Company Profile: Euro Leader

Alex Henderson
When American adult webmasters do business in Europe, they are reminded of the fact that ecommerce is as much of a way of life overseas as it is in North America.

But Europe and North America can differ considerably when it comes to online payment methods, and Payment Network AG (based in Gauting, Germany, near Munich) is among the payment service providers that has prospered by catering to European e-commerce needs.

Officially launched in 2006, Payment Network AG ( has grown considerably in the last four years — and 2010 finds the company continuing to grow and expand.

‘It has been a great success,’ said Sascha Winkler, executive director of strategy for Payment Network AG. “From five friends having a vision, we grew to the leading real-time bank transfer system in Europe with 56 fulltime equivalents. We expect to process over 1 billion euro transaction volume in 2010. Over 10,000 merchants are already using our payment method.’

And the payment method that has made Payment Network AG one of Europe’s ecommerce success stories is the online banking transfer method known as DIRECT

Winkler explains: “There are hundereds of billing service providers out there, but there are only a few payment methods. At the end of the day for electronic payments, there are only four methods: credit cards, debit cards, e-wallets and online-banking transfer systems. At this moment, we are the leading and almost only international online banking transfer system worldwide. Our idea is very simple: we connect the merchant site to the online banking account of the customer. Basically, our system forwards all order data to the online banking account through one of many thousand bank gateways. There, our software triggers a direct credit transfer to the merchant’s bank account and sends a real-time payment confirmation to the merchant.’

Although Payment Network AG was officially launched in 2006, Winkler and his colleagues started laying the groundwork two years earlier. Winkler noted: "What many people don’t know is that started developement in 2004. At the end of 2005, after a long period of development, we knew: this is a great system with great benefits for both merchants and customers. We therefore founded the company and started sales in 2006.’’

Winkler continued: “The overwelming merchant feedback has been that is simply a no-brainer. Imagine a payment method with almost zero chargebacks, no fraud, and the fastest possible money settlement at very low payment fees; that’s what we offer. Because it’s 100 percent credit card-free, all the hassles regarding PCI-compliance, debt guarantees and fraud management just disappear with our system.’’

The fact that Europe is one of the most adult entertainment-friendly parts of the world as well as one of the most Internet-savvy has helped Payment Network AG to grow and expand in several different European countries. But Payment Network isn’t forgetting about the North American market. Winker said: “ is live in Germany, Austria, Switzerland, Belgium, the Netherlands and the U.K. We will rapidly expand all over Europe by 2011, and are also planning our U.S. market entry already.’’

In terms of online payment methods for adult websites, the U.S. continues to be much more credit-card-centric than European countries. Winkler pointed out that in Europe, online credit card transactions are the exception rather than the rule — and U.S. webmasters, he said, need to understand that if they want to attract European customers.

‘In the U.S.,’’ Winkler said, “there’s a clear dominance of credit cards. Almost every U.S. citizen owns two, three or more credit cards. This is completly different from Europe. In large markets such as Germany, the Netherlands, the Nordics, etc., only 20 percent of online shoppers own a credit card. People here prefer to pay with bank transfers directly (through) their bank. If a U.S. merchant tries to set up his business in Europe, he needs to respect this very different payment culture. Otherwise, he simply loses up to 80 percent of his customers.’’

Winkler added that even though credit card use still dominates e-commerce in the U.S., American banks and credit card companies have become tighter with credit — and if American consumers have less credit for online payments, he said, webmasters will inevitably need to look into additional payment options. That, according to Winkler, can only help Payment Network AG’s expansion in the U.S. market.

“The economic crisis has sharpened the focus on credit defaults, chargebacks and fraud in general,’’ Winkler said. “The credit card companies are trying to reduce this with costly rules such as PCI. However, the industry still faces huge credit default risks. Therefore, I expect that banks will start to become more selective when issuing credit cards or adapting credit limits. Of course, this will also help direct credit-based payment solutions like ours gain more market shares.’’

Winkler continued: “If you’re a merchant earning money based on net earnings and those earnings partly disappear in expensive, time-consuming payment methods, what will you do? The answer is simple: take the risky step to increase prices or offer cheaper payment methods. However, a payment method is only cheaper than credit cards if it’s not connected to them. At the end of the day, the best solution for this is online bankingbased payment methods, and the leader in this area is’’

Payment Network AG, Winkler said, has come a long way since 2006, and he expects the company to become even busier as the new decade progresses.

Winkler said: “We reach 99 percent of all online-banking users in Germany and above 90 percent of all online-banking users in Switzerland, Austria, the Netherlands, Belgium and the U.K. It’s great to work for a company that is breaking her own records all the time.’’