E-Business Leaders Discuss Cross-Atlantic Trends

Alex Henderson

It is often said that technology makes the world a smaller place, which is true in some respects. An adult webmaster in Prague can post new content online and be selling it to customers in Dublin or Paris moments later. Yet different European countries have their own nuances, and when it comes to adult billing, Europe maintains a diverse billing landscape with a variety of billing and processing needs.

Mitch Farber, president and founder of the Valencia, Calif.-based NETbilling, explained: “Obviously, electronic payments are growing all around the world. However, North America and Europe remain at the forefront of this evolution. They account for the highest density and strongest markets with regard to existing electronic payment volumes and traffic.”

Europe continues to be a part of the world in which webmasters encounter many different billing preferences for adult entertainment — and what works well in one E.U. country might not work well in a neighboring E.U. country. -Cathy Beardsley, SegPay

Cathy Beardsley, CEO of SegPay, stressed that Europe continues to be a part of the world in which webmasters encounter many different billing preferences for adult entertainment — and what works well in one E.U. country might not work well in a neighboring E.U. country. There are many parts of Europe, Beardsley said, where credit cards aren’t used nearly as much online as they are in the U.S., but the billing methods used instead of credit cards can vary considerably.

Beardsley noted that Germany remains “a debit country with minimal credit card usage” and described France as a country where consumers “rely on paying by check, direct debit or with Carte Bleue, which is also a debit solution.”

Beardsley said that Italy is a country where consumers “rely on local payment options such as Sella Cartas as well as debit solutions,” adding that “Netherlands consumers rely on Ideal, which is a local debit solution that allows consumers to pay for Internet purchases directly from their bank account.”

Germany, France, Italy and the Netherlands are all strong markets for both the production and consumption of adult entertainment, but they are four different E.U. countries with their own billing preferences — and webmasters who offer credit card billing exclusively in any of those countries will be at a major disadvantage.

“It is never easy to get people to use their credit cards,” Peter Rabenseifner, head of business development for the Barcelona, Spain-based advertising specialist ExoClick, said of adult billing in much of the E.U. “If you look at Germany, for example, only 20 percent of the population use credit cards — yet it is the world’s fourth biggest economy and needs to be monetized. Alternative payment methods will need to be involved.”

Nonetheless, Farber describes Europe as a part of the world in which credit card payments have been increasing and will continue to do so. “In the E.U.,” Farber explained, “debit and transfers are king, as many consumers do not use credit cards—although that is changing. While payment types in Europe differ considerably from one country to another, the general trend over the past decade has been similar—card payments are gaining importance, and the number of card payments per capita has increased in each and every E.U. country.”

Beardsley noted: “At SegPay, we’re seeing a surge in credit card and debit transactions in Europe. Debit card transactions are currently outpacing traditional credit cards and represent over 50 percent of all consumer purchases. We are also seeing a shift in Visa transactions in digital payment processing with more consumers opting to use MasterCard or other emerging cards such as China Union Pay and JCB. However, China Union Pay does not currently allow for acquiring adult.”

The SegPay CEO added that a country’s billing preferences must be viewed in “cultural” terms.

Wolfgang Ruecker, CEO of the European payment solutions provider Global Humax Cyprus Limited, also described payment preferences as “cultural” and cited Germany and Austria as two E.U. countries where consumers don’t like going into debt. “Germany and Austria are countries with a high demand of direct debit payments,” Ruecker observed. “People don’t use credit cards as much as in the U.S., and there are two main reasons for that. First of all, people spend money only if they do have the money. Second, people with a bad financial history didn’t have the opportunity to apply for credit cards or even debit cards in the past.”

Some companies that offer extensive E.U. billing solutions are actually based in Europe — for example, Global Humax, the London-based GTBill and the Barcelona-based CommerceGate. But there are many U.S.-based companies with expertise on adult billing around the world, including NETbilling, L3 Payments (based in Westlake Village, Calif.), the Burbank, Calif.-based Mobius Payments, the Eureka, Calif.-based iProcessing (whose range of services for Europe includes debit and phone billing) and the Tempe, Ariz.-based CCBill.

Rabenseifner pointed to mobile payments as a billing method to keep an eye on in Europe. “The growth of mobile has seen one-click payment solutions explode,” Rabenseifner observed, “and the industry can expect to see this as the basis of payments, but activated in different ways—for example, fingerprint recognition payments, voice activated payments with pin codes, etc.”

Julia Dimambro, founder and managing director of the Barcelona-based mobile specialist Cherry Media, said that with adult mobile content becoming increasingly popular in Europe, it stands to reason that Europe will be ahead of the curve when it comes to mobile adult billing.

Dimambro observed: “Europe has been offering adult mobile content for more than 12 years now, so billing processes and options have always been quite advanced when compared to other continents. The fact is that Europeans will rarely purchase mobile entertainment services of any kind using their credit card because operator-based one-click billing is the standard over here. Conversion rates for credit card billing are so low in Europe that if this is your only billing model, you’ll probably be missing about 80-90% of your potential reach.”

But Dimambro, a native of London, quickly added that mobile billing also has its challenges in the E.U.

“The main point to consider about billing — especially in Europe, where local regulations will vary dramatically from one territory to another — is localized billing,” Dimambro asserted. “In mobile, it is actually impossible to get a ‘one account does all’ to bill Europe-wide or globally. This is because a billing aggregator will need to connect directly with each individual carrier in each country. Add to that the fact that different carriers within the same country will also vary on what you can and cannot sell when it comes to erotica — and you can start to see the can of worms open.”

Although Farber said that webmasters billing in Europe need to have a thorough understanding of the different billing cultures, he also cautioned against offering too many payment options.

Farber advised: “Not only for adult, but for online payments in general, e-tailers need to offer a variety of payment options based on the location of consumers using IP and other methods of geo-tracking. However, too many options can often lead to confusion for the consumer, thus resulting in less sales and more abandoned payment pages.”

Beardsley advised webmasters billing in Europe to keep a close eye on regulatory trends in different countries.

“There are regulatory requirements that affect content that webmasters can process in Europe,” Beardsley said. “The U.K. has put regulations in place that require webmasters to block consumers that cannot prove that they are over the age of 18. Revenge sites have also been a focus of the U.K. government. The Icelandic government is very concerned with revenge and hate sites. Recently, several conservative politicians in Iceland even tried to lobby the ban of digital adult entertainment in the county.”

Beardsley continued: “It’s important for webmasters to be aware of compliance changes with the E.U. Payment Services Directive (PSD). The PSD originated through European legislation, aiming to establish a comprehensive set of rules applicable to all payment services in the European Union. The legislation states that payment processors are required to be registered in one of the E.U. countries and licensed to process payments and handle funds in the E.U. It is important that your E.U. biller or processor is registered. If they are not, the biller/processor can face fines or be shut down.”

The U.K. remains one of the more credit card-friendly parts of Europe, and when credit card billing is involved, European banks maintain a very low tolerance for chargebacks.

Ruecker noted that Global Humax is “working on a score system to reduce chargebacks. The system will automatically allow each issuer to receive a refund instead of processing a chargeback. A similar system has been launched for a few issuers in the U.S., but it has not placed in Europe yet.”

One U.S.-based company that is trying to reduce chargebacks overseas is ChargebackHelp, which has developed an anti-chargeback solution for the E.U. Raja Roy Choudry, ChargebackHelp’s owner/CEO, explained: “We are currently offering a managed service version of Ethoca’s Fraud Alerts. While Ethoca is primarily known as a chargeback intercept provider in the U.S., they also have a large presence in the U.K. Currently, their coverage includes eight E.U. card-issuing banks that are all focused on U.K. consumers; two of them are part of the top five issuers in the U.K. Over the rest of 2014 and into 2015, Ethoca will continue the expansion of their coverage across the continental E.U.”

Clearly, adult billing in Europe remains a complex matter with many variables. But given Europe’s importance to adult entertainment, savvy webmasters will make an effort to meet its diverse billing needs. “Billing specialists are working hard to implement as many payment options as they can into their portfolio so they can expand their client consumers reach,” Beardsley explained. “It is a top priority for SegPay, and it should be a priority for other global payment processors to continue to enhance and expand the ability to add new payment types for merchants.”