The Dutch don't like to buy on credit.

"I think it's in our genes," laughs Arthur Van Essen, marketing manager for American Express Services in Amsterdam.

"The Dutch have an aversion to buying things on credit. We don't have that tradition of the Americans, for example, of paying for things on revolving credit. We tend to spend only what we have."

While Mr. Van Essen won't give any figures, citing the competitive nature of the credit card business, he says he is generally happy with the "dramatic growth" that his business is experiencing in Holland.

"While credit card use is not up to the level of, let's say, the UK," he adds, "There are many opportunities here, especially with the many new industries and of course the Internet which is gaining here also," he comments. "So while you can never sit back, we are quite happy with our level of acceptance."

Van Essen does add, however, that merchant acceptance also isn't at the "level we want it to be".

"But we see that as an industry problem rather than an American Express problem," he adds.

Marcel Woutersen a spokesman for Interpay, one of the largest processors of credit cards, including MasterCard, for many banks in Holland says that there are about 2.8 million Mastercard credit cards in circulation and almost 80,000 merchants have signed up to accept them.

"It's well known that the Dutch don't use credit cards, we use credit cards for vacation and petrol," said Woutersen, "But we are typically a debit card country."

A study done by Hoofdbedrijfschap Detailhandel(HRD), a Dutch Retail Association might provide a clue as to why acceptance isn't as pervasive as in other parts of the world. By their estimates an average credit card transaction costs about EUR 2.5 — a significant amount compared to EUR .22 for a debit card transaction and an even lower EUR .01 for a cash transaction.

"Yes, credit card costs are high, up to 4 percent of the transaction," comments Jan de Jong, Deputy General Director of HRD. "So why do it when you have other methods which are just as good, like debit cards. And some of these merchants are on lower margin business, such as department stores like Hema, can't afford these high costs."

But he adds that some sectors, such as tourism and business travel, have to accept them but that they operate on higher margins and in turn can pass those cost on to the customers.

"So too," de Jong adds, "the Dutch will only get a credit card when traveling abroad, for hotels and so on, where they can't use the debit cards and they don't want to carry cash."

Carla van Lier, a spokesperson with Visa Netherlands, said that there are currently 1.7 million Visa card holders in Holland, and the numbers were growing at a steady rate as are the number of merchants who accept her card.

"I think it is being more and more accepted," she commented, "But I still think there are still a lot of people paying with bank cards. Its just the Dutch habit."

Erik Jansen, an Amsterdam resident and father of two, might be typical of a growing acceptance of credit cards. He said that he got his credit card for traveling to the World Cup in America several years ago and loves having it.

"I love it. And I hate it that so many stores don't accept it," he says. "I want to pay everything with it - also at the supermarket - like Albert Heijn. Sometimes you only have EUR 50 on your account and you want to use that for other things. I like it because I can pay at the end of the month."

A spokesperson for Albert Hein said that while they don't accept credit cards — citing technical difficulties and the longer processing required at the checkout line — they really haven't had much demand for them.

"We have other concerns at the moment," she said.

Ola Schaap, who was shopping with her niece at Hema department store on Amsterdam's Kalverstraat shopping street, said she doesn't shop with a credit card and doesn't mind that Hema doesn't accept them.

"No, I don't have a use for credit cards," she said.

"We got one when we travelled abroad — my daughter lives in Canada — of course you need it there. But I always use cash, it's easier and less troublesome.

Pieter Van Bakkum, a spokesman for Amsterdam-based Royal Vendex, the parent corporation of Hema, says that while Hema doesn't accept credit cards, many of their other categories of stores accept them.

"Hema is one of our formats which doesn't accept credit cards but we have many others which do," he said. "For Hema the average shopper only spends about EUR 6 so it doesn't make sense for us to take them with such a low average."

"Also when you pay in cash," Ms. Schaap added with a conspiratorial wink as she resumed her shopping. "You won't get any nasty surprises later."

June 2002

Subject: Credit cards in the Netherlands