First off, let me just say this post has nothing to do with the Euro crisis, nor the recent collapse of the Dutch government over failed austerity measure negotiations. I’ll leave that for the economists to discuss. This post is basically about the differences I’ve noticed in how we do transactions in the US versus how they are handled in the Netherlands.
The official currency of the Netherlands is the Euro (€). Right off the bat, there are some significant differences between the Euro and the US Dollar ($). The lowest printed Euro bill is €5, and goes in denominations of €5, €10, €20, €50, €100, and so forth. The coins come in 1 cent, 2 cents, 5 cents, 10 cents, 20 cents, 50 cents, €1 and €2 forms. However, the Netherlands has banned the use of the 1 cent and 2 cent coins. Prices are not marked in 5 cent increments though, which can lead to confusion. Let’s say I run into Albert Heijn to purchase a bottle of wine for dinner, and it is €8.97. If I pay by cash, I’ll only need to give the cashier €8.95. If I pay by debit card (called “PIN card” here), then I’ll pay €8.97. If the total were €8.98 instead, then the cash transaction would be rounded to €9. I’ve actually heard of expats who pay cash for transactions that will round down, but will use their PIN card for transactions that round up. They feel like they’re “gaming” the system. Personally, I think it all evens out in the end, and I appreciate not having to carry the tiny 1 cent and 2 cent coins.
At first, it was weird not having a €1 bill, and having to keep track of the €1 and €2 coins. However, the Euro designers have done a good job making all of the bills and coins easy to distinguish at first glance. Coins are differentiated by color and size, as well as the cut of their edges. For example, a €1 coin has a gold edge, and a silver middle, while a €2 coin is the reverse. Sometimes keeping track of change can be a chore, but at least we use it here. In the US, I’d put all of my change into a jar at home, and when the jar got full, I’d count it out or take it to one of those change machines to trade it for gift cards. Here, I keep it in my pocket, and use it next time I buy something.
While the US Dollar has somewhat recently started using colors to differentiate between bills, the colors are still somewhat muted, and the bill is mostly green and white. The Euro is much more colorful, leading to the Monopoly money comparisons. Here is a graphic of the assorted Euro bills. Their sizes are also different, so it’s easy to see what bills you have when you open your wallet, provided you keep them in order from smallest to biggest.
As I previously mentioned, what Americans call “debit cards” are here referred to as “PIN cards”, and paying with them is called “PINing”. If you go to the Albert Cuyp outdoor market, you will see signs posted at various vendors saying “Hier kunt U PINNEN!” (“You can PIN here!”). PINing takes money directly out of your main bank account. In addition, most PIN cards also have the ability to use “Chipknip” functions. Chipknip (pronounced “chip-ka-nip”) is used for small transactions, like paying a parking meter. There are Chipknip machines located next to ATMs around the city. You insert your card, and move money from your bank account onto your Chipknip card. The balance is kept track of via an encrypted chip on your card. This way, parking meters and other machines that accept Chipknip don’t need to connect to your bank to check your balance. They just deduct it from the chip on the card.
Credit cards exist here, but are mostly used for large purchases only. I don’t think many people use their credit cards to do their everyday transactions.
Checks (or “cheques” for any Brits reading this) don’t exist here either. At first, I wondered how people pay each other without checks, but it’s actually quite easy. When a business wants to bill a customer, they send an “acceptgiro“. The customer can fill in their bank number, sign it, and return it, and the business will deduct the amount straight from the customer’s bank balance. However, with the advent of the internet and smart phones, this is no longer required. If I receive an acceptgiro, I simply use my bank’s iPhone app to snap a picture of it, fill in the amount I want to pay, and it automatically sets up the payment. Furthermore, when people want to pay other people, they simply ask the payee for their bank account number, then log into their bank account and transfer the money directly. There is no charge for this, even across international boundaries, as long as you are staying within the same currency. It’s free for me to pay someone in Germany, but it costs money for me to pay someone in the UK, since they still use the Pound Sterling. In the US, we try to protect and hide our bank account number as much as possible, while in the Netherlands, people exchange theirs freely. Businesses print theirs on their stationary.
Finally, accessing my bank account here is different. I have a special little device that looks like a calculator, that I plug into my computer when I wish to access online banking. I then insert my card into the machine and enter my PIN. This logs me right into my bank account. Other banks use different security measures, such as texting a single-use PIN to the user’s mobile number when they wish to log in. Either method is still more secure than using a traditional password. Furthermore, websites can accept payment through the “iDeal” system. When you make a purchase at a website, it asks you which bank you use. After you tell them, it redirects you to the bank’s “iDeal” website, where you connect your card reader, swipe your card, enter your PIN, and the money is transferred out of your account. No credit card necessary, and much more secure than just entering your PIN card number online.
As you can see, use of money here in the Netherlands can be quite different than what you’re used to, especially if you’re from the US like me. All in all, everything makes sense, and is fairly secure and easy to use. Just be warned that if you come to visit, American-style debit cards and credit cards won’t be accepted most places. Only large department stores (De Bijenkorf, Media Markt) / international chain retailers (Foot Locker, H&M), or chain restaurants (Hard Rock Cafe) will accept American cards. Most Dutch ATMs won’t charge you to use your bank card here, so just wait until you arrive at the airport, and then withdraw enough cash to last you for a while. You can also visit the Travelex exchange booths at the airport to get pre-paid PIN cards, but they will charge you for that privilege.