Munich, 30.06.2010

Interview with PAY.ON CEO Robert Kuzelj

What is your company’s value proposition? What services does PAY.ON currently offer in the payments sector and what benefits do they bring?

Our main proposition is payment outsourcing, our core technologies are PaySourcing, a modular platform for global payment outsourcing and PayPipe, an e-gateway for global payment routing. Additionally, we offer all the advantages of SaaS (Software as a Service) and Cloud Computing. Our technologies are fully PCI-certified and white-labeled. Our superior solutions and technologies together with know-how and scalability enable our clients to work and grow internationally and successfully. Using the PAY.ON infrastructure and consulting services, payment experts are able to focus on developing their business activities and serve their customers locally and globally across all industries. PAY.ON provides the necessary support, industry experience, global networking and consulting services, with a strong focus on product development, internationalisation, strategic cooperations and market analysis.

What payment methods and currencies does the company’s payment platform support?

There are no limits or constraints. Along with progressive payment technologies worldwide, we provide a great variety of classic and alternative payment methods. As the technology partner of the PSP, we do not serve merchants – this allows us to focus on the development of technologies and thus offering our business partners the best possible solution for their needs, at every time and in every market.

Last year, we connected over 40 third party systems to our platform; on average, this amounts to 3 to 4 connectors every 4 to 6 weeks - all in all about 150 connections to third party systems. Acquirers like Elavon’s US platform, Barclaycard, Merchant e-Solutions, EMS card solutions and payment method providers including Interac via Moneris, Centricom POLi, and ClickandBuy were some of the integrated connectors in 2009. With special regard to current projects, we connect as many banks, acquirers and payment methods to our platform as possible, and we are able to integrate them faster than any other market participant.

Does the platform also support mobile payments? Bill payments? Remittances?

We already support almost any kind of payment options: be it by mobile, SMS, prepaid cards, voucher and wallet payments, as well as endorsing the transaction processing of loyalty cards. Additionally, we provide clients with customised connections to acquirers and/or payment methods, and our promise is to complete the integration within 4 to 8 weeks.

In 2009, the company closed important agreements with Sino Payments and Elavon. What do these partnerships consist of and what value do they bring to your services?

With Sino Payments, a leading provider of IP payment services throughout Asia, we were able to win an additional international partner for our technology and to further strengthen our position in the Asian market. Sino Payments will deploy our payment platform PaySourcing for processing e-commerce transactions from its customers worldwide in multiple currencies including US Dollar. This proves once more that our technology is truly global and able to meet local payment demands anywhere in the world.

Elavon is a leading global card acquirer and with this partnership, we are both able to not only maximise our services but also to manifest our global coverage. Both companies are in a position to offer localised services adapted to the individual market’s requirements. Therefore, it is possible to penetrate new geographical as well as industrial markets and benefit from synergy effects. Elavon’s competitive services enable our clients to maximise their market potential, allowing them to further become more active cross-border.

For a global processor of online transactions, fraud and data breaches are an ongoing concern. How does PAY.ON try to combat payment processing fraud?

We are continously extending and developing our fraud prevention tools and screening processes, internally as well as externally. To this end, we are working closely with our clients to optimise and improve these tools, e.g. by analysing samples and reacting to suggestions our clients might have. In addition, we provide new risk management tools on demand.

PAY.ON is always open to the integration of 3rd party risk management providers or partnerships. For instance, we implemented Quova’s IP geolocation data to assist, detect and prevent fraudulent online payment transactions. Quova is the leading provider of IP geolocation data and services with a strong track record within the fraud prevention market. Its level of accuracy in detecting an IP address right down to city level for a variety of online payment methods is truly impressive.

PAY.ON currently works with international financial institutions, card firms, risk management providers etc. Why not also merchants?

Since the founding of PAY.ON, we have always been the technology partner of our clients and as such have never served merchants. This is the core of our business philosophy and a way to avoid conflict of interests. We focus on supporting our clients with advanced technologies that are constantly further developed, always state-of-the-art and able to meet market demands and dynamics. All our services are integrated into our clients’ corporate design as “white label”, meaning that for our clients’ customers, we operate invisibly in the background. Our services are seen as theirs. This asks for a trustworthy relationship on both sides, since we are dealing with highly confidential data. We appreciate the trust our clients put into us and vice versa.

In 2009, you opened a company division in Hong Kong. In what way does the European e-commerce and online payments market distinguish itself from other markets (the Asian or US one, for example)?

It is exciting to observe that the e-commerce market in Asia, particularly in China, is growing at rates which cannot be observed any more in Europe. The Chinese e-commerce market is still in a huge growth movement and driven from enormous online merchant affiliation rates in the internet payment industry. Large IPSPs in Europe are mid-sized or second tier IPSPs in China.

With regard to payment methods, there are less varieties on payment instruments or payment scheme levels than in Europe and the market is less fragmented. Credit card payments are still a less relevant payment scheme, and the related risk management methods are mostly at a very early stage.

The PAY.ON technology is ideally suited for the Asian market, as we offer a huge network of acquiring banks and payment schemes for Asian IPSPs and merchants to process payments for non-Chinese end-customers and online shoppers. We are used to implement local payment scheme methods in a very short time. Also, we connect to banks in Asia for local direct debit payment methods, which Western IPSP clients need to support their merchants in selling their products and services in Asia.

PaySourcing is one of PAY.ON’s core technologies. What led to the development and what are the benefits and advantages compared to other solutions?

Global requirements of payment transactions are constantly growing, and so are the demands on payment service providers and acquirers. PAY.ON is a well-known expert in this fast and globally growing market. Using our technology, marketing and sales experts are able to fully focus on their core business.

Our PaySourcing™ platform is the perfect solution for reliable and efficient processing of all payment procedures: it allows the complete outsourcing of payment and risk management systems. PaySourcing not only meets the demand for flexible and globally deployable technology, it is also state-of-the-art and fulfils highest availability and security standards.

PaySourcing provides high-performance technology for processing and managing local and international payments, which can not only be easily and quickly integrated into processes, but can also be continually adapted to process developments. It is the perfect solution for reliable and efficient processing of all payment procedures and fulfills the needs of clients as well as merchants.

What are your views on the online payments industry (its current trends and developments)? What do you see as the greatest challenges for online payments in the near future?

One of our greatest challenges is today’s big variety of payment methods and their fast development. Methods are becoming more and more complex, business- as well as technology-wise. One way to handle this is to integrate new connectors fast and on a regular and cost-efficient basis. This way, we are able to provide our clients with the technologies and the network that offers them the best conversion rate. This is what PaySourcing does and the reason we continuously optimise the technology, in order to help our clients solve the problems and challenges of their merchants.

According to a Javelin Strategy & Research report, online credit card retail purchase volume is expected to register a decline in its growth rate by 2013. As a result, the percentage of online payments conducted via credit cards is to drop to 40 percent in 2013, compared to 59 percent in 2007 and 55 percent in 2008. On the other hand, the share of online purchases made via other payment methods is set to grow by 2013.How do you comment on such findings, or, more specifically, on the rise of alternative payment systems?

We see those findings in our system, too. Despite SEPA and other public reforms, we notice a strong wish from our customers to find the perfectly suited payment method for their merchants. We are the company that fulfils those needs – for example by providing on-demand payment methods.

Usually a processor needs large volumes to really become competitive in pricing. Where do you see your main target markets, or do you have other USPs (unique selling propositions) which will give you an edge over the competition?

We are a new breed of processor – far more tuned to the needs of multinational merchants and payment providers than any of the established players. We are constantly optimising our system to the needs of merchants who act globally. This requires a close cooperation with our clients and their merchants. This customer focus is visible through our large connector network – the biggest worldwide – down to the fact that we do a new release of our software every 4-6 weeks, the industry average being 4-6 months.

Speed of execution and quality are of utmost importance for us as a technology provider and have lead us to structure our whole company around these requirements. Combine this with a platform that already has a huge feature set and is constantly improved at a rate that nobody can match - then you have a set of impressive USPs. Nevertheless we are more than competitive when it comes down to volume pricing.

How does PAY.ON as an organisation remain trendsetting and innovative in an environment that is subject to so many developments?

PAY.ON is a very fast and proactive company. We are able to quickly respond to any market needs our PSPs might have, be it local or international. On average, we integrate 3 to 4 connectors every 4 to 6 weeks, and have about 12 software releases per year.

We supply our clients with SaaS (Software as a Service) technologies via the internet, with all the benefits this procedure offers. SaaS is a very efficient tool that lets our clients save time and money and provides flexibility as well as scalability. Thereby it is possible to focus budgets on competitive advantage rather than infrastructure, and use tomorrow’s advantages today.

In addition, we employ a team of researchers that continually focuses on local payment schemes and payment markets, analyses system developments and identifies and evaluates market potentials. We gather facts about new and emerging markets worldwide, gaining important know-how and therefore a headstart on new product and technology developments.

Where do you hope to take the company in the next 2-3 years?

We are proud to state that our technology is truly global and meets local payment demands anywhere in the world. It is our mission to continuously develop and enhance new technologies to further strengthen our position. Obviously, this includes knowing the wishes and needs of our clients in order to help them grow internationally. This is also why we place a strong focus on research. It is our mission to always be one step ahead when it comes to market facts, technologies and development.