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In 2005 McKinsey conducted a large-scale study into the costs and revenues of payment transactions in the Netherlands. 17 years on, McKinsey has carried out a similar study. Much has changed but one thing remained consistent; payments are still a loss-making activity for the Dutch banks.  If we look at their banking counterparts in other European markets, where they are seeing payments as a relatively profitable activity. While the report highlights a somewhat negative position from a Dutch Banking perspective the payments landscape is not an entirely gloomy one, as other Dutch players in payments do show positive figures.
The issue is clear that the Dutch banks are simply not raising the costs to private customers and this certainly needs to happen, as I have indicated here or here before. For many customers, payment transactions are the starting point for a long-term relationship with their bank. Costs that are currently allocated to payments should probably be allocated to other products. And what about efficiency, not only in systems but also in the organization. In a competitive market, it is not the internal cost level that determines the market price, but the cost level of the more efficient competitors.

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