iDEAL is an e-commerce payment system used in the Netherlands, based on online banking. Introduced in 2005, this payment method allows customers to buy on the Internet using direct online transfers from their bank account.
iDEAL is owned by the Dutch organization Currence and remains by far the most popular method for online payments in the Netherlands, well beyond credit card use. As of April 2016, the total amount of payments exceeded one billion. All major Dutch banks are part of the iDEAL scheme.
iDEAL is based on the “four-corner model”, commonly represented by the following figure:
…in which the Consumer is the end user, Issuer is the end user’s bank, Merchant is the service provider and Acquirer is the bank with which the Merchant has an agreement to use iDEAL to accept payments.
There’s a little box with a dashed border in the figure which says CPSP, meaning “Collecting Payment Service Provider”. There is a vast number of such CPSP’s currently operating in the iDEAL ecosystem, and what they offer is something analogous to what Signicat offers, meaning that they build on top of iDEAL and provide a supposedly complete integration along with client kits, ready-made plugins for a plethora of e-commerce and CMS systems and to some extent backoffice functionality such as dashboards for reporting etc. An example of such a provider is Rabobank Omnikassa.
- Merchant offers iDEAL as payment method
- Consumer selects iDEAL and selects their issuing bank
- Consumer is redirected to their issuing bank’s login page
- Issuing bank displays transaction data
- Customer enters account number and signs the transaction digitally using a 2FA token provided by the issuing bank
- Issuing bank authorises transaction in real-time, deducting the amount directly from the consumer’s account (if there is not enough balance, the transaction will be refused)
- Merchant received real-time confirmation of the payment by the bank
- Consumer is redirected back to the merchant page with a confirmation that the payment has been successful
Example iDEAL response
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