‘Europe, take action on EU-wide account number portability when switching banks’

The Netherlands Authority for Consumers and Markets (ACM) wants consumers and businesses that switch banks to be able to retain their account numbers. In ACM’s view, this is the best way to ensure that consumers can switch easily. The ability of consumers to switch easily will keep banks on their toes, which will lead to more competition. However, many consumers expect ‘a lot of hassle’ when switching banks, and therefore decide not to switch. Being able to keep one’s account number considerably reduces the hassle.

With its study ‘EU-wide account number portability’, ACM has added new impetus to the international discussion about lowering switching barriers. ACM calls on policymakers across Europe to conduct more research into the costs and benefits of account number portability. On its part, ACM has developed a method for calculating the benefits, and has applied this method to the Netherlands.

Chris Fonteijn, Chairman of the Board of ACM, explains: “Consumers play a key role when it comes to promoting competition. When it comes to switching banks, I see account number portability as an important instrument to get consumers moving. Europe should take action on this, right now. This study is an important step towards a healthy and objective discussion about the costs and benefits of account number portability.”

Method for calculating the benefits per member state

In its study, ACM developed a method that allows each European member state to get as complete a picture as possible of the benefits of account number portability. According to ACM, a benefit analysis is needed for each member state, since national payment markets in Europe vary. The developed method therefore takes into account local market conditions, for example, if a lot of technological innovation (FinTech) already takes place in a specific market.

This method has been applied to the Netherlands. Direct benefits for Dutch consumers and businesses have been estimated at approximately EUR 400 million over a period of ten years. Most of these savings are realized through a reduction of the administrative burden on consumers and businesses. Account number portability will also lead to more competition between banks, resulting in an improved quality of services and lower tariffs for all consumers and businesses. These indirect effects are more difficult to quantify than the direct benefits. A part of these indirect benefits has been quantified. These have been estimated at approximately half a billion euros over a period of ten years.

Two forms of account number portability that cost less

The total costs of account number portability strongly depend on how it will be introduced in Europe. Many people think that it involves everyone getting a new portable account number first. That is not necessary. ACM has fleshed out two variants of account number portability that cost less because banks and other market participants in the payment chain need to make relatively fewer adjustments. ACM prefers a variant in which consumers and businesses pay using a unique alias, such as a mobile phone number or the registration number with the Chamber of Commerce.

Launch an additional study into the costs and benefits of account number portability in a timely manner

The introduction of account number portability should be realized at a European level, because the Netherlands is part of the European payment system. In 2019, the Payment Accounts Directive will be reviewed. A new cost-benefit analysis of account number portability will be part of that review. ACM is critical of the cost-benefit analysis that was carried out in 2013 when the Directive was introduced. For example, the benefits for businesses had not been taken into account. Considering the complexity of this topic, ACM believes that additional research into the costs and benefits should thus be launched in a timely manner.