Report: Revolutionising Payments
Media: Lufthansa Inflight Magazine
Publication Date: December 2015
The Path to Purchase
Transactions need to be simple, fast and secure, says Dr Gerrit Seidel, CEO of SOFORT GmbH. This is crucial for the adoption of online payment solutions as well as the growth of the e-commerce sector.
E-commerce is continuously growing. Why are payments such an important topic in your opinion?
We just need to take a look at the numbers. In Germany alone, 54 million people shop online, more than half of them (53%) via smartphone or tablet, and the whole subject of mobile shopping is going to take off even more. In comparison to other e-commerce areas, when it comes to payment, there is tremendous room for improvement.
What are the key issues?
Payment processes are often far too complicated and not very user friendly, which results in high dropout rates of online shops. There are too many obstacles put in the way for the person who is browsing and would actually like to purchase. The payment process is not tailored to the needs of the customer. This is why payment is one of the most important success factors for the retailer. Only if they offer a perfect user experience, they will achieve long-term success – especially in terms of mobile commerce.
SOFORT GmbH turned 10 this year. This is a long time in e-commerce. What have been the main milestones in the company’s development?
When growing so rapidly in a short timeframe there are, of course, many milestones, but our recent merger with Klarna, creating the Klarna Group, was certainly one of the greatest milestones because it adds value to our offering: Klarna’s and SOFORT’s services complement each other. Just to give you an example: SOFORT Überweisung, a payment method, was integrated into Klarna Checkout, which is the easiest solution to complete a purchase. The Klarna Group has now become the leading European payment provider. Today we are active in 18 markets, including the US. Talking about SOFORT, we are proud that some 20 million consumers have already used our core product, SOFORT Überweisung, and we now work with more than 30,000 online merchants in Europe. In Germany, around 65% of online shops offer SOFORT Überweisung, including Lufthansa, Deutsche Bahn, Rossmann and redcoon.
What are the key advantages of SOFORT Überweisung?
Today’s consumers seek reliable and easy payment solutions when buying online. This is exactly what SOFORT Überweisung offers because consumers are able to pay with their familiar online banking details. All required payment data is transferred automatically and accurately from the online shop. Thanks to real-time transaction confirmation, the online merchant can process and dispatch the order faster and hence, the customer receives the goods faster.
In order to complete a purchase with SOFORT Überweisung, the customer has to enter PIN and TAN. How do you respond to customers who are worried about security?
We assure our customers that they do not need to worry about security. Within the past 10 years – since the inception of this payment method – none of our users who entered their PIN and TAN in our system have experienced PIN/TAN fraud. Security is our number one priority. With SOFORT Überweisung customers use the online banking procedure. Compared to payments via credit card or e-wallets the short-term generated TAN provides
a high protection against hackers, because it is only available via a separate channel and can be used once only.
“Today’s consumers seek reliable and easy payment solutions when buying online. This is exactly what SOFORT Überweisung offers because consumers are able to pay with their familiar online banking details.”
Dr Gerrit Seidel, CEO of SOFORT GmbH.
What exactly happens when a customer types in the login data for his online banking?
This is easy to explain: the transaction will be processed quickly and safely. The user’s login data and the confirmation code to authorise the transaction is transmitted to the user’s online banking account in encrypted format. Confidential online banking login details and confirmation codes are not stored by SOFORT GmbH. This also means that neither the confidential online banking login data (like PIN) nor the TAN are accessible for any staff member at SOFORT GmbH or any external person or organisation.
SOFORT Überweisung is SOFORT’s main product, but it is already quite well established. What other service is important for your company?
The SOFORT Überweisung Paycode.Today around 90% of consumers prefer to purchase online via invoice. There is one simple reason for this: they consider this payment method as particularly safe because the goods are delivered before the customer has to pay. However, transferring money via invoice has not been very convenient so far. Consumers were obliged to type in the payment information manually, which was perceived as complicated and time-consuming. SOFORT ́s Paycode solves this problem. It is a pre-filled digital transfer form, which shortens the transfer process and represents a modern form of invoice. The Paycode can be delivered via text message, e-mail or QR code.
What trends do you see in the industry, and where do you see SOFORT in two to three years?
Internet payment methods such as wallets and direct transfer options will continue gaining market share. Mobile shopping will become the biggest challenge for all competitors in the payment market. Payment companies who do not manage to prepare themselves properly and do not offer perfect mobile shopping solutions, will not be able to hold or increase their market share.
Talking about SOFORT, I can tell that we will definitely continue on our growth path. In the first six months of 2015 we had about 40% growth in revenue, and we are confident that this trend will carry on for the rest of the year and hopefully beyond. We seek to establish SOFORT Überweisung as one of the top three pan-European payment methods. As I said, in Germany, about two-thirds of online shops have integrated SOFORT Überweisung. Certainly we still see great potential in this country, but on a long-term basis, we particularly expect to experience growth on an international level. This is also what our German merchants expect from us as nine out of ten merchants are already selling across borders.
“Mobile shopping will become the biggest challenge for all competitors in the payment market. Payment companies who do not manage to prepare themselves properly and do not offer perfect mobile shopping solutions, will not be able to hold or increase their market share.”
Dr Gerrit Seidel, CEO of SOFORT GmbH
Payments and Cybersecurity: Staying One Step Aheadgiulia
New technologies must maintain high security standards, says Jens Bader, Chief Commercial Officer of Secure Trading, and identity services could be the next big thing in the fight against payment fraud.
Pioneer of Paymentsgiulia
After PayPal cut loose from eBay in the summer of 2015, the company has set its sights on capturing a larger share of the growing mobile payments market.
Businesses and consumers are standing on the brink of a payment revolution. Interest in the adoption of new technologies is quickly moving into the mainstream. Contactless is the latest buzzword of the payments industry, as it opens up exciting new opportunities for innovation.
From mobile wallets and wearables to blockchain and cryptocurrencies, the rate of change in the payments industry has accelerated in recent years. While technological advances are offering consumers more choice and more convenient ways to pay, companies may find it more challenging to stand out in a crowded market.