In the U.S. and Canada, the term “alternative payments” is typically used to describe payment methods other than credit cards, including direct debiting. But in other parts of the world, especially countries in Europe, direct debiting continues to be a prominent payment option for both adult and mainstream transactions. And companies that are not debit-friendly stand to lose a lot of business in major European economies. Germany, for example, is the largest economy in the European Union (EU), and it is also a country in which a considerable amount of adult debiting takes place.
Wolfgang Kring, CEO of the alternative payment specialist 2000Charge, told XBIZ: “The use of direct debit has been strong for the largest e-commerce marketplaces in the E.U. These are Germany and the Netherlands. As a whole, the reach of a payment option like EuroDebit is massive. The transition to SEPA is now a year on and no longer a consideration. Even countries with slower uptake, such as France and Spain, are moving towards more usage of EuroDebit/SEPA.”
The use of direct debit has been strong for the largest e-commerce marketplaces in the E.U. These are Germany and the Netherlands. -Wolfgang Kring, 2000Charge
Cathy Beardsley, president and CEO of SegPay, noted that while debiting is still widespread in Europe, adult companies may need to look into other alternative payment options such as mobile payments if they hope to expand in developing countries.
“Direct debit is successful in specific countries in Europe — Germany, Finland, Poland and the Netherlands — and Latin America,” Beardsley told XBIZ. “Direct debit tends to be adopted by these areas as the form of payment and is a payment option that they are comfortable using.”
Beardsley added, however, that “as Internet access and e-commerce has grown in African countries, they have adopted mobile payments as their preferred option for what in the past had been a traditionally cash market.”
Rand Pate, director of communications for Epoch, asserted that with technology evolving at such a rapid pace, adult companies would do well to be as debit-friendly as possible but remain open to other alternative billing options as well.
“With so many existing and upcoming payment methods, it’s not easy to predict if direct debit billing will gain more market share,” Pate told XBIZ. “It is, however, a very good payment solution in specific markets. Direct debit billing is very popular for recurring payments, and Germany is the top country making use of it.”
One U.S.-based payment solutions provider that has been helping adult companies with their European needs is Payze, whose leadership includes chairman Joel Paulin, CEO Douglas Wicks and president Hank Freeman.
Wicks previously served as vice president of sales for CCBill, while Paulin was CCBill’s COO. Adult companies that have worked with Payze range from the Prague, Czech Republic-based ReallyUsefulCash.com to Grooby Productions, which publishes the popular, transgender-oriented SheMale.xxx.
Mitch Farber, founder and CEO of the Valencia, Calif.-based payment gateway NETbilling, asserted that as popular as direct debiting is in Europe, adult companies should not overlook credit card users in that part of the world.
“Direct debit is extremely popular in the E.U. region,” Farber told XBIZ. “Credit card use is about 40 percent of transactions and rising. About 30 percent use debit cards, and other methods cover the rest. These are overall stats with credit card use being even more popular for online purchases.”
Wolfgang Ruecker, CEO of the European payment solutions provider Global Humax, stressed that adult companies need to watch out for “friendly fraud” with debiting.
“Another fraud risk factor is the so-called friendly fraud, which means the adult user is able to call back the specific amount within six weeks after (it is) processed,” Ruecker told XBIZ. “Through the highly strict EU banking rules, the adult user would have the big advantage to call back the money without any reason. Friendly fraud is also (a problem) with credit card payments.”
Mia Hyun, president and CEO of the Los Angeles-based Mobius Payments, is quite bullish on direct debiting — which, she said, is an attractive billing option for adult companies because “the rates are typically lower than a credit card merchant account, especially in the high-risk marketplace.”
Hyun told XBIZ: “More than 100 million direct debit payments were processed in just one day at the end of July, in what Britain’s bankers are hailing as another milestone in the path to a cashless society. BACS, formerly known as Bankers’ Automated Clearing Services, said that eight out of 10 adults in the U.K. have at least one direct debit going out of their account — and around 71 percent of household bills are paid this way. As the market continues to evolve, direct debit will be brought along and gain in popularity.”