E Money 2010 Oct09


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E Money 2010 Oct09

  1. 1. This supplement is an independent publication from Raconteur Media 27 October 2009 e-MoneY 2010 Welcome to the world of electronic money E-money is the lifeblood of mail order businesses, especially those firms that operate on the Internet. But what are the perils and pitfalls of accepting e-money as a form of payment? Steve Gold discovers that e-money is lot more than just plastic cards... G reat strides have been worse, transactions - like cheques - and monthly minimums. Although sor. Charges for both these primary ess where a professional transaction made to offer the can be returned some time after they convenient, these e-money (electronic professional transaction processors processor is involved – has a higher consumer numerous are processed. If the cost of leasing a money) services can work out to be an vary and are – like so many aspects of chance of a chargeback occurring. choices in ways to pay card terminal and paying a minimum expensive option and thus it is crucial card acceptance arrangements – sub- Chargebacks are incurred when- electronically. The regulatory au- monthly charge to the transaction to draw up a cost analysis. ject to negotiation. ever the cardholder disputes the thorities, notably the Financial Serv- processor is factored in - plus a myriad As a general rule of thumb, the transaction – for any reason – and ices Authority and the Information number of extra charges, such as 3 to 5 online professionals transaction processor’s control of the card issuer starts an investigation. Commissioners Office, have been pence card authorisation fees, 50 to 75 Online businesses wanting to accept verifying the identity of a debit card- The process can take some time but instrumental in ‘keeping up’ with pence card refund fees and commis- electronic money can opt for an on- holder seems less rigorous than with a it is normal for the retailer to see the the internet revolution. sion fees of up to 5 per cent on some line transaction processing account credit cardholder. value of a disputed transaction (the For the retailer that sells goods or lesser-known cards - the process of ac- from companies such as Sage Pay Anecdotal evidence suggests that this chargeback) taken from their avail- services online the playing field seems cepting cards can start to grossly affect and Worldpay, to mention but a few. is because with a credit card cardhold- able card transaction balance for a less than level, since consumers have a company’s profits. Both firms are well established; with ers are effectively spending the card is- period of between 30 and 60 days. the benefits of regulation and legisla- It’s for this reason that a grow- Worldpay part of the RBS Group’s suers’ money, whilst with a debit card, After this period, when a dispute is tion on their side, whilst there is much ing number of smaller businesses are Streamline operation and Sage Pay the bank or building society can re- resolved, the funds are either placed fraudulent activity on the Internet. turning to online e-money firms like the result of a recent merging of move the money straight out of a cus- back into the retailers account or the The bad news with payment cards is Paypal and NoChex that process card brands between Sage, the account- tomer’s bank account. For an online chargeback is confirmed. that the card issuers can reject a trans- transactions for online merchants ancy/business software specialist and retailer, this can mean that a debit card action for a variety of reasons. Perhaps without the need for card terminals Protx, the online transaction proces- transaction – though cheaper to proc- continued on page two Painless transactions A roadmap to e-invoicing Business compliance Completing transactions online is no Why not send your invoices electronically? Since fraud is a major obstacle, companies longer a sticking point. We take a look It saves you time, money, effort and an must factor security compliance into their at the major providers. page 4 awful lot of paper. page 8 proposition. pages 14-15 Keep your e-money moving www.sagepay.com
  2. 2. 2 E-MONEY 2010 continued from page one Howes says that Chip and PIN is a Fortunately for businesses, UK classic case of this ‘management by com- banks are not run by goblins, as is Retailers with a store frontage have mittee’ approach. The Chip and PIN the case in the world of Harry Potter, the advantage of having a customer technology, he explains, was originally but for most online businesses – as signature or PIN verification to wave developed and used in France in the well as traditional retailers expand- at their transaction processor. Online 1980s and, by the time it rolled out in the ing online – the choices are many merchants have no such protection. If UK, the technology was actually 20 years and varied. Conversely, businesses of the cardholder wants to cause prob- old. “Will e-money take off? It’s going to all sizes can seek out the best trans- lems for the retailer they can, and quite take a lot of time. UK banks are rather action processor for them as well as frequently it seems that they do. like Gringotts Bank in the Harry Potter going some way to keeping fraud and Curiously, most transaction proc- novels. Very archaic and traditional.” potential chargebacks at bay. essors impose a transaction fee for processing chargebacks and refunds. This means that, even if the cardholder The elecTronic money aSSociaTion dispute is found to be invalid and the funds are released back to the retailer, the fees are still imposed. 15 years ago, the banking industry initiated projects to replace physi- This, unfortunately, is the price cal cash with an electronic equivalent or e-cash. With some initiatives of doing business. For online retail- based around payment cards and some using electronic networks, ers, there is little option but to grit most met with limited success; consumers did not see a compelling their electronic teeth and suffer the Pin verification can serve as protection for retailers in chargeback disputes reason to move away from cash. death (or so it seems) of a thousand The advent of the Internet brought with it opportunities for electronic micro charges. authentication model of 3DSecure net and e-money veteran whose ex- payments that exploited limitations of alternative products. The introduc- (Verified by Visa and Mastercard Se- perience dates back to the 1980s, says tion of an instant means of payment by PayPal, Moneybookers, Click and low-value e-MoneY curecode) to allow a user to create a that whilst banks always appear to be Buy and others provided a real consumer advantage. Today, the segment transactions one-time pictorial PIN that authenti- trendy they rarely innovate unless it has more than 250m users worldwide, accounting for some 10% of global Visa and Mastercard are busy trialling cates the cardholder. Howes, an Inter- suits them. “This means that innova- consumer e-commerce.The story of prepaid cards provides a number of a low-value (typically sub ten pounds) tive e-money services like Mondex and insights into changes in approach that have led to recent success. Prepaid “ initiative – respectively branded Pay- Paypal invariably get swallowed up by cards have become mainstream in the USA, and now are on the threshold Wave and PayPass – where a user has a smart card with an embedded radio Even if the banks and big business and either qui- etly buried (like Mondex) or repack- of growth in Europe. They have succeeded by focusing on clear and well defined consumer propositions; providing electronic alternatives to gift wave-enabled chipset. A good exam- ple of this is the Transport for London cardholder aged (like Paypal),” he says. “Visa and Mastercard have an inter- cards, travellers cheques or store cards.Gradually, more general purpose cards are beginning to find their way into the market, meeting the needs Oyster card. Despite some early prom- ise, the aforementioned cards have dispute is found esting approach in this regard. They say ‘we are a membership organisa- of the unbanked, those preferring not to use their credit card online and those seeking a budgeting tool for better spending control. never been engineered for use online and away from the real world. to be invalid and tion’ and, as a result, everything gets done by committee and takes an age Furthermore, these have been largely marketed as retail consumer products rather than traditional financial services products;. adver- According to Steve Howes who is chief executive of Gridsure, a UK- the funds are to be agreed upon and eventually tri- alled,” he added. tised and sold in supermarkets and convenience stores as well as bank branches, their branding more in common with consumer goods based company that has developed a pictorial alternative to the PIN system released back According to Howes, this effectively stifles innovation in the e-money than with Traditional financial products. Increasingly alternative outlets are also being used, such that most of us use with our payment cards here in the UK, the current situa- to the retailer, business. One may draw the conclu- sion therefore that despite the media as money transfer agents, travel agents, and online financial services sites, targeting specific consumer segments. tion with e-money is unlikely to change the fees are still hype over alternative payment tech- The outlook for both online and card based products is good, and ” going to arrive? for the foreseeable future. Gridsure is nologies, most businesses will be ac- the maturing of mobile and (contactless) technologies promises a rich a personal identification system that extends the standard ‘shared-secret’ imposed cepting card payments in their current form for some time to come. and diverse payments environment for the future. is e-money ever may have (or claim to have) taken back merchandise to a merchant in return for a credit, but the credit was never posted to the account. In this example, the retailer is responsible for There are more e-money alternatives for retailers than which helps the transaction processor situation, a card is used without the issuing a credit to its customer, and – and the retailer – understand why consent or proper authorisation of the would be charged back. you would think but it may be more difficult to prove the chargeback has occurred. cardholder. In many cases, a retailer is Other types of chargebacks relate their side of the case where a chargeback is involved Reason codes vary by card issuer responsible for charges fraudulently to technical problems between the J and network, but fall in to four imposed on a customer. Mostly, merchant and the issuing bank, ust to make life interesting, where a chargeback is involved. It’s general categories: however, fraudulent card transactions whereby a customer was charged twice there are a lot more e-money also worth noting that US transac- n Technical – Expired authorisation, originate with criminals who gain for a single transaction (duplicate options available for online tion processors are normally outside insufficient funds, or bank access to secure payment card data and processing) for instance. retailers. These include e-gold of the reach of the Financial Serv- processing error set up schemes to exploit that data. Against this backdrop, a number of and Neteller, for instance and many are ices Authority meaning that you may n Clerical – Duplicate billing, incorrect Chargebacks can also result from a players in the financial industry have mainly based in the US. need to hire a US lawyer if you hit any amount billed, or where a refund was customer dispute over a return. This tried to launch e-money initiatives but These services are often priced very serious problems. never issued type of chargeback is usually described to date they have all either failed or been appealingly but the downside is that There are many reasons for a n Quality – Customer claims to have as credit not processed. A customer snapped up by big business. your transactions – and those of your chargeback to be issued ranging never received the goods or service customers – are normally charged in from ‘buyer’s remorse’ – where promised at the time of purchase US dollars, meaning both sides take the buyer has second thoughts on n Fraud – Customer claims they did not Published in association with: a modest ‘hit’ on the exchange rate their purchase – right through to authorise the purchase, or have been commission front. real criminal card fraud. With each the victim of identity theft Added to this, anecdotal evidence chargeback the card issuer usually One of the most common reasons Electronic suggests it’s a lot more difficult for selects and submits a numeric ‘reason for a chargeback is a suspected or Money retailers to prove their side of the case code’ to the transaction processor, actual fraudulent transaction. In this Association e-money 2010 Distributed in publisher: Jamie Simon editor: Tobias Kelly For more information about Raconteur Media publications The information contained in this publication has been obtained from contributors: Steve Gold, Andrew Gellatly, Barnaby in The Times and The Sunday Times, please contact Freddie sources the proprietors believe to be correct. However, no legal liability can Page, Ron Condon, Rod Newing, Thaer Sabri, Bob Russo Ossberg T: 020 7033 2100 E: info@raconteurmedia.co.uk be accepted for any errors. No part of this publication may be reproduced Design: Hervé Boinay, Steve Burgess W: www.raconteurmedia.co.uk without the prior consent of the Publisher. © RACONTEUR MEDIA
  3. 3. E-MONEY 2010 3 PROMOTIONAL FEATURE airPlus transforms corporate card programme at BT When BT needed a global card provider to streamline its corporate card operations, it looked to AirPlus International for both its lodged and corporate card solutions STreamlined ProceSSeS W ith 60,000 regular travel- BT is aiming to increase the number of In the UK, only a very small percent- lers, each making more expenses processed through the lodged age of people pay their cards by direct than 12 expenses claims account, ultimately reducing credit lim- debit, so AirPlus introduced a wider per year, it is essential its on the individual cards, saving costs range of ways in which people can pay, that BT has an efficient process to han- and reducing company risk. AirPlus including by phone and via internet dle travel expense claims. BT’s growing works closely with BT’s travel agent for banking; in June, AirPlus added on- international activities also mean that scheduled flight bookings, and will soon line payment, through its own portal. any management system needs world- start incorporating budget airline and The range of payment options has also wide coverage in order to consolidate train bookings into the lodged account. helped to reduce late payments. and centrally process global data. With central settling, frequent travel- Gaynor Martin, global corporate card lers do not need to receive thousands global prograMMe manager at BT since 2003, explained: of pounds from BT and be left with the By switching to AirPlus, BT has been “In 2008, it was decided to overhaul responsibility for paying that to the card able to implement a global programme, Of particular value to Gaynor’s team is being able to have the centrally BT’s corporate card programme for a provider. BT has already seen a reduc- and Gaynor is able to see worldwide settled account visible to line managers. more efficient, streamlined process. We tion in non-payments since starting the data through the AirPlus Information “Claiming all expenses through the Oracle system, part of which is looked for a self-issuing card provider, new programme. Previously, somebody Manager online reporting tool. From centrally settled and another part paid to the employee, was a brand because our UK card base is simply could buy a flight one month using the October 2008, when the UK operations new scheme that AirPlus did a lot to help us develop, proactively too big to work through a third party. individual corporate card and go on the were still in the planning stages, AirPlus communicating with the Oracle consultants. We also felt that a lodged card account trip the next month when the bill came solutions were already being rolled out Oracle automatically allocates all flights to the budgets, and every was a key for moving the programme in, accruing interest unnecessarily; with in 20 other countries, through partner individual can see their flight costs, as well as the costs on their forward, to centrally settle pre-trip a lodged account, it is automatically issuers for the individual cards. individual cards. The link with Oracle makes it so much easier to handle travel costs like air fares, train fares and paid so there is no delay. Gaynor elaborated: “One of the ad- the information.” car hire. However, full central settle- vantages of being with AirPlus is that, “ ment would not be suitable for BT; the although the cards are issued by a part- Company deals with a range of different ner issuer in different countries, there is businesses, and in some sections, like BT After a lengthy an AirPlus presence in every one of exPenSeS ProceSSed overniGhT Retail, for example, the sales force and those countries, ensuring that a direct field managers need cards at hand for and detailed line of contact is maintained between Gaynor said: “Many of our previous systems have been replicated with on-the-road travel expenses, particu- larly petrol costs.” tendering process, BT and AirPlus.” As BT continues to develop its corpo- AirPlus, and the programme has improved significantly. With the AirPlus tenDering process BT eventually rate card programme, AirPlus has been adaptable to BT’s unique requirements. Company Account lodged card, we now have centrally settled scheduled air fares, which has been a huge step forward. After a lengthy and detailed tendering process, BT eventually chose AirPlus chose AirPlus “AirPlus has been extremely flexible in setting up exactly what BT needs, and With the AirPlus Corporate Card, expenses incurred through individual business cards are processed over- International for its corporate travel payment solutions, starting implemen- International for came up with some innovative ideas to tackle certain challenges. Its representa- night, to pre-populate the account for when the employees claim their tation in January 2009 and achieving full operation by April with both lodged its corporate tives have also been very receptive and responsive to any requests that we have expenses. Each of the pre-populated credit card transactions is justified and individual cards. By August, 20,000 travel payment made, even as far as how the statements for tax purposes, and any cash or ” cards had already been issued in the UK, would look. AirPlus has been excellent mileage are added. The new system and other regular travellers continue to solutions in helping us to optimise our expenses has been a big time-saver for us.” be encouraged to apply during 2009. handling processes,” Gaynor concluded.
  4. 4. 4 E-MONEY 2010 Attracting customers online is the easy bit – taking their money has always been harder. But the payment service provider takes the pain out of transactions, writes Barnaby Page E -business works because it shrinks the distance and time that historically so often separated willing buyers – be they consumers or businesses – from sellers offering just the right goods and services. But while the Internet quickly made contact between sellers and Putting money customers much easier to establish, completing the transaction with a payment was often a sticking point. Accepting an order online is one thing; sending money in a way that’s secure, reliable and cost-effective for both parties is a good deal in your pocket more complex. While the big banks and credit-card companies have now accepted the reality of online business, with divisions like The Royal Bank of Scotland Group’s WorldPay supporting online business as eagerly as real-world transactions, their early laggardliness allowed the emergence of a new class of financial facilitator, the payment service provider. In essence, these operations complete “Two of the greatest challenges faced functionality such as storing a cash when they display the Checkout logo, offer additional services such as a team the link between the two participants in making payments overseas are the balance in the consumer’s account, and also that the system’s simplicity of experts on preventing gaming fraud, in an online transaction by taking complexity of payment formats and the Google Checkout is focused on single means customers already signed up and again a global mindset is on dis- payment from the buyer and passing it ability to track the status of transactions transactions. Users save their card to Checkout are 40 per cent more play – the company provides users with on to the seller, in a way that’s as hassle- from initiation to beneficiary. Payment details and personal information in likely to be converted to a sale than live chat support in 22 languages. free and secure as possible for both. service providers need to offer solutions their Google account, then only have non-Checkout users. And the list goes on: Wirecard, Mon- For the seller, they remove the that address both issues,” says Colin Kerr, to enter a password to pay for their PayPal and Google may be the best- eybookers, 2Checkout, Digital River’s headache of developing and managing industry manager for payments and purchases with Checkout. known brands, however, many less CCNow, Gogopay, Russia’s Webmoney, in-house systems that would have to core banking at Microsoft Worldwide high-profile payment service providers PayPoint – perhaps more familiar from handle multiple payment methods and Financial Services. siMple ...or coMplex? find their strengths in more specialist its logo in the window of your local foreign currencies; for the buyer, they Probably the best known to consumers From the seller’s point of view, services. Envoy Services, for example, newsagent, where the service also allows make it easy to complete a transaction is PayPal, an early entrant into Internet Checkout, like many other payment emphasises its international creden- people to pay utility and mobile-phone payments – it was founded during the services, can be simple or complex to tials by supporting 15 local languages bills – and ClickandBuy, with its envi- “ first flush of Webmania in 1998. PayPal implement, depending largely on the as well as 20 local payment options, able list of blue-chip customers includ- Accepting has been relentlessly pushed by eBay, which acquired the service in 2002, as extent to which you want the payment process to be integrated with your including POLi (Australia New Zea- land), Abaqoos (Hungary) and Telen- ing Electronic Arts, iTunes and Playboy. (Inevitably, the Internet being what it is, an order online the payment method of choice for the millions of online auctions it hosts, and other systems and your own branding. At the most basic level, appropriate to gresso (Spain). By contrast, Google Checkout accepts only a handful of there is also an extreme libertarian end of the market, with nascent projects like is one thing; that in turn has given it a household- name familiarity unrivalled by any the smallest online operations, ready- to-use HTML code supplied by Google internationally well known cards. Envoy Systems allows companies to eCache and Ripple attempting to create digital money and transaction systems sending money other payment service provider. can be pasted into a firm’s own Web pages; more sophisticated e-businesses receive money by local wire transfer, without having their own bank ac- untainted by big business.) in a way that’s one-off creDit PayPal continues to develop – most may find that their shopping-cart technology already incorporates count in those territories and transfer funds to 192 countries, through their paYMents pie All these and others are competing for secure, reliable recently, for example, with the introduction of Pay Later, a service support for Checkout (about a dozen do), or develop a bespoke interface to 150 local bank accounts, supporting over 22 currencies. This offering is a slice of the payments pie, which can only grow as e-business itself grows and cost-effective through which consumers can obtain one-off credit to fund their online make other shopping carts work with the payment system. enabled by a range of real-time bank- transfer services, which last year saw – earlier this year, payment service provider SagePay was reporting year- for both parties is purchases. And over the years it has seen off plenty of competitors, including Unsurprisingly, Google has ambitions for Checkout that go beyond merely 25 million cross border payments exe- cuted, totalling in excess of $1 billion. on-year growth in transaction volumes of more than 50 per cent every month, a good deal more Billpoint – its predecessor in the eBay providing an enabling technology. Others go beyond payment services to and nearly 70 per cent in some. ” stable – as well as Western Union- Already firmly in control of the first part support the rest of the transaction. Kagi, Many will succeed, and some won’t. complex founded BidPay and the PayDirect service operated for Yahoo! by HSBC. of many online shopping expeditions – the user’s search, and the merchant’s for instance, can provide technology to manage the downloading of paid-for The big players – the banks, PayPal, Google and a handful of others – will However, despite its high profile, advertising – it now wants to be present digital content or the online registra- not go away, but there is scope for quickly and confidently, even if their PayPal is far from the only choice at the completion of the transaction too, tion of software purchases, and for mer- niche providers to flourish too when existence is minimised beneath the for businesses looking to complete and hopes that it can deploy its existing chants selling physical goods, it offers they add value to the buyer-seller re- seller’s own branding. They’re not transactions online. large base of registered users and its warehousing and fulfilment services. lationship. Large or small, global or dissimilar to the merchant service Among the most significant advertising platform to enhance the Similarly, Dragonfish specialises local, selling boxes or selling bytes, providers that process businesses’ alternatives, because of its hugely performance of its payment system. in providing payment services to the each business has distinct require- credit-card transactions, but frequently powerful owner, is Google Checkout, The company claims that Checkout online gaming sector, although it is ments when it comes to outsourcing offer a wider range of payment options which has been available in the UK users are ten per cent more likely to now expanding into retail too, accord- e-payments – and a provider that and – crucially – have a resolutely for about two-and-a-half years. Unlike click on AdWords – the ads displayed ing to marketing director Gavin Bisdee. meets those needs should soon make international outlook. PayPal, which offers some bank-like on its search-engine results pages – This sector-specific focus allows it to its presence felt on the bottom line.
  5. 5. E-MONEY 2010 5 PROMOTIONAL FEATURE Think global, pay local Envoy Services has developed a network of 150 local bank accounts and payment services worldwide. Businesses that are expanding their operations globally need to realise that a one-size fits all business strategy won’t cut it in a competitive environment T he Internet has been break- no need to enter payment details for ing down barriers between every online transaction; payments different geographic markets are quicker as it eliminates the need to for some time. However, lo- register on websites and, unlike credit cal customs, traditions and general or debit cards, there are no surcharge approaches to business still vary from fees for the consumer. country to country, and one of the For merchants, iDEAL also has a most important of these is the way number of advantages: acceptance fees in which customers prefer to pay for are considerably lower than those as- goods and services over the internet. sociated with credit cards, they receive Businesses that are expanding their immediate payment confirmation and operations globally need to realise that they can leverage lower acceptance fees a one-size fits all business strategy will to offer discounts to consumers. not work in a competitive environment. Another example is Przelewy 24, a Consumers and businesses alike will bank supported service in Poland, choose to engage with the organisa- which is independently owned by tions whom they perceive to have the DialCom24. Established in 2003, best understanding of them and how Przelewy 24 is now supported by they want to operate. approximately 7000 merchants and Consider this: a UK company promotes a staggering 95 per cent which is successfully operating in banking coverage in Poland. the UK by solely accepting payment Not only do the experiences of by cards will, if it takes the same ap- countries such as Germany, Po- proach in Germany, potentially miss land and the Netherlands demon- out on sales to over 70 per cent of strate that real-time payments are domestic consumers who will not or a proven and successful real-world cannot use payment cards. Likewise, if possibility, but they also illustrate the company cannot accommodate the the contrast in payment attitudes iDEAL payment network in the Nether- within the UK: one payment solution lands or Przelewy 24 in Poland, they risk does not fit all. missing out on transactions from up to 80 per cent and 95 per cent of the popu- easier for businesses lation.Without adopting the preferred For an individual retailer or service pro- payment types within each country, vider, just to be able to offer each of organisations risk missing out on huge these real- time payment options, even proportions of business. There is no ex- without trying to replicate Envoy’s large cuse. Thanks to organisations such as network of international bank accounts, Envoy Services - a UK based payment would be both extremely costly and ad- technology and services provider - it is doubt that pay- ments such as ministratively hugely complex. now easier for businesses to trade in the ment cards and Giropay, Sofor- Envoy has enabled over 300 me- region of their choice, offering popular online banking have tuberweisung, ELV, dium to large merchants through a local payment services, without having transformed how money payment on invoice and single integration to access a variety to create a complex, costly infrastructure transactions can be made. cash on delivery are popular. of payment methods, and make both within each country to do so. Gone are the days of having to carry In the Netherlands, the domi- significant savings in time and trans- vast sums of cash around or relying on nant payment method iDEAL has action costs. Last financial year, Envoy tHe rise of real-tiMe the postal service to deliver a cheque to seen real-time payments rocket since processed over 2.5 million cross-bor- paYMents the right person at the right time. local paYMents its launch in 2005, with 28 million der transactions, in 192 countries, rep- The key to developing a global, but lo- However, just as payment cards sig- Envoy does this by operating local bank transfers processed in 2008. In just resenting a total transaction value in calised, strategy revolves around three nalled the death knell for established pay- accounts ‘in country’ which are directly four years, iDEAL has become re- excess of $1 billion. Significant growth key tenets. Offering tailored products ment mechanisms such as the humble integrated with banks’ proprietary soft- sponsible for between 60-80 per cent is forecasted this financial year. that meet the needs within each spe- chequebook, we are entering a new era of ware. This means that organisations of all online commerce in that mar- In summary, it’s the informed com- cific country, conducting business in payment technology, which offers a host can make and receive local payments ket, depending on the information panies who use these technological the right language for the region, and of benefits for businesses and consumers through the Envoy interface at a fraction source, demonstrating the strong advances to their advantage who will offering payment services that cus- alike – real-time payments. of the cost and time of using their own demand from Dutch consumers for be in the best position to reap the tomers know, use and trust. Real-time bank transfer services are bank’s international payment service such a service. benefits of being perceived as a ‘local’ This last point relating to payment specifically designed to complement which is often expensive and slow. iDEAL offers consumers a more supplier –regardless of where they are services may seem obvious, but too domestic card services to maximise ac- Envoy clients, who include Datacash secure means of paying as there is located in the world. many businesses decide how they cess to domestic customers –particularly plc, one of the UK’s largest payment will accept payment for goods and those who prefer not to use cards online. processors, and Viagogo, the ticketing services as an afterthought. Instead, In most cases, these services offer instant exchange, typically save between £10- this should be one of the first issues a secure online bank transfers between £15 per cross-border transaction. business should consider. After all, if business and business, or business and Despite the clear benefits of real- people cannot make payments using customer. One such real-time payment time payments, it is not yet the method their preferred method, then there is provider is Envoy Services whose network of choice in the UK where payment a high risk that they will look else- of bank accounts and payment services is cards still account for the majority of where and the transaction will not used to collect and deliver money eco- the market. Elsewhere in Europe, it is happen in the first place. nomically, quickly and securely on behalf a very different story. A recent For- Technological developments have of customers and online retailers world- rester report found that payment card meant that there are many different op- wide. Envoy offers merchants single point adoption in Germany is typically low, tions when it comes to paying for goods access to this ever expanding network of while traditional methods such as bank and services. For instance, there is no local payment services. transfers, bank specific payment instru- www.envoyservices.com
  6. 6. 6 E-MONEY 2010 “ Retailers that succeed are those that listen to their customers, give them what they want and execute with ” excellence “We are at the sharp end of fashion, as opposed to clothing,” says Robertson. “It will help to grow the online market, which is good. The tide is definitely in our favour.” Increasing the amount customers spend on the web, rather than on the high street, involves removing barriers. Instead of trying on in a shop, customers can get free delivery and return. ASOS can match the instant delivery of a shop with same day delivery for just £9.95 extra. “It becomes so convenient that people won’t get in the car,” says Robertson. His second biggest peak in the day is lunchtime, but the 9.00pm peak is twice that size, when the shops are shut. nick robertson predicts big growth in the online fashion market He points out that a web platform provides an infrastructure that can no guts, no glory! boundaries and no physical walls, service global distribution. which lets you carry product ranges Before investing in any local that are vast relative to a high street marketing or language facilities, store. In a physical world it is all about the site is shipping from the United return per square foot. The biggest Kingdom to 114 different countries high street store has 200 dresses on its around the world, with the biggest E-commerce success of money, lose it and go under,” he Aimed primarily at 16-34 year olds, it web site, we have nearly 3,000. If we being Denmark, France, Germany, says. “We were propped up by our offers 25,000 branded and own label are out of stock on one item customers Ireland, Sweden and United States. comes from a sound other business and only raised £2.8 product lines over 1,500 new ones are will select another.” International sales already account for business model, the million from family and friends, so introduced each week. It attracts over By definition, fashion is notoriously 25 per cent of sales are growing at 110 we didn’t have anything to go under 5.2 million unique visitors a month. volatile and big name brand perform- per cent a year. founder of ASOS.com with. We just paddled away furiously With a background in marketing ance can quickly go from phenom- Robertson sees the big advantages tells rod newing until the revenue and cost lines and limited funds, ASOS was able to enal to catastrophic. However, ASOS of the internet over the high street as crossed in 2003.” be very frugal and sensible in the way is hedged by spreading its risk across being more inventory, lower overhead A ASOS plc started as a marketing it attracted its first customers, relying 800 brands, as well as its own label. and global selling. SOS.com was born on business that did product placement on ‘free’ marketing, like online search The United Kingdom clothes He is exploiting these benefits the internet in June with celebrities. The name was and press campaigns. Every day sales market is worth about £45 billion through an organic ‘build and grow’ 2000, shortly after the derived from ‘As Seen On Screen’, and were bigger than the previous day, annually. Between five and six per strategy. Whilst mobile shopping is internet bubble burst, the original web site told people what every week bigger than the previous cent is currently over the internet not material at the moment, he sees it when the business landscape was brands celebrities were wearing in week and every month bigger than the and Robertson expects this to rise as the next big opportunity. covered in dead and dying web sites. programmes and films. Robertson’s previous month. The trend improved to 10-15 per cent over the next “Retailers that succeed are those “No guts no glory!” That is the way vision was to increase revenue by quickly as more fashion products were three or four years. With reasonably that listen to their customers, give Nick Robertson, its chief executive selling the product as well. added to the site. healthy margins in fashion and them what they want and execute with and co-founder, philosophically Admitted to alternative investment “Fashion is all about newness, without the overheads of shops and excellence,” he concludes. “We have set describes the timing. market in October 2001, ASOS is the discovery and what is different,” staff it can be quite profitable. This out our stall to do that, so we stand “The classic internet business United Kingdom’s largest independent says Robertson, “and the internet is bringing in world-class retailers a good chance of winning the online model at the time was to raise lots online fashion and beauty retailer. enables that in spades. There are no like Tesco and John Lewis. fashion race.”
  7. 7. E-MONEY 2010 7 risk vs opportunity: PROMOTIONAL FEATURE The business imperative cost of fraud for legal-specific e-billing software Educating consumers is essential for successful Legal departments have unique needs for reviewing e-commerce security, and processing law firm invoices and DataCert AIMS says rod newing provides legal-specific e-billing to meet those needs F B raud always goes to the arclays Bank is one of a growing AIMS, each invoice goes through weakest point. The payments number of organisations in the an advanced automated validation industry introduced chip UK that are taking the lead on process. We can now be sure each and PIN in the ‘card present’ implementing electronic billing invoice is compliant with our Outside physical world, which drove fraud specifically for their legal team. Counsel Guidelines.” to the ‘card not present’ world of The British bank, which employs over The data captured through AIMS internet, mail and telephone order- 150,000 people worldwide, has imple- now gives Barclays an unprecedented ing. Verified by Visa and MasterCard mented DataCert AIMS to track its legal view into the details of its legal spend, SecureCode, using their agreed 3-D spend more closely and automatically including which matter, with which law Secure standard, were introduced validate fees and expenses. firm, at what cost, and most importantly, to authenticate internet purchasers. As well as allowing Barclays to track for what outcome. Financial Fraud Action UK, the pay- more closely where invoices are in the The Barclays experience is typical of ments industry voice on fraud, has review process, they are keen to work the increasing interest DataCert sees just reported an 18 per cent fall in in partnership with their law firms to in its AIMS solution. “All of the legal ‘card not present’ fraud, but an in- understand in more detail the types of departments we speak to in the UK and crease of 55 per cent in online bank- work that have been carried out and to Europe in general, whatever their size, ing fraud, as criminals move on to improve the management information realise that they have to improve the way the next weak point. that is made available. they currently handle, receive, review, Although a fall in fraud might seem To achieve these goals, Barclays track, and report on their legal spend,” positive all round, web merchants understood that a legal-specific e-billing said Jerome Raguin, DataCert’s Territory carefully monitor conversion rates system was needed. While horizontal manager for the UK Ireland. from entering check out to making billing systems can satisfy many of Working with DataCert on Barclays’ the final payment. Some have been the general billing requirements of an legal e-billing initiative has been naturally disturbed by perceived lost visa codeSure aims to be the consumer’s preferred payment method organisation, they are insufficient for critical to its success as DataCert is sales, fearing that additional security the more complex billing needs of the the only vendor in its market that can is putting buyers off. spent. It attributes the reduction in merchants to replace the current pop- legal function for which the invoices truly support the unique and complex “3-D Secure lacked the huge internet fraud to both growth in the up verification screen with a simpler are very content-rich, require many e-billing requirements defined in media campaign of chip and PIN use of the new authentication process one that appears to be part of the validations and complex and variable the European Union VAT Directive. to educate consumers,” says Simon and the increasing use of sophisticated payment process. It is also piloting review/approval workflow, and contain DataCert provides a comprehensive Black, managing director of Sage Pay, fraud screening detection tools by CodeSure in six different countries. a great deal of line item detail – each solution that helps its customers achieve a payment services provider. “It has retailers and banks. This is a standard Visa chip card relevant and critical. compliance with all aspects of the EU also lacked strict enforcement. 3-D In Europe 450 banks are employing with a 12 digit keypad and eight Barclays understands first-hand VAT regulations, including an e-invoice’s Secure needs a password, which is an Verified by Visa and have enrolled 50 digit display screen on the back. the benefits of using DataCert’s legal- content, transmission, and storage. extra step some users don’t want to million cardholders, mostly in the When users enter their PIN on the specific e-billing system to capture line In addition, DataCert has an take, but is necessary to fight fraud.” United Kingdom. Over 50 per cent of card it displays a random one-time item detail and ensure compliance with established team of full-time staff in “ Jennifer Perry, founder of number, which is entered into the its established guidelines. “Traditional key European markets, delivering local E-Victims, which provides support Verified by Visa payment process on billing software just did not give us implementation, dedicated support, to victims of electronic crime, says Consumers do the computer or given to a merchant enough visibility into the details of and relationship management services that the banks and retailers protect over the telephone. Visa expects rapid each transaction,” said Mark Harding, to its customers and their outside the trustworthiness of their brand, not understand deployment early in 2010. general counsel at Barclays. “With counsel firms. so don’t want to raise security issues “We are all drowning with different themselves. “They put authentication why they are static passwords and passcodes for processes in place to protect themselves as much as to protect being asked to different web sites, applications and payments,” says Smith. “There is a the consumer,” she says. “However, consumers do not understand participate in yet really strong need now to move to dynamic passwords and passcodes, so why they are being asked to participate another layer of consumers don’t have to remember ” in yet another layer of security and them all. Visa CodeSure will not are annoyed.” She explains that when criminals security just bring the added security of chip and PIN to online payments and get hold of your e-mail address they internet banking, but will make it so will try to hack your password. If all Visa card e-commerce transactions much more convenient and intuitive they succeed, they will try the same are now authenticated by the Verified for consumers, so it becomes their password on your e-Bay account, by Visa service. preferred way of paying.” then your PayPal account, where they “We would like it to be a lot higher, The latest Unisys Security Index can see your bank and credit card but draconian enforcement rules are found that over 60 per cent of details. “Once you tell consumers this not in anybody’s best interests,” says consumers are still apprehensive is how the criminal works,” she says, Kevin Smith, senior vice president for about shopping and banking online. “they suddenly understand why they fraud management at Visa Europe. The most practical advice comes from need to protect themselves.” “We deliberately set out to create security expert Robert Schifreen: “The According to Financial Fraud the right economic framework, so best way to ensure that customers Action UK, 31.6 million people use that individual banks and merchants don’t abandon the purchase is to the internet for shopping accounting would deploy at their own speed, ensure that your prices are the for 7 per cent of all card payments. hopefully as quickly as possible.” cheapest. Then customers know that However, fraud still only represents Visa is working with UK banks, giving up and ordering from another a tenth of a penny for every pound payment service providers and site will cost them money.”
  8. 8. 8 E-MONEY 2010 The hard road to electronic invoicing The European economy could save money, time, effort – and a whole load of paper – if it moved to electronic invoicing. ron condon charts progress so far I magine you are a small company directly into the buyers’ own accounting standards across Europe. “Every cleaning windows for a large com- systems? It would save time, money, member state implemented their pany. Each month you print out an effort and an awful lot of paper. The own slightly different version of it. invoice, send it to their accounts chances of suppliers being paid on time It was not prescriptive enough and department, and then hope you’ll be would greatly improve too! that made things more complicated.” paid within 30 days. The European Commission has says Ifor Williams, sales director If payment fails to arrive, then you already identified this as a major of Accountis, a major player in the have to get on the phone, locate the problem for business. As part of its e-invoicing world. right person to deal with, ask them to goal to reduce administrative costs It is also worth mentioning that locate the invoice and let you know for SMEs by 25 per cent by 2012, the as recently as 2004, some European what is happening. If the invoice has Commission has identified electronic countries still actually demanded that been lost or misplaced, you may end invoicing (e-invoicing) as a major invoices should be on paper, although up having to send a replacement with component of its efficiency drive. that particular barrier has now been re- more delays and uncertainty. A task force looking at the subject moved. Differences still persist, howev- Way to go: e-invoicing Apart from the sheer hassle of reported in July 2007 that “electronic er. For instance, in Germany, electronic is the future having to chase payment, that kind of invoicing could significantly reduce invoices are required to have a digital delay can make the difference between supply chain costs by 243 billion EUR signature, which many commentators survival and failure for many small across Europe, as well as helping to see as over-elaborate and a barrier to environment, because they are used level by the European Expert Group businesses, especially with credit from streamline business processes and wider adoption of the technology. to presenting paper documents to the on e-Invoicing, which will deliver its the banks being so tight. help drive innovation.” It also warned Differing VAT regimes have also VAT auditors. There is a requirement final report and recommendations in Yet it is estimated that around 30 against a fragmented approach been seen as a potential barrier, to retain invoices for six years, so there November for implementation early billion – yes, 30 billion – paper invoices between different countries that could certainly to cross-border invoicing, are concerns over compliance.” next year. are generated across Europe every limit easy communication across according to Stefan Foryszewski, head However, he admits that most The group’s chairman, Bo Harald, year, each of them making their own national boundaries. of business development for OB10, a tax regimes are now becoming plays down the importance of standards slow journey through the mail service, provider of e-invoicing services. “The more enthusiastic about promoting as a barrier to progress. “The lack of before navigating an often uncertain unsuccessful atteMpt invoice is a VAT document, and as such electronic working and that HMRC standards is not the show-stopper. We path from the company mailroom to In some respects that horse had already it is subject to all sorts of legislation, has done a particularly good job in need to change the mindset so that the accounts payable department. bolted, following an unsuccessful which varies across Europe,” he says. enabling it to happen. people see these wasteful practices have How much more efficient would it be attempt in 2004 to promote the “Buyers and suppliers often have Those and other impediments are to disappear,” he says. “We need to get to send all those invoices electronically, use of e-invoicing by harmonising concerns over moving to an electronic being ironed out at a pan-European SMEs, and maybe the bankers, to see the aviva driveS ouT PaPer From the start of this year, the was not a reliable audit trail to ways of improving the system, and If suppliers have their own Aviva and its suppliers. The cost insurance company Aviva has keep track of the physical invoice. examined a variety of solutions, accounting software, they of the overall invoice process, introduced electronic invoicing Incoming mail, unless addressed including automatic scanning of can submit their invoices he says, has been halved, and for its suppliers, and already has specifically to accounts payable, the incoming invoices. electronically directly to the the staff in accounts payable are 65 per cent of them enrolled on could often take some days to Finally, it selected the OB10 service. now able to concentrate of more the system. reach the right department. electronic invoicing service from Smaller suppliers can log on valuable tasks. Before this project began, Aviva Furthermore, Aviva’s suppliers OB10 which operates as a central to OB10 via the Internet and “Beforehand, staff were just employed a team of 10 full-time had no way of knowing when hub where suppliers can send complete a web-based form to manually entering invoices into staff to process paper invoices they would be paid, or even if electronic invoice files in the submit their invoices. the system. Now they can focus and to input the information into their paper invoices had been format of their choice, and which Tom Boosey, accounts payable on building relationships with the company’s Oracle accounts received. then converts all those files into service development manager the suppliers, looking after their system. Not only was the process Around 18 months ago, the the correct format required by at Aviva, says the service has accounts and making sure they very labour-intensive, but there company started researching the buyer organisation. already created benefits for both get paid on time,” he says. tieto.com Financial Value Chain One connection to all your trading partners