The merchant checklist for taking on global commerce in many ways might appear never-ending. There are multiple languages, currencies, payment methods, regulations, compliance issues, the build versus buy discussion and much more that must be considered in the process. And in Europe specifically, simply signing commercial deals is extremely time-consuming, says Michael Doron, Managing Director of PAY.ON America, who told MPD CEO Karen Webster that such a complex checklist calls for stakeholders to work in parallel on all fronts. As a solution, Doron unraveled the tech-filled global payments “gateway in a box,” to enable payment service providers, ISOs, acquirers, ISVs and VARs to more easily stretch businesses across borders.
KW: So let’s get started. Who is PAY.ON, what do you do and what problems do you solve?
MD: PAY.ON offers a white-label global payment gateway that provides certified technical connectivity to over 250 payment providers, including domestic and international card acquirers, and many alternative payment methods, across more than 160 countries. We’re basically a technology enabler, and PAY.ON delivers its gateway as a stand-alone solution, or it can be implemented using a gateway connection to companies’ existing platforms using our APIs.
PAY.ON also offers value-added services around risk and fraud management, managed services, mobile Apps, mPOS in Europe, and we have recently brought to market a White Label SDK for Apple Pay.
KW: So what is the sweet spot in which you guys operate? Are you solving for cross-border payment problems?
MD: We definitely are a solution for cross-border problems, but what we do is help payment service providers, ISOs, acquirers, banks, independent software vendors and value-added solution providers to establish a global presence by providing them the technology they need to reach cross-border.
KW: So when you say the technology they need to operate effectively in those markets, what are most providers missing that you are delivering?
MD: The U.S. is a core market for PAY.ON, however many companies we talk to don’t necessarily have the understanding yet of what it means to go global and how to reach these markets from a technical and commercial perspective. So we address the portion of the solution on the technical side by doing all the heavy lifting – sort of like a global payment gateway in a box.
KW: I know that PAY.ON has been in the European market, working there quite successfully for quite a while, and has now moved into the U.S. market. Give us a sense of what you’ve been doing in the U.S. and how long you’ve been operating here?
MD: So PAY.ON AG, which is based in Munich, Germany, is in its 11th year of operation. The U.S. office, based in New York City, opened in March of 2014. We felt the time was right because North America has seen an increased interest from clients and prospects wanting to go global. In a typical fashion, merchants don’t know how to get access to the international markets including Europe, Asia, Latin America and Canada. We’re here because of the increased interest in learning how to do that.
KW: I’d like to get your perspective on some of the things you think the payment providers in the U.S. might be able to take from your experiences in other markets outside of the U.S. Obviously, PAY.ON has been operating outside of the U.S. for more than a decade. What are some of the lessons that you can import into the U.S.?
MD: In a way, North American payment providers have been spoiled because they’ve only had to deal with four credit card brands and a little bit of ACH to cover their e-commerce and checkout needs. But it’s quite different in Europe. First of all, there are many issues around legal, regulatory and compliance that a U.S. company must be concerned about. I really recommend that anyone seeking to go into any international market work with a payment expert or industry consultant that can help them navigate through the “going global” process.
In Europe, the landscape is much more complex due to the necessity of incorporating alternative payment methods, and having the right partners in place to allow companies to grow alongside changing technology and partners. With cross-border capabilities, you can expect to see more European companies actually establish a presence in the U.S. – as we did – through acquisitions and consolidations. For example, Worldpay bought SecureNet.
KW: So is the demand coming from U.S. companies wanting to do business globally, or from businesses outside of the U.S. wanting to establish a presence in the U.S.?
MD: I think what we’re seeing is that the world is getting smaller in terms of technology and the ability to reach consumers in new marketplaces. So the demand is coming from the merchants, and the merchants are turning to their payment providers, asking for help in getting to Europe or Asia. They want to reach new consumers who want their products, and they need a way to get there technology-wise. It’s coming from both sides – we’re seeing a lot of European companies jumping into the U.S. market as well. We have the ability to see that clearly, because my counterparts in Europe talk to me and I talk to them, and we’re in alignment in our strategies because we’re seeing cross-pollination happening.
KW: Cross-border commerce is really one of the important topics of conversation, and as you said, merchants who want to reach a global audience are driving this demand. Of course, when you’re online, your customers can come from just about anywhere.
Give us your insights on what kinds of things merchants need to be aware of and planning for as they’re thinking about cross-border commerce opportunities.
MD: Sure. Certainly, as I said, seeking a payments industry expert will help them navigate the challenges of going global – particularly if they don’t have the expertise in-house. If a merchant wants to establish a presence in Europe, they’ll need to have a legal entity in order to be able to sign contracts with processors or acquirers in Europe.
Finding the right partners that can support the geographic regions you want to reach is also very important. Then there’s the question of build versus buy, which is an internal discussion – it depends on costs, resources and time to market. Also, understanding the risk and rewards of the opportunities by country is key. U.S. payment providers and merchants are very credit card driven, but when you start going to international markets, you have to keep an open mind to the payment cultures that are different, and the local payment options that are necessary for any e-commerce or commerce solution – like mobile or POS.
You definitely need legal and regulatory advice. If you are establishing an entity, you may want to have an e-money license – a banking license – for Europe. These are very complex, long decisions and detailed strategies that need to be thought-out. I can’t stress enough that it takes time to sign commercial deals in Europe and other countries. You need to work in parallel on all fronts.
KW: There’s certainly a lot more to it than just having a website or a mobile app, or being able to attract customers to that site or that app. I am curious about what PAY.ON is doing to help satisfy some of those requirements and remove the friction from the merchants who are looking to make this as easy as possible.
MD: We engage in a lot of pre-sales consulting with our clients, helping them understand differences in payment cultures and behaviors. Take for example Germany, where consumers typically like to spend money they actually have. They prefer to use debit-based transactions, whereas in the U.S. we’re heavily credit card driven – and that’s changing over the years.
We have solutions to meet all of those needs, whether we’re partnering with ISOs or PSPs, and because we have our groups based in Europe, we’re already sensitive to the different languages, cultures and payment schemes. When we built our platform, we built it from the ground up to be internationally capable. Coming to the U.S. for us was an easier move, because, back to the credit cards and ACH, that’s all you really need in the U.S.
You need to understand what the payment mix is in each country to maximize conversion rates, and understand the fraud risk. We offer our own fraud risk management suites, but we also partner with third-party risk management providers like ReD, Kount, ThreatMetrix and 3D Secure providers. These are all things you need to consider, as well as average transaction values that merchants are selling. There are some lower risk payment methods like “online money transfer” in Germany that have lower risks when you make an online transaction.
Of course, the multiple language issue is a problem as well. Our platform supports nearly 30 languages – so we’ve really built it to help clients solve their international issues.
KW: Well it sounds like having that ability for merchants to access “in a box” capabilities that allow them to do commerce on a global stage is quite helpful. What kinds of merchants do you serve? Is there a particular segment, like digital goods or physical goods?
MD: Really both – it’s not skewed any particular direction. Our platform is independent of what type of product or value or currency the merchant is dealing in. It’s an agnostic system from that perspective.
Managing Director, PAY.ON America, Inc.
Michael Doron is Managing Director for PAY.ON America Inc., leading commercial efforts in North America and expanding PAY.ON’s white label global payment gateway business. Prior to joining PAY.ON, Doron held executive roles as Director of Sales at Ogone, Inc. (an Ingenico company), as VP Americas at ClickandBuy (a subsidiary of the Deutsche Telekom’s Business Unit Payment BUP), and as Co-Founder and VP of Business Development at Broker Processing Services (BPS).
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