Recently, Payment Network AG launched Rechnung by Sofort, a payment service that enables online merchants to offer their customers the option to pay by invoice.
Munich-based Payment Network AG provides internet payment solutions. Its products are based on online banking; almost everyone with an online banking account can use the SOFORT products to pay on the internet. Besides its most known products sofortüberweisung and sofortbanking, Payment Network offers further online services such as sofortdauerauftrag for recurring payments and sofortident to verify the identity and age of a person.
We spoke to Georg Schardt, Chief Marketing Officer at Payment Network AG, about the company’s new service and the latest e-payment developments. He has more than 25 years of experience in the European mail-order and retail business. Before joining Payment Network AG, he worked on the management board of the online retailer Conrad Electronic where he was responsible for the online and mail-order distribution channel.
PaymentObserver: Could you give us some background information on Payment Network AG?
Georg Schardt: Payment Network AG has been providing secure payment solutions for online shopping since 2005. Our main product sofortbanking is a service that allows customers to instantly trigger a credit transfer during an online purchase with his or her online banking information. There is no need for an additional registration or a credit card. A transfer order is instantly confirmed to the merchant allowing an instant delivery of goods and services.
Among our partners are large international companies such as Hugo Boss, DELL, Skype, KLM Royal Dutch Airlines and Emirates. Last year the number of transactions increased by 60%, at this point we are processing more than 1,3M transactions per month.
PaymentObserver: Your services are very popular in Germany, are you planning to expand to other countries?
Georg Schardt: Currently our services are available in seven European countries. We have partnered directly with more than 20,000 online merchants and e-commerce solution providers in Germany, Austria, Switzerland, the Netherlands, Belgium, Italy and the UK. We are planning to expand to all relevant markets in Europe by 2013.
PaymentObserver: Let’s talk about your new product. Can you provide more details on Rechnung by Sofort?
Georg Schardt: For Rechnung by Sofort, a service offered by our partner Sofort bank, we are working together with arvato infoscore, a subsidiary of arvato Bertelsmann AG, to provide a solution for B-2-C online shops to offer a pay by invoice option to their customers. Our service is easy to integrate into existing e-commerce platforms and is offered at a very competitive rate. We charge 2,99% + 0,49 € for every successful purchase and guarantee 100% payout towards the merchant. Regardless whether the customer pays or not – the merchant will get the full invoiced amount within 27 days after the purchase is made. With Rechnung by Sofort an online retailer can increase its conversion rate and create liquidity without bearing the risk of nonpayment.
PaymentObserver: These days we see many companies starting similar services for online retailers, what are the advantages of payments on invoice?
Georg Schardt: To customers in most European countries, the option to pay on invoice is not new at all. Traditional mail-order companies have been offering this payment method to customers for decades. It is also one of the most popular payment methods for online purchases. According to a research study by EuPD in 2010, almost around 97 % of all users would like to pay on invoice when buying online. By implementing this payment option, online retailers can win customers that are not comfortable with using e-payment methods such as PayPal or credit card payments.
The main advantages for consumers is that he or she can try out the product before paying for it. Customers are more likely to order clothes or shoes online when they know that they can return the ones that don’t fit and only have to pay for the items they keep. Although this payment method leads to a higher return rate than other payment methods, this can be compensated by the higher conversion rate that merchants experience when offering payment on invoice.
PaymentObserver: How important is the selection of payment methods for online merchants?
Georg Schardt: In general it is true that more payment methods offered result in a higher conversation rate, as different customers prefer different payment methods. But not every payment method is suitable for all kinds of shops and branches. Choosing the right mix of payment options is one of the critical success factors for online shops.
Summary by Georg Schardt: To pay on invoice is still one of the most preferred solutions for online shopping. We see great potential for Rechnung by Sofort. Our customers can easily implement offering payment on invoice without having to deal with risk management and debt collection. Together with Sofort bank we offer standardized interfaces, so the integration in existing shop systems is simple and usually does not take longer than a few hours.