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SEPA direct debit scheme - chances and risks for recurring payments
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Agenda
Chances: 1.Reach 2.Costs 3.Customer Lifetime 4.Merchant managed
Risks: 1. Risk Scoring 2. CRM
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Chances of SEPA direct debit
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SEPA is an EU initiative aiming for: • Harmonization of money transfers in Europe • Boost money transfers beyond borders • Advance a secure and cost-efficient payment
system • Independent of creditk card networks
4000 banks, 300M+ bank accounts available since August 2014
Further improved SEPA scheme COR1 will launch in 11/2016
With SEPA, merchants can reach 500M users across 34 countries
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Credit card: 2%-3.5% of transaction, plus base fee (15-20 cent)
SEPA: 10-30 cent, based on monthly total volume of transactions. No percentual fees.
SEPA is the more cost-efficient solution for merchants
Case study- Deezer
Music-Streaming service Deezer leverages SlimPay for processing their monthly service fee of EUR 9,99 – Costs
per transaction compared to credit cards were a main driver for this
decision.
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Credit card: • Expiration date • Account Updater often not possible to use
in Europe • High churn rates
SEPA direct debit: • No expiration of banking details • Low churn rates, consumers do not
frequently switch bank accounts
Better customer lifetime with due to low churn rates
37%
63%63% of online consumers discontinue subscription service hen their credit card expires
source: a new digital future for publisher Nextissuemedia
No expiration model extends customer lifetime of more than 50% of your customers
•This is a titleCase study- SFR
After integrating Slimpay, mobile service provider SFR lowers annual churn rates to
3.6% (for direct debit)
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• Full automation possible • Consumer shares IBAN once and confirms
electronic mandate (supported tokenization)
• „oneclick“ payment possible for all following transactions
• Invoicing, advance payment, PayPal, SOFORT: requires customer action • Risk: delay of payment, cancellation
or collections
Merchant stays in control with automatic processing in the background
Case study- Nespresso
Coffee re-orders are processed automatically via
SlimPay Direct Debit
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•This is a title
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Case study- Greenpeace
1 out of 2 recurring donations in France is processed via Slimpay direct debit.
3X lower churn rate with direct debit compared to credit card donations
14 Boost your customer lifetime value!
Case study- BIP &GO Maut and road tolls
Fully automated booking of EUR600k per 24h
Case study (B2B) - TripAdvisor
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Online sign up for marketing program – automated payment process with company bank account
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Risks – what to watch out for
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Consumer identity – verification is key
• Use of public IBANs • Stolen IBANs • Generated IBANs • Account information of
other companies or non-profits
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Solution: Scoring when IBAN is entered• Minimizes fraud • Filters out publicly
accessible IBANs of NGOs, etc.
• Comparison of history and payment behaviour
• Credit standing and liquidity
• Effective reduction of R-transactions and consequential charges
Keine Deckung? CRM/Retry/Reminder-Funktion
Subscribe Pay Alert Collect
SEPA mandate Contract Transaction
processing
Electronic signature
Payment card
Bank account
Payment pre-recovery
Payment card
Client action
E-mailSMS
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•This is a titleCase study- Bein Sports
2 out of 3 customers prefer Slimpay direct debit over credit cards.
Slimpay leverages scoring, Reminder texts and retry logics for
unsuccessful payments
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Key Takeaways – SEPA direct debit offers unique benefits
• Broad reach across 34 countries and 500M consumers • Low costs due to competitive pricing model • Higher customer lifetime with lower churn rates • Holistic integration with scoring and CRM functionality is key to avoid
fraud and to avoid deficit in payments
