions. For example, businesses can only pay up to a maximum of 10% of total transactions in cash. When accepting deposits of €500 bills, banks must ask questions about the source of the funds. These bills are currently still in circulation, but will be phased out. If a cash payment exceeds 10,000 euros, the receiving party is required to conduct a customer check (due diligence). Cash payments of over 20,000 euros must always be reported (in Dutch). An amendment to the Money Laundering and Terrorist Financing (Prevention) Act Wwft will ban cash payments exceeding €3,000, once it has been adopted. 

4. Payments using the retail app

Pin and contactless payments remain the main and fastest payment methods for now. But other payment solutions are also entering the market. Some shops, for instance, have a special app for their customers. With this, they scan their shopping themselves. When they finish shopping, they pay via iDEAL in the app. The app also communicates with the anti-theft gates in the shops. So if the payment is approved, the customer can just leave the shop. Major banks are now testing alternative shopping apps without iDEAL. 

5. Payment using a QR code

Another trend is QR code-based payments. There are three options: 

• The customer scans the iDEAL QR code with their own banking app. Beugel: "You see this system being used more and more in the hospitality industry. If it is very busy and all the mobile pin machines are in use, you can offer an extra payment method with a QR code on a screen or even on the receipt."
• Nowadays, consumers can also pay via a QR code from a mobile payment service. For example, through Tikkie Zakelijk. The customer scans the QR code with the phone's standard camera and is then taken to that payment service's mobile webpage. An iDEAL page then often follows.
• An entrepreneur can create their own QR code and a dedicated payment page. This option allows you to ask for customer details such as an e-mail address or phone number. You do have to inform the customer what you are using this data for in connection with privacy legislation (GDPR). 

6. Paying with cryptocurrencies

If you would like to start using cryptocurrencies and blockchain technology, your customers can pay with cryptocurrencies using a cashier application. The cashier application converts the amount of the invoice into the present value of the cryptocurrency of choice. Next, the application creates a QR code of the cryptocurrency value and your cryptocurrency account. Your customer scans the QR code with their smartphone and pays in cryptocurrencies. Note that this type of payment is still relatively rare. 

7. Mobile recognition

A new way to pay is recognition via your mobile phone. This technology is now being tested. Consumers sign up once. Using bluetooth, technology recognises the customer when they are in the shop. The customer does not pass by the cash register or payment kiosk and pays via direct debit. The risk for the entrepreneur is that the customer can reverse a direct debit. 

Decide on your own payment tools

It is entirely up to you which legal tender you will or will not accept. For example, you may refuse cash and only accept debit cards or vice versa. The exception is a company or institution with a local monopoly. It may not refuse cash payments. This is stated in the policy rules of regulators De Nederlandse Bank (DNB) and Authority Consumer and Market (ACM). Think of a pharmacy or a municipality. The European Commission submitted a legislative proposal on cash acceptance in all euro countries at the end of June 2023. So that people can continue to pay in cash if they want to.

Do you only accept cash? Keep in mind the maximum amount you can deposit at a deposit or coin machine at a time. Your bank determines this amount.

There are several ways of reducing the amount of cash in circulation. For example, you can put up Pinnen, ja graag '(Pin, yes please') signs or stickers next to your cash register. These indicate your preference for electronic payments. You can order these items free of charge from Betaalvereniging Nederland (Netherlands Payment Association, in Dutch). If you operate multiple cash registers, you can also reserve one of these tills for cash payments, as they do in supermarkets. 

PIN payments cheaper than cash

In-store debit-card PIN payments are appealing to businesses because they are cheaper than cash payments. The average cost for contactless debit card payments is 17 cents, 18 cents for debit card insertion and 49 cents for cash payments. With debit card transactions, all costs are included. From the devices to the network connection and paper roll. Also, contactless debit is twice as fast than paying with debit card and PIN. 

Choice of card machine

There are several payment systems available on the market. You also need to decide if you prefer to buy or rent your equipment. Will you choose a smart cashier system, a static cash register with a PIN terminal, or a mobile card machine? “Look closely at your sales revenues and transaction volumes to decide what will suit your business,” Beugel says. “Start out by signing a shorter-term or flexible contract, so you can assess after one or two years whether this is still the best fit for you and your set-up.” 

You can also use an ordinary smartphone as a payment terminal. You sign a contract with a payment service provider. Then you install a special app from that service provider. Do you already have a suitable smartphone? Then buying or renting a separate payment terminal is not necessary.

Do you prefer not to use a static cashier system with a card machine (also known as a point of sale (POS) payment terminal) because of the expenses or obligations? Then you can also rent or opt for a simple portable model such as a mobile Point of Sale (mPos). mPos connects to your cell phone via bluetooth. Prices vary from under €50 to around €1,000. If you do not use mPos, you do not pay a fixed monthly fee. But you do pay more for transactions You can now also find dedicated mPos where you do not have a link to your cell phone. These mPos operate independently via a chip.

If you process few, or irregular, transactions, an mPOS system may be the right choice for you. Beugel: “If you are looking for a solid and reliable payment system, you should choose a traditional mobile POS system for PIN payments.”

Tips when buying a payment system

• Costs
  How much will I be charged after buying the payment system? Some card machines operate on a cost-per-transaction basis, others on a per-month basis. 
• Cash register software
  You can get total packages with POS systems included or just get a simple option. For mobile devices, too, you have more extensive variants with cash register software. With many payments at a fixed location, it is an advantage to have a link to a POS system. For smaller businesses, the cash register link is less important. 
• Cash-back transactions
  If you want to offer a cash-back (retourpinnen, in Dutch) service to your customers, you also need a contract for cash-back services from your bank. The customer can also get the money back on a different debit card than the one they paid with. Card Refunds is an alternative offered by payment service providers to cash-back. These are refunds on the card the customer paid with. The customer does not have to show the debit card. 
• Gratuities, tips
  If you work in the hospitality industry, you could consider getting a POS terminal with an automatic tipping option. 
• Network
  Is the encrypted data handled through a cable, 4G, or 5G? Some types of mobile payment systems have their own SIM cards, while others work based on Bluetooth and your phone network. If you want to be absolutely sure of your network, you should order a (usually slightly more expensive) certified connection, which offers a guaranteed availability of 99.6%. 
• Credit-card payments and foreign payment tools and methods
  If many of your customers are from abroad, try to find a payment provider that also accepts credit cards (Betaalvereniging Nederland, in Dutch). Credit-card payments are generally more expensive than payments using debit cards such as Maestro and V PAY. If you have a lot of Chinese customers who would like to use UnionPay, WeChat Pay, or AliPay, choose a payment services provider that accepts these payment methods. 
• Back-up
  Finally, Beugel advices: "Make sure you can fall back on other payment options if your payment system fails. Think of mPos, iDEAL, Tikkie, QR code or cash. Then your customer will always be able to pay."

Software update of existing payment terminals

In mid-2023, the new Debit Mastercard and Visa Debit payment cards came into circulation with new technology. Existing payment terminals received an automatic remote software update. The terms of the contract with the payment provider changed, but the fees did not.

There are still some types of card machines in circulation that you cannot update remotely. Do you have such a payment terminal? If so, contact your payment provider. You will need a new type of payment terminal so that your customers can pay with the new cards.