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TheSubscription

Economy

The business-customer relationship in the digital age

YOUR GATEWAY TO THE WORLD OF PAYMENTS

Welcome to Vol.2 - issue 12

Following our last edition about Recurring Payments, we want to dig deeper into the exciting subscription based business world. In today’s digital age more and more businesses see their advantages in offering their services in subscription tiers. To thrive with this specific type of business model you have to face a number of different challenges. To get a new perspective on this topic, Scott Harkey, Payments Practice Lead @Levvel provides expert advice on how to manage regional distinctions when offering subscription options from a merchant viewpoint. He also addresses how trends and developments in the payments landscape are shaping the business environment of subscription merchants.

Carrying on, Marcos Marins, CEO @PayU Brazil shares his experience about the Brazilian e-Commerce landscape and what he foresees for its future. Focusing on crucial challenges when operating in Latin America, he explains the importance of localized partners too.

Alan Walsh, Head of Marketing @Bud presents the key advantages of the financial marketplace platform and app as well as the reason why they decided not to work with the subscription based model.

Emma Cloninger, Marketing Coordinator @MRC reveals how active participation on social media accounts can actually protect users from identity theft and fraud.

In our start-up spotlight this month, we interviewed Samir Haj, CEO @InfinitePay who tells us the story behind creating financial service offerings tailored to the specific characteristics of B2B e-Commerce market in Germany and its neighboring countries.

Finally, an overview of the hottest job openings we have at the moment. Feel like you need a change or looking for a job opportunity? Get in touch directly by clicking on the job. What better way to network and get to know your peers in the industry? Check out our premium event partners and make use of the discounts we have on offer before they run out!

For any questions, suggestions, or concerns, please address them to the editors:

Amir Abdin - amir@paymentsandcardsnetwork.comDuc Dang - duc@paymentsandcardsnetwork.comLayla Durrani - layla@ paymentsandcardsnetwork.com

The Payments & Cards Network team wishes you good reading!

Thanks to our partners

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thoughtleaders

STORIES

spotlight

Contents

E-Commerce Growth in the Brazilian MarketMarcos Marins, CEO @PayU Brazil, explores key challenges in

the Brazilian e-Commerce space.

Spotlight: InfinitePayFind out how Samir Haj, CEO @InfinitePay, combines a conservative but highly innovative company approach to keep up with the B2B e-Commerce market in the digital age.

Hot JobsHand picked jobs of the month within the Payments and FinTech industry. Check out our hottest vacancies for this month and hit APPLY!

EventsHave a look at the last chances to meet your peers and industry experts in 2016 and make use of our special promo codes!

Why we didn't go down the subscription routeAlan Walsh, Head of Marketing @Bud, tells us the advantages of the online platform & app Bud and how it helps customers and financial service providers.

How social media can protect you from identity theft & fraudEmma Cloninger, Marketing Coordinator @MRC presents suprising findings of a study about social media data and how active participation on social media accounts can protect users.

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Subscription BillingScott Harkey, Payments Practice Lead @Levvel addresses hurdles of businesses in the subscription economy from a merchant viewpoint.

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The sheer size of the Brazilian market opens up exciting opportunities for scale and growth. This is particularly true for the e-commerce industry. At the same time, businesses entering new developing markets

are facing many challenges in unknown territory. The PCM team invited Marcos Marins, CEO of PayU Brazil, to share his experience with us about operating throughout Brazil. We spoke about how the market landscape looks today and what he sees for the future.

As head of PayU Brazil, can you can give us a summary of what the ecommerce landscape looks like in Brazil?

Firstly, it is important to frame the market appropriately. Many global merchants fall into the trap of viewing Brazil as Latin America or indeed LatAm as one singular market. While there are similarities across the region within the E-Commerce world, each country is different and brings with them uniquely local habits and customs. What may be true in Mexico from a consumer perspective may not be true in Chile for example. Brazil is no different.

E-Commerce growth in the Brazilian marketby Marcos Marins

Thought Leaders Corner

Now is the time for global merchants to come to Brazil and pave the way for growth

“,,

Brazil is the largest and most mature E-Commerce market in the Latin American context, thanks to an expanding middle class and booming digital ecosystem. Here are some stats - The market is expected to surpass $27 billion by 2018, a total of 39% growth. Approximately 19% of all e-Commerce transactions were made via mobile phones in 2015. As in many markets globally, mobile is fast becoming the dominant method of purchasing amongst consumers. This can be backed up by the fact that mobile phone sales are expected to exceed $ 11 billion in 2016.

One statistic that should make global merchants sit up is that 49% of digital buyers in Brazil make cross border purchases. This means that nearly half of online Brazilian consumers are buying goods and services from companies outside of Brazil. Meaning that the opportunity already exists for companies from abroad to come to Brazil and engage a highly aspirational population coming online and willing to purchase like never before. But doing this in a localised way with the right partners, providing the locally preferred services is key to being successful.

As a Brazilian, could you give us some insights into how the political and economic situation has changed over the last few months, and what your outlook is for 2017?

For the past 13 years, the country has been led by a left wing government. As part of their policy plan, they have increased spending in all sectors. As a consequence, Brazil’s competitiveness slowed dramatically. On top of this, the ruling party was found to have extensive corruption within its structure, this included the publically owned Brazilian oil company; Petrobras. The company was eventually put under investigation and it was found that more than 10 billion USD had been taken out of the country illegally.

This political period culminated with the President, Dilma Rousseff, resigning from office. Since this happened, the Vice President, Michel Temer, has taken a more transparent and business friendly approach by attracting investment back to Brazil to boost the country ’s competitiveness once again.

Overall, as a Brazilian, I recognise that while yes we have had a tough few years with internal corruption; the country is back on the right path. All indications show that 2017 will see the Brazilian economy bounce back.

Given everything that has happened in Brazil, what can global merchants expect from your market, in terms of innovation and business opportunity?

Brazil is steadily becoming a more mature digital economy. As well as the impressive e-Commerce figures that we touched on earlier, we see strong growth in all areas across the technology ecosystem from B2B Fintech to the multiple

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consumer apps born in Brazil. It is clear that Brazil will continue to lead Latin

America in innovation in the short to medium term.

The major trend we see across the online business verticals is the uptake

in a mobile first approach. With only 20% of e-Commerce transactions taking place on mobiles this year, we are only seeing the tip

of the iceberg. There are 100 million active users of mobile phones. So if global merchants

can harness this user base by providing localised payment methods and overcome local challenges the

business opportunity is huge.

What do you see as the most important factors for global merchants to be aware of when entering your markets?

As I mentioned at the beginning of this interview

Thought Leaders Corner

Marcos MarinsCEO - PayU Brazil

Marcos is CEO for PayU Brazil, a leading payments service provider in 16 high growth markets around the world. PayU is part of Naspers’ Group which is one of the largest technology investors in the world. Previously, he worked for MercadoLibre, Redecard (Brazilian Acquirer) and Itaú-Unibanco, one of Brazil’s leading banks. He has more than 25 years of experience in banking and payments. He graduated in Economics and has a MBA in Business Management extended in Kellogg, Chicago.

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Thought Leaders Corner

– understanding the local consumer mindset and how they differ from country to country can be the key to being successful in Latin America.

Brazil has unique consumer payment trends when compared to the card dominant markets of the US or Europe, where single card payments make up the vast majority of online sales.

Firstly, we have the culture of interest-free instalments. It allows customers to pay for goods or services in monthly payments, with no added interest fee. The Installments are enabled by local acquirers that, in effect, provide loans to customers arranged by merchants at point of sale. In 2015, 58% of retail e-Commerce purchases—worth USD $13 billion—were made using installment plans.

Global merchants that aim to start doing business in our country have to fully understand this, because it is part of Brazilian consumer culture. Without offering instalments, a merchant will struggle to penetrate the domestic ecommerce market.

The second particularity is the cash payment method called Boleto. Boleto represents 25% of all sales, offline or online. It’s

almost mandatory for a foreign merchant to include Boleto as a payment method at checkout.

The third thing for a global merchant to take into account when entering our market is choosing a player that can provide local acquiring. PayU for example is connected to the main acquirers in Brazil and we are able to provide merchants with the main card networks in the county, including local ones such as ELO and Hipercard. However, they are accepted only domestically. Currently, ELO accounts for 12% of the credit card sales in the country. The share is big and it is growing rapidly.

Any last bits of advice for a company contemplating expanding into this exciting market?

Brazil is a big economy. It is the eighth country in the world in terms of GDP. Ecommerce has continued to grow and it is expected to grow 13% by December 2016, even though the country is still in a recession. Brazil is ready to be the next big player in the world after China and India, so I am very optimistic regarding future opportunities both for the country itself, as well as for global merchants.

PayU

PayU is a leading online payment service in 16 high growth markets across Africa and the Middle East, Central and Eastern Europe, India and Latin America. Our 250+ payment options enable safe transactions for more than 160,000 merchants, allowing them to focus on reaching the 2.3 billion consumers in our markets.

For more information please visit www.payu.com

Ricky KnoxCEO

Tandem Bank

Alexander Graubner - Müller

CEOKreditech

Ignacio Juliá VilarCIOING

Thomas BuberlCEO

AXA Group

Celine LazorthesCEO

Leetchi

Patrick MeisbergerManaging Director

Commerzventure

Sofia MerloCo-CEO

BNP Paribas Wealth Management

Ismail AhmedCEO

Worldremit

Valentin StalfCEON26

François PerolCEO

Groupe BPCE

Mike LavenCEO

Currencycloud

Stefan KlestilPartner

Speedinvest

Marc RennardDeputy CEO

Orange

Mark MullenCEO

Atom Bank

Mircea MihaescuCOO

Moven

Frédéric OudéaCEO

Société Générale

Olivier GoyCEO

Lendix

Vladislav SolodkiyManaging Partner

LifeSreda

Khalid FellahiGeneral Manager

Western Union Digital

Axelle LemaireMinister of State for

Digital Affairs

Paolo GalvaniCEO

Moneyfarm

Michael KentCEO

Azimo

Mariano BelinkyManaging Partner

Santander Innoventure

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Research Industrial Systems EngineeringRISE

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Matthias KroenerCEO

Fidor Bank

The subscription business model, or ‘recurring billing’, is one of the hottest strategies in digital marketing right now. A simple yet

effective way to keep revenue coming in. Think Netflix, Amazon Prime, Spotify, the list goes on. The price isn’t extortionate, but when millions of people are paying it, the sums soon stack up and it becomes a very profitable business model.

At Bud we opted for the customer free model, swaying away from subscription costs to the user. We are positioning ourselves as a consumer champion and a cost immediately limits the number of customers we could reach. We want to help people with their finances, not sting them for it with charges. I’m not saying subscription models are wrong, they most certainly have their place, and various studies have been conducted placing more value on a paid for service rather a free service. But free seems right for us.

Many providers offer tiered pricing structures depending on the depth and breadth of service offered. LinkedIn offers free access to many, but if you want deeper access and richer content

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Why we didn't go down the subscription route

charges are levied. The more you want, the more it costs. Basic psychology.

The subscription vs advertising model is another alternative and we are seeing more organisations essentially charge people to remove the adverts.

Scott Galloway, professor of Marketing and Brand Strategy at the NYU Stern School of Business says that, if you are

w i l l i n g

by Alan Walsh

Thought Leaders Corner

to pay, you can now easily avoid advertising. Sign up to Spotify and you can skip the ads. Buy a pricey iPhone and ad blockers are fitted as standard.1

Download your favourite TV show from iTunes and you get it without the annoying ads. Not only do you get to watch your programme in a shorter period of time, because the ads have gone, but you get the uninterrupted

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content. As Galloway puts it: “Advertising is becoming a tax only poor people pay.”

There are amazingly smart algorithms to allow advertisers to target the exact type of person you want, or more importantly the people that you believe will buy your product. The amount of data that the likes of Google, Facebook and Amazon have allowed them to constantly refine their targeting and improve results, but they still aren’t great, which is why people are prepared to essentially pay to remove this advertising.

My belief is if you offer consumer value first and foremost in a simple and intuitive way they will want to use your product and continue to use it. If you surprise and delight, they will become advocates and spread the love to their friends and family. The more this happens the quicker the growth rate.

At Bud, we want to make interacting with your money and your entire financial world simple. Our plan is to rebundle all of your existing financial tools into one platform so you get that total view, through creating a marketplace.

But rather than charging the user for this, our business model is based on partner commissions. Similar to a comparison site, but through a discovery engine and smart spend analytics Bud is able to offer much more relevant and timely services to help users save money.

Thought Leaders Corner

Alan WalshHead of Marketing, Bud

Alan Walsh is a seasoned financial services professional, having delivered commercial growth at some of the largest and most respected FS brands including American Express, Barclays and Santander. Having moved into the fintech arena he now consults, currently for Bud, driving marketing, partnership and commercial strategy.

Contact Alan via email or through LinkedIn.

Think about when you go on holiday. You may take out some currency before you travel. You may take out local currency from the ATM when you arrive at your destination. You may just charge everything to your card. Now with the emergence of new companies like Revolut, Transferwise, Azimo etc, the cost of currency is lower than it’s ever been and so much easier to access. Bud can help suggest these type of products to you through push notifications when it sees you spending abroad, or even earlier when it sees you have booked a flight, hotel etc. The idea being that by serving more efficient products to you at the right time and allowing you to sign up to said product in one-click on the Bud platform, you can quickly start reaping the benefits and see how much you could be saving.

So, we are very different to a comparison site when you add this to the equation.

Our idea is that our users start seeing instant value. In return, so do the partners on the marketplace. And the best piece? The aggregated data will allow Bud to help educate the sector on what consumers really want and how they are behaving. When you look at it like that you quickly see why we opted out of the subscription model.

Sign up to Bud now and see your spending like never before.

1 http://www.campaignlive.co.uk/article/1381922/advertising-tax-poor-people-pay

Bud

Bud is an online platform and app which allows users to manage any financial product, with personalised insights, all on one dashboard. The Bud marketplace introduces relevant services which users can interact with through API integrations.

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how social media can protect you from identity theft & Fraud

Thought Leaders Corner

As a marketer, I know the value and opportunities of a digital footprint. Maintaining an active online presence is key to staying relevant and evolutionary in today’s information age. Furthermore, the demand for

instant gratification is fulfilled through electronic engagement particularly within the realms of social media. Our experiences today predominantly exist online.

Although these platforms certainly make information more accessible and life in general more convenient, I as a consumer worry that my online activity makes me more susceptible and vulnerable to fraud and identity theft. Just last year 13.1 million US consumers were victims to identity theft1 and fraud losses incurred by banks and merchants worldwide reached $16.31 billion2. However, new data now shows that active participation on social media accounts can actually protect you from being a victim. Behold the catch 22.

Greater Participation Discourages Fraudsters

Socure, a company which offers digital identity verification solutions, found a strong correlation exists between fraud and social network usage. Their research showed that individuals who do not belong to any social networks assumed a fraud risk of 22.9%. That number drops by 5.7% when consumers participate in personal, blog-based and professional social media networks.3

To further authenticate these findings they conducted an experiment testing the effectiveness of a fraud model that relies upon social data based on a supervised learning approach to identity verification.

To provide a little context behind traditional identity verification,

the standard process relies on basic credit bureau data, such as past record of credit history, bank loans, etc. This data is validated with offline data, or personal history (i.e. date of birth, home addresses and Social Security numbers). However, the identity of younger consumers or international populations with little to no credit history can be difficult to validate. Often they are denied transaction approval and simultaneously become more vulnerable to fraud.

Testing 1, 2, 3

Socure’s experiment demonstrated a supervised learning approach to identity verification. In particular, three sets of data were assembled to test the power of online and social media data to validate authenticity:

Real Data- The control group consisted of 10,000 real US consumers identified by name address, phone number and date of birth.

Synthetic Data- 10,000 fake identities were generated automatically using an online tool, simulating fake data that fraudsters tend to make up. It had the following attributes: random first and last name, random date of birth, email: random name connected to an existing domain, phone number: valid area code preceding random 7 digits, address: city, state, country and zip were valid and matched (house number and street name were random), random IP Address. Note that in this data set the city, state, country, zip and phone area code DID match.

Stolen (Simulated) Data- All the data in this set was real and valid, but belonged to different persons. This data simulated most attributes of an identity, but the fraudster changed some components for the misdirection of goods, funds or services to

by Emma Cloninger

Thought Leaders Corner

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MRC

The MRC (Merchant Risk Council) is an unbiased global community providing a platform for eCommerce fraud and payments professionals to come together and share information. As a not-for-profit entity, the MRC’s vision is to make commerce safe and profitable everywhere by offering proprietary education, training and networking as well as a forum for timely and relevant discussions. The MRC was launched in 2000 at the start of the eCommerce boom by a small group of industry professionals from leading consumer brands, with the ultimate goal of combating online fraud in the card not present space. Since its inception, the MRC has also added online payments to its portfolio, expanding its presence further into eCommerce.

themselves instead of to the valid identity.4

Using each of the three data sets, Socure built a predictive model that generated a series of social and online data for each set of identifying information, to see if those variables could correctly classify each “person” into their true category: real, fake or stolen. According to Socure’s research, the predictive model showed a success rate of 98.8% accuracy.5

Capitalizing on New Opportunities

Now with social media on the rise, merchants and financial institutions have a unique opportunity to approve online transactions, purchases and money transfers with data derived from social media account information, that until recently was difficult to achieve.

Ever tried purchasing an item online and were denied? You hastily check your bank account to see that you have sufficient funds all the while wondering why your card wasn’t processed. It likely could have been because there wasn’t enough available credit bureau data to validate your identity. Now there’s an alternative solution.

The beauty behind utility of social media data as ID verification is that the information is authentic. It is very difficult to forge a LinkedIn account dating back 8 years with hundreds of connections and a multitude of endorsements and employment experience. Similarly, maintaining active social media profiles will make you less appealing to fraudsters as your information is genuine and harder to spoof.

Recognized Value, Slow Progression

Although the value of this process is understood by businesses in the industry, its capability is still being developed. A study by Worldpay reports that 60% of respondents already use social media in their review process, but 52% want to make better use of it, lacking the knowledge to do so. This might be a result of usage being manual and extremely time consuming, as most companies do not have an automated process in place for using social media authentication.6

Where We Go from Here

As we look to the future, there’s no doubt that online capabilities and technological advancements are growing exponentially. The MRC offers a safe, knowledgeable community to help make sense of the changing eCommerce landscape, including effects of the rapid rise in use of social media. At the MRC, fraud and payments professionals from both merchant and solution provider businesses are encouraged to challenge one another, share information conducive to growth and innovation and keep pace with technological developments.

The MRC is a community that proudly supports one another. Join as a MRC member or attend one of the MRC annual events in Last Vegas, March 13-16 2017 and London, April 24-26 2017. This year MRC Vegas 2017 expects over 1,500 attendees from 30 different countries representing over 450 global companies. Attendees will have access to over 70 sessions of educational content categorized by experience level and over 60 exhibitors. All attendees with full registration passes receive a free Kindle Fire for a convenient and efficient digitalized experience.1 Identity Theft and Cybercrime, Insurance Information Institute2 Global Card Fraud Losses Reach 16.31 Billion, Business Wire3 Using Online, Social Data to Make Thin Files Thick, Pymnts.com4 Real, Fake or Stolen: Validating the Use of Alternative Data for Identity Verification, Socure5 Using Online, Social Data to Make Thin Files Thick, Pymnts.com6 Fraud Trends 2016: Latest Perspective on International eCommerce Fraud, Worldpay

Emma CloningerMarketing Coordinator, MRC

Emma Cloninger, is responsible for developing comprehensive communication, advertising, social media content and media relations initiatives that directly support MRC constituents. With a background in public relations and communication, Emma has expertise in brand representation, event planning, digital marketing and campaign execution. Emma came to the MRC from Global Credit Union where she gained a wealth of experience as the Communications Specialist.

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expert interview

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Subscription Billing

Gone are the days of simple one-time transactions. In today’s digital age the subscription business model has become mainstream with companies like Dropbox, Netflix, Adobe, Spotify because it offers a predictable

and recurring revenue stream. However, the management of these subscription models can be very complex and businesses utilizing them need to overcome various challenges. We sat down with Scott Harkey, Payments Practice Lead at Levvel, to get deeper insight into challenges from a merchant perspective.

What challenges do merchants managing subscription billing have that the typical merchant doesn’t have to face?

We see several challenges that have more specific impact to subscription based merchants. The first centers around card expiration and card re-issues. An increase in the occurrence of data compromise events is forcing issuers to mass re-issue cards more frequently. This can create a lot of frustration for subscription-based merchants. Customers often don’t think to go change their card everywhere they are using it online, and so it takes a failed subscription payment to trigger the queue to update the card details. This results in a percentage of customers choosing not to renew their subscription and adds to the account churn for the subscription biller.

A second challenge we commonly see, especially in certain parts of the world, deals with subscription management in cash-based regions. Subscription billers have a wide variety of payment

tools available in regions like the US, where a large percentage of the population is banked. Scaling to the unbanked, however, requires increased focus on enabling cash-based services; this can introduce a lot of additional logistical challenges.

Other operational challenges include things like managing the upgrade and downgrade of subscriptions, handling all of the PII and adhering to PCI compliance requirements, and maintaining high transaction approval rates.

What are some interesting ways you have seen merchants overcoming these challenges?

Services like Visa Account Updater have attempted to address the first issue that we mentioned regarding expired card data; however, these tools typically don’t fully address the problem for most merchants. More recently, we have seen some of the more sophisticated merchants using additional tools from processors like First Data or FIS that attempt to notify the merchant when card changes occur. Some have even gone as far as setting up services directly with some of the major financial institutions. The upcoming adoption of card-on-file tokenization will also help with this problem.

To address the challenges around serving the unbanked, we have seen merchants increasingly using services like Pay Near Me to allow the customer to pay the subscription locally in cash. Additionally, in regions where cell phone carriers have entered

expert interview

the payments space, we are seeing merchants partner with the telcos to offer payment through the customer’s cell phone bill. A final top recommendation for this specific challenge is the utilization of gift cards to allow for in-cash payment or gifting of the subscription.

Another area where we have seen a lot of advanced work recently is addressing the approval/decline rate challenges faced by subscription merchants. Many subscription billers face a significant amount of card declines due to the general riskiness of e-commerce transactions and the limited data set required on a recurring transaction type. The more sophisticated merchants are using advanced data analytics and processing techniques like ‘chaining’ to adjust transaction data real-time for the best possible approval rate.

How does EMVCo tokenization being offered by the payment networks impact subscription billers?

The creation of the EMVCo token model addresses two major challenges that subscription billers face. The first, expiring card data, is addressed by the creation of a token that is stored with the biller and can be continuously re-mapped to an underlying plastic card any time it changes. When implemented at scale, this means that the tokens which billers have should be valid for charges as long the as the customer has an active account tied to it, regardless of what happens to their physical plastic card.

The second issue addressed by tokenization is the storage of card data. The token creators (currently the payment networks) have the ability to issue merchant-specific tokens and thereby greatly reduce the value of the data from any given breach. If, for example, Hulu was breached, the bank could simply delete all tokens issued to Hulu, and the breach would not impact

accounts at Postmates or Netflix. The amount of fraud that can result from a data breach is thus greatly reduced and the impact to the consumer is minimal. This solution also provides the consumer with greater visibility into where their cards are stored and could offer them better management of those cards or tokens.

Does the introduction of Apple Pay, Android Pay, and others have any impact on the subscription billing merchants?

Android Pay, Apple Pay, and most of the other Pays from technology providers and merchants are all using the EMVCo tokenization model from the payment networks. As a result, subscription based merchants can take advantage of these services and gain the token benefits we mentioned above. Additionally, the native integration of Apple Pay, Android Pay, and other services often provides a better user experience and higher conversion rates than traditional card capture checkout methods.

As more commerce moves to mobile, how does this change the outlook for subscription billing merchants?

For brick and mortar merchants that offer a subscription model, mobile presents a new and interesting way for them to interact with their customers. Merchants can explore offering value beyond the core in-person experience and potentially generate additional revenue from the subscription. Additionally, mobile provides a way to offer loyalty programs and other ones that encourage the customer to interact with the merchant more frequently. Plus, the merchant gains valuable data about the user each time they interact. All of these things enhance the value of the subscription or potentially create new revenue streams outside the merchant’s core offering.

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This Month’s Expert

Scott HarkeyPayments Practice Lead, LevvelScott Harkey leads the Payments Practice at Levvel. By leveraging his experience leading digital wallet technology at Bank of America along with 10 years of technology integration work at Wells Fargo, Scott brings a proven track record of delivery to banks, technology providers, and merchants in the digital payments space.

expert interview

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For existing ecommerce subscription billers, it’s basically the opposite effect. Mobile creates the opportunity for merchants to extend their brand into the real world through their own physical locations or through partnerships. A great example of this would be if someone like Birchbox allowed users to snap photos of a cosmetic item they see in a store and have similiar items in their next subscription box.

In other cases, the entire subscription is centered around creating an online or mobile experience to eliminate or simplify a task people traditionally spend their time on. Subscription based billers like Blue Apron, Instacart, and others couldn’t succeed without mobile.

Are there any additional trends or themes you are seeing with subscription billing? One additional trend we see that hasn’t been discussed much thus far is how many merchants are considering ACH based payment options, as opposed to only accepting credit card payments. While the use of ACH isn’t new for subscription billers, it has historically been harder to get customers to provide checking account and routing number information, especially for ecommerce merchants. New tools from companies like Dwolla and Plaid have made providing ACH details significantly easier and have also added fraud prevention and balance check capabilities that make this payment method more appealing to merchants.

Levvel

Levvel is an IT consulting firm that combines the innovative DNA of a start up with the wisdom, scalability, and rigor of a Fortune 100 company. They help big companies innovate like startups and small businesses scale like industry leaders, providing companies both technical implementation and strategic advisory services.

SpotlightYou think you have what it takes to start a business in a super-hot market?

PCM takes a close look at some of the most innovative and promising startup companies in the payment industry.

startup Spotlight

“WE WANT TO KEEP THE BUSINESS-CUSTOMER RELATIONSHIP IN THE FOREGROUND AND ACT AS SAFE & COST-EFFCIENT PARTNER IN THE BACKGROUND ”

E-Commerce is booming and in particular the B2C eCommerce market prospers. Many new innovative processes and services have entered the market to service growing needs. However, B2B eCommerce can

still be found in its early stage in terms of innovation and development in the payments space. If you look at the volume size between B2C and B2B, it quickly becomes clear that the B2B volume is immensely larger than that of the B2C market. The potential growth the B2B commerce offers comes along with many risks and obstacles. One major challenge in the B2B realm is the payment option of “purchase on account” (Invoicing). We spoke with InfinitePay, a company that tackles this problem hands-on in the B2B market. The CMS Group consists of four companies and the InfinitePay branch offers 100% payment protection tailored specifically for B2B online merchants.

PCM: Payment protection in the B2B e-commerce is a major and important topic. How did the idea come about and what does the product offer the client?

Samir: The idea for InfinitePay sparked from the initial question of whether B2B eCommerce can be as successful as the B2C market. The B2C eCommerce domain experienced a lot of attention and thus growth, driven by payment household names such as PayPal and Klarna. In contrast to that, the progression in the B2B domain has been long neglected. That’s why in 2014 we came up with the idea behind InfinitePay. We

tried to focus on a number of aspects in need of innovation. From our experience and market research we extracted results indicating that paying via “purchase on account” is a predominant preference in the B2B eCommerce market in Germany and its neighboring countries (DACH region). However, this does not reflect the global preferences where credit card payments or other payment methods can be more prevalent. Another fact on which we based the business model of InfinitePay was that 70% of the customers in the B2B markets in our study wanted to have “purchase on account” as a payment option.

In addition, the B2B ecosystem is serviced by various players such as credit insurance companies and factoring companies but these companies were not very well-equipped for the eCommerce domain. Our vision for InfinitePay is to offer B2B online merchants riskless, easy and affordable payment solution. Our aspiration back in 2014 was to transform the current process with credit insurance companies and factoring firms into a solution which is adapted to the digital age.

Another very crucial aspect we wanted to keep consistent when creating our solution is the customer relationship between the seller & buyer. Especially in the B2B space, it’s about building long lasting relationships with customers which we achieved due to the fact we decided to create our solution in a white-label fashion. These were the cornerstones of the InfinitePay creation process.

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Samir Haj, Owner & CEO at InfinitePay

startup spotlight

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PCM: What makes the payment method “purchase on account” for online merchants so risky? How do merchants deal with this situation currently?

Samir: As commerce has shifted more and more to the online domain, the customer identity has become more anonymous too. Online merchants have to face the challenge of validating whether the customer or company placing an order is an actual existing entity. There are various risk aspects merchants need to overcome operating in the digital ecosystem and that is where credit checks come into play to provide more control over the considerable fraud risk.

Our research from B2B eCommerce prospects and clients also revealed that currently the purchases and orders are often still processed manually. For instance, when an order is received by the online merchant, generally it’s printed out and checked manually via a credit information provider or a credit insurance company. On top of that, the online merchant needs to have a credit manager in-house who can check t h e new customer from a risk point of view as well as the delivery address, which might be different from the invoice address. The multiple stages the order has to go through typically take one to two days for the merchants to get valid results. This situation is likely to result in inconvenience for both buyer and merchant as they expect everything to happen in real time in today’s digital age.

Another challenge we aimed to address was the dynamic business environment of the customers in the B2B eCommerce domain. To be more specific, in revolving business relations the solvency of the customer may change. Due to this reason companies take advantage of offline credit insurance and factoring services. However, these offline services require time and cause high processing costs. This is where InfinitePay can help out as we can service the online needs and secure up to 100% against payment defaults. Our service solution also includes an intelligent credit limit control, which operates on positive or negative payment histories, information from collection etc.

PCM: A fully automated order and payment processes would thereby make life considerably easier for many online merchants. Why InfinitePay is suitable for B2B online merchants and what are the costs of such service?

Samir: Making the life of online merchants easier is one of the main goals of InfinitePay. We do this by providing automated and tailored made processes which can lead to great time and cost efficiency. Saying this, the InfinitePay solution is more than just the simple buyer credit check. It also allocates credit limits, which are constantly monitored and under control.

To compare our solution with the current B2B eCommerce options, you need to look at the typical “purchase on invoice” payment option with in-house management and without a payment service provider like InfinitePay. In 2015, the average internal costs per invoice are estimated around 8% based on a survey by ibi research (University of Regensburg). The fees for InfinitePay are a lot more cost effective as they are calculated as a percentage of the sales and in the form of a transaction fee. Depending on the percentage of coverage and the scale of services, the costs for InfinitePay already starts at 0.5% plus costs for credit checks. The fees structure is very comparable to the B2C eCommerce environment.

PCM: Is InfinitePay exclusively designed for the B2B e-commerce with high order amounts, or can it be used for small shopping cart?

This is a very good question because, in fact, we are able to handle any size of shopping carts, whether it is an order amount for 150 Euros or for 150.000 Euros. In principle,

we do not know any limitation in the number of transactions as well as in the

transaction amounts. This means that small B2B, mixed B2B/B2C or

even B2C online merchants can also benefit from the advantages of

InfinitePay.

We have currently more than 250 B2C clients linked to our system. However,

our goal was to offer a solution for B2B online merchants with

high order amounts as that side of the business environment

have been very much neglected in the past.

PCM: What does a typical order process in InfinitePay looks like - from the first click until the payment is cleared?

Samir: In the first step online merchants can be connected via an Application Programming Interface (API) or our shop modules to ensure a 100% payment protection.

Walking you through the customer journey from our perspective, it starts at the moment when the buyer selects the payment method “purchase on account” in the online merchant; a request is forwarded to InfinitePay. Within the checkout process, a credit check and anti-fraud checks on the buyer is conducted in real-time by InfinitePay.

In the next step InfinitePay sends a response back to the online merchant whether the buyer is eligible to choose the payment method “purchase on account” or not. If a positive credit check is received the transaction is processed and the purchase is completed.

All process stages such as risk management, anti-fraud checks,

invoicing, dunning and collection can be incorporated into our services. Thanks to the white label principle, the buyers are not aware of InfinitePay’s involvement and the relationship between buyer and online merchant remains protected. This enables the merchants to focus on their core business and the relationship building with their customers.

PCM: So what makes InfinitePay so special for online merchants and what other competitors cannot do?

Samir: Firstly, we are able to guarantee orders in 40 Countries in real-time and to offer the whole process chain, beginning from order creation, invoicing and debtor management up until the collection.

Secondly, we are able to guarantee high amounts in real-time.

Thirdly InfinitePay helps online merchants to combat fraud at the central point of payments. Online merchants can take advantage of InfinitePay fraud prevention solution, so they can get back to their business.

Due to our many years of financial management experience, we pursue a conservative but highly innovative approach at the same time. This fusion is very unique in the market.

PCM: Where do you see InfinitePay in 5 years from now?

Samir: At the moment we offer InfinitePay mainly to German online merchants, which have national as well as international buyers. In the future we are planning to make InfinitePay available for online merchants worldwide.

Our goal for the mid-term is to establish InfinitePay as the

most successful payment solution in the B2B e-commerce market.

PCM: Any exciting news/announcements you would like to share?

Samir: We’d like to announce our new strategic partnership with Oro Inc. Oro, founded in 2012 by industry leaders in open-source business application development, is the company behind the suite of products including OroCRM, OroCommerce and OroPlatform. Prior to Oro, the founding and senior leadership team helped lead Magento’s success and have an extensive history in e-commerce technology. Through many years of experience in commerce and CRM, Oro is committed to delivering innovative solutions that will further disrupt the customer experience. Oro is already working to localize their B2B e-commerce platform, OroCommerce, to local market needs. This includes integrations with key services such as payments.

This partnership gives us the direct access to B2B e-commerce customers and Oro Inc. can offer our innovative payment solution within their B2B e-commerce platform, OroCommerce.

PCM: Who is behind InfinitePay?

The leading figures at InfinitePay are CEO, Samir Haj, COO, Jan Baszczawski and CTO Germain Dimicoli. All of us are experts in credit management solution including risk management, credit insurance, factoring and collection. The team behind InfinitePay can look back at many years of common experience and are very well positioned to help online merchants with advice and actionable strategies to get the most out of their merchants.

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MPE 2017 is one big expo with 3 parallel conferences. It offers top class networking opportunities & evening dinners; Internationally recognized MPE Awards, MPE C-Level Club , Festival of European merchant payment methods and Innovation Corner. The addressed topics span from ACH payments, Apple, Samsung, Android Pay to integrated shopping experience, NFC, from FinTech to RegTech, SmartPOS, mobile & online checkout conversion, CNP Fraud & security, IoT, biometrics, API driven innovations, local and cross border acquiring.

Berlin, Germany

This event will unite the entire payments ecosystem together to network, do business and learn in one of the fastest growing and most competitive markets for smart payments in the region. Over 1,000 senior decision makers from across the retail, banking, transport, entertainment and leisure and telecoms industries will meet to discuss key MENA high growth targets, hear case studies from across the globe and experience the latest payment solutions and technologies that will revolutionise their payment strategies in the year ahead.

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Amsterdam, The NetherlandsGathering manufacturers and distributors, B2B Online is ideal for senior decision makers who are involved in customer facing e-Commerce. Therefore, 200+ e-Commerce and digital marketers are attending to keep their finger on the pulse and more importantly how to stop more digitally focused competitors from overtaking their place in the market.

Discount Code: PCN20

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Copenhagen, DenmarkA world-class experience for European innovators, Money20/20 Europe is more than just an event. It’s a catalyst for the growth and development of the payments and financial services ecosystem. Money20/20 organises the world’s largest events focused on payments and financial services innovation for connected commerce at the intersection of mobile, retail, marketing services, data and technology. In April 2016, Copenhagen took centre stage as the companies and individuals building, disrupting and challenging the ways consumers and business manage, spend and borrow money come together at scale.

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