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