twikey and subscription economy - getting paid setting up a saas business
Post on 15-Apr-2017
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www.twikey.com
Subscription Economy – Great
But how to get paid ?
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• Getting the payment done is the last element in the chain of setting up a SAAS business• SAAS businesses think in the first place about building a superior product
• IT-guys / Website builders decide on the payment mechanism – the easier it is – thefaster they want to integrate it• Sometimes teams from India or US and they know only one payment product
• 3,4 % of your online revenues can go to the payment
• This presentation will show you the possible options and some additional insights in the different payment mechanismes
Our observations
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• PSD2
• Some trends or reflections
• Different payment methods
• The components influencing your choices
• Different players
The fundamentals you need to know as European SAAS company
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European initiative: PSD2
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• Component 1: Payment Initiation• PSD2 will allow the possibility to do an immediate payment transaction.
• Component 2: Access to the Account (XS2A = check if there is sufficient amount on the account• PSD2 will give the possibility to get access to the account info of a customer
How the PSD2 will offer possibilities to the Subscription Economy
Some ideas:1) Use it to make the first set-up payment2) Use it to have a trust-worthy customer relationship – is it a potential good customer ? 3) Or use it in the tools you make yourself
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• Online – offline • Pure SAAS
• Offline relations
• Rise of new payment mechanisms• Paypal
• SEQR
• More recently: PayConiq
Those parties play in a creative way with one or more of the components mentioned in the next slides.
Trends
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Different payment methods
CashDirect DebitCredit TransferCards
Most popular oneMost expensive oneA lot of players support this and buildframeworks around it.
Easiest paymentmethodOnly usuable for one-time eventsThe end-customer needs to confirm theinitiation each time.
More difficult tounderstandUsed by 550000 companies in Europe but not a lot in SAAS models.
Do we need to say more….
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Usage of payment instruments in Europe
Source: Blue book Europe – graphic: AcceptEmail
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• A lot of playersin theframework
• In most cases on top of theAcquirer also a PSP
• Direct schemeslike BC/MC & iDeal have lessdependencieson 3th parties = read: less fees
Cards
Source: Innopay 2015
Extra fee: fixed + extra %
PSP and/or 3th party system
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• Advantages:• A lot of players have access to the card schemes – you can easily find > 20 PSP’s in the Benelux
(most in the Netherlands) – some of them have good API’s
• Easy and acceptable for the end-user
• Can be used in a kind of recurrent billing model – without extra end-user acceptance
• Charge back possible – protective scheme
• IT knows this product well
• Disadvantages:• Setup – acceptance by acquirer
• A lot of players involved => results in pricing
• More in a B2C context – less evident in a B2B context
Cards
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(SEPA) Credit Transfers (= overschrijving)
Debtor Bank
Creditor/ Supplier
Debtor / end-customer
Creditor Bank
(3) Transfer
(2) Interbank transfer
(1) Execution of the payment
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• Advantages• Easy – well known product
• Accepted by customers
• More reach (see further)
• Cheapest payment instrument !
• Disadvantages• Killing for “loyality” => - 50 % loyality
• Late payments : DSO > 30 days
• Expensive invitation part
• No control
• Extra follow-up costs
• No API’s (yet)
Credit Transfer
-
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• More complex scheme compared to credit transfers but less complex than card scheme
• Two types of direct debits: CORE & B2B
(SEPA) Direct Debits
Debtor Bank
Creditor/ Supplier
Debtor / end-customer
Creditor Bank
(1) Agree with a MANDATE
(2) Execution of a mandate
(3) Interbank transfer
(4) Execution of the payment
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• Advantages• Merchant decides when to get paid
• Protection during 8 weeks for consumers – thus increase trust
• Loyality
• Less follow-up – no invitations
• Can be used for fixed and variable amounts
• Disadvantages• Acceptance by the bank (or PSP required)
• Getting money (in a Core scheme) back is “easy”
• Limited number of specialist providers with API’s
• Unknown product for web-builders / IT developers / foreign developers
• More complex to understand: mandate vs collectionare 2 different things
• Sepa: Europe only
Direct Debit (= domiciliëring – automatische incasso)
Cash flow
You decide!
+
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• Cash or Cheques are not usablein SAAS business
Cash payments
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• Not every instrument can be used in every context
• Possible influencers• Omnichannel ?
• Region
• Reach : does your end-customer has the necessary instruments to pay
• Payment context
• Pricing
• Context: B2C vs B2B
• Technical feasibility
• Risk
Influencing your payment choices
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In which context is the payment
aranged ? Omnichannel ?
Channels
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• Europe or more ?
Region influences your payment options
Credit cards, Paypal, a mix of local instrumentsCredit cards, Sepa Direct Debit, Paypal, local instruments
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Cards vs Accounts: reach ! B2B SAAS products => lesscards available => SDD has a clear reach advantage
Easier and more reach…
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Which payment instruments are usable in SAAS-products
Direct DebitCards
Credit transfer: the typical one time invoice
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Different payment instruments: Average cost per 100 €
Source: Europe Blue Book – Graphics: Twikey
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• Card Scheme: PSP pricing + Acquirer Pricing + Card Pricing• Credit cards:
• Stripe : 2,9 % + 0,30 $
• Braintree: 2,9 % + 0,30 $
• Mollie: 1,8% + 0,25 €
• …..
• Debit cards:• Bancontact: 1,5 % + 0,25 €
• Paybuttons banks: idem
• Hybrid:• Paypal: 3,4 % + 0,34 €
Pricing
• Direct Debit• Bank pricing:
• Belgium: 0,05 € / transaction
• Netherlands: 0,10 €/transaction
• PSP pricing• Between 0,20 € & 0,40 €
+ One time Mandate cost:• Paper: Between 5 € - 20 €
handling cost
• Official eMandate cost:• Between 0,5 € - 4 €
• Credit Transfer:• Bank pricing: limited
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Card schemes:
• Credit cards
• Debit cards
Direct Debits (Core)
B2C vs B2B
Card schemes:
• More difficultbut possible
Direct Debits: Core & B2B
Invoice withcredit transfer
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{API}
Technical feasibility & risks
Payment risks• Cards: immediate execution but
charge back possible
• Credit Transfer: immediateexecution but customer takes the initiative
• Direct Debit: Core – 8 weeks refund (or 13m)
• Direct Debit: B2B – no risks
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• Card scheme players
• Credit transfers => Banks
• Direct Debits => Banks or PSP’s (see above)
Players
Only a few Belgium players
AgreementsTransactions on theMerchant Account
Follow-upSepa Direct Debit
eAgreement
Dashboard en rapportage
Role of Twikey
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• Twikey unlocks the Sepa Direct Debit system for online players in need of easy simple API’s and cheap transfers
Role of Twikey
Debtor Bank
Creditor/ Supplier
Debtor / end-customer
Creditor Bank
(1) Agree with a MANDATE
(2) Execution of a mandate
(3) Interbank transfer
(4) Execution of the payment
Optional Creation SDD
Optional Follow-up SDD
Some of our customers….
Why Twikey ?
Proven digital replacement of paper. 100% SEPA Proof
Solution for Sepa Direct Debit
Omnichannel usage – easy activatable
Usage on European level
Immediate acceptance of customers
Up-to-date Twikey Dashboard
Cashflow optimalisation – control onpayments
Manages mandates andagreements
Spare money on transactions
8% loyal customers
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Increase your….
Your objective….
Questions
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