When American webmasters travel to Europe on business, one of the first things they learn is that credit cards aren’t necessarily as revered overseas as they are in the U.S.. Credit cards are a way of life in the U.S., but in many European countries, they take a back seat to alternative payment methods—and one of those methods is direct debiting. Not all of Europe’s noncredit card payments are made with debiting; in Europe, alternative payment methods for online transactions can also include anything from e-wallets to mobile payments. But there are millions of European Internet users who prefer direct debiting whether they are purchasing sex toys, paying their electric bills or joining an adult membership website. The popularity of debiting can vary from one European country to another, but for American webmasters who are hoping to reach European consumers, offering debiting as a payment option makes very good business sense.
“In many European countries, consumers have long been accustomed to paying for goods and services using debiting, and it would not even occur to them to use a credit card,” explained Wolfgang Kring, CEO of the alternative payment solutions provider 2000Charge. “The main advantage for the consumer is the convenience, and for merchants, it’s the reach. A European debit system is a must-have.”
Direct debit is by far the most popular option in Germany by comparison to the rest of Europe, where it is less popular.
It isn’t hard to understand why American businesspeople who visit Europe for the first time may be shocked to see how different the payment environment can be in European countries. There are millions of American consumers who use credit cards for most of their in-person transactions and all of their online transactions; in Europe, however, there are millions of consumers who don’t even use credit cards at all. In Germany, for example, direct debiting is the dominant online payment method—and that is an important thing for adult webmasters to be aware of because Germany is the largest economy in Europe and is also one of the world’s top markets for Internet erotica.
“Debit is especially important and widespread in the German-speaking markets, where it is the norm that the customer’s telephone, electricity and gas bills are paid by direct debit and have been for decades,” noted Sascha Winkler, executive director of strategy for Payment Network AG (a payment solutions provided based in Gauting, Germany near Munich). “The proliferation of credit cards in Germany is much lower than in the U.K. or the U.S.; only 25 percent of German consumers have a credit card. Furthermore, it is not to be underestimated that many users quite consciously choose the option of direct debit because they know exactly what benefits they have with it.”
Many Americans continue to equate credit card use with financial stability; getting a decent score from Equifax, Experian or TransUnion can mean the difference between getting a mortgage and not getting a mortgage. But Kring pointed out that in Germany and other European countries where direct debiting from bank accounts is a popular payment option, both businesspeople and consumers are likely to equate debiting with both convenience and frugality.
“Historically, Germany has been a market of savers, which is why credit cards never really ever took off there,” Kring stressed. “Penetration is low, and those that do have them tend to use them more when traveling or for business.”
In fact, 2000Charge (which has offices in Munich, Germany and Los Angeles) offers debiting for no less than eleven European countries. But again, online payment preferences can vary from one European country to another—and while American webmasters who are seeking European customers need to be debit-friendly, they also need to be aware of other alternative payment preferences. And they need to know that Europe has different forms of debiting. In Germany, bank-based direct debiting reigns supreme. But in France, Carte Bleue is a popular debit card that permits transactions without the authorization of the user’s bank.
“Direct debit is by far the most popular option in Germany by comparison to the rest of Europe, where it is less popular,” Winkler said. “This is due to different cultures related to payments. For example: in France, of course, bank accounts and the technical conditions for direct debits to be processed through the banks exist. However, the wide acceptance and ease of use of Carte Bleue negates the need for the French to use procedures such as direct debit. This is especially true for Internet transactions. It is a similar situation also in England; again, the processing of direct debit is technically feasible and conceivable, but there is competition from the very popular card payments, especially as payment by debit card is available online. In Europe, each country has peculiarities in payments; therefore, the distribution of each payment method per country varies widely.”
Kring pointed out that with the adult Internet having becoming increasingly competitive during the economic crisis of 2008-2011, American webmasters need to think internationally—and part of thinking internationally is understanding the payment methods preferred in other countries. “Hardly a day passes nowadays without yet another thread being posted on the industry boards announcing the passing of another affiliate program,” Kring observed. “Times are indeed tough, especially in the new ‘freemium’ economy—surfers want and expect material for free before even entertaining the idea of parting with their money for a premium version of your offering. What is more, even if you have managed to steer a potential customer to your join page, there are further challenges to overcome: perhaps the surfer does not want to use his or her credit card online, particularly on an adult site—or maybe they have been reading the numerous articles in mainstream media about identity theft and do not want to leave a digital trail. Perhaps they do not have a card. Or they have one, but like countless others, it is maxed out and there is no credit left.”
Kring continued: “Smart, forward-thinking companies are adding every ‘alternative’ payment method possible to their options mix.” And that, Kring said, includes debiting.