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Page 1 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Direct Response Forum – Basel, 25./26.04.2006 Case Study: Direct Debit Sven Krahn.

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Presentation on theme: "Page 1 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Direct Response Forum – Basel, 25./26.04.2006 Case Study: Direct Debit Sven Krahn."— Presentation transcript:

1 Page 1 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Direct Response Forum – Basel, 25./26.04.2006 Case Study: Direct Debit Sven Krahn

2 Page 2 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Lycos is one of the leading European portals. Top 5 Top 10 Other Introduction to Lycos Results from a Roland Berger Ranking of Top-Brands Source: Manager Magazin Online 2002 Rank 1Coca Cola LycosRank 32 T-Online Rank 42 MSN Rank 77 Amazon Rank 83 Marlboro Rank 94 BMWRank 115

3 Page 3 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 International business Introduction to Lycos T-Pay bank-/post-/ autogirot 4B MasterCard Debit 4B Maestro Debit Visa Electrón Debit Premium SMS Premium Rate Numbers

4 Page 4 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Challenges for Lycos Multi-Service Billing (for all the different Lycos Premium Services) Integration (bring all the different bills on one invoice) Service bundles, packages (apply price and discount plans to a set of services) Flexible pricing (transparency and visibility to user AND product manager)

5 Page 5 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Integration means to bring the charges for all premium services to one consumer invoice. Challenges and requirements

6 Page 6 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 We require core competency within each module. Lycos Core Billing Platform usage/ orders Core Billing Platform customer data invoices 1. Premium Services signup CDB Lycos Sign Up 2. Sign up and customer database 3. Customer Care T-Pay Account receivables, debtor management 4. Payment processing

7 Page 7 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Importancy of Direct Debit Germany and Netherlands are direct debit countries Offline bank transfers are fully substituted by Direct debit. Target group has no credit cards.

8 Page 8 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Pros and Cons of Direct Debit Customer Merchant Pros Cons 100% coverage (Everybody has a bank account) Control of the payment date Fast (payment notification after 2-4 days) Low costs (per transaction fee) Very common for all types of recurring payments (utilities, subscriptions, membership fees, …) Secure and simple Customer-friendly chargeback policies Some countries require very complex mandate handling (fulfillment) procedures High chargeback risk Long revocation periods Easy to fraud Customers need to control debits on their accounts

9 Page 9 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Pre-authorized direct debit The payer (debtor) pre-authorize the debit of his account on the initiative of the beneficiary (creditor) Legal framework between five parties: -Creditor and creditor‘s bank -Debtor and debtor‘s bank -clearing house or payment supplier (optional) The different systems operate on basis of three contracts: -agreement between all participating banks -agreement between debtor and creditor  mandate -agreement between creditor and his/her bank The ‘mandate issue’ Germany is an ‘easy’ Direct Debit country Non pre-authorised direct debit No mandate before the direct debit process actually occurs The creditor has to present the collection instruction to the debtor as a request for authorization After authorization by the debtor, the debtor’s bank will execute the direct debit Possible revocation period of 6 weeks for the consumer without stating a reason

10 Page 10 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Bank information is ‘public knowledge’ Algorithms check are available from the Federal Bank of Germany http://www.bundesbank.de/zahlungsverkehr/zahlungsverkehr_pruefziffernberechnung.php Valid sort codes (Bankleitzahlen) are available as well http://www.bundesbank.de/zahlungsverkehr/zahlungsverkehr_bankleitzahlen_download.php For fraudsters, it is easy to get “real” bank information that will pass any of the algorithm checks For customers it is very easy to make a chargeback Internet Merchants need additional customer validation, e.g. -PIN (SMS or bank statement) -phone validation -address verification -initial active fund transfer by customer (prior to direct debit) Algorithms check are available from the Federal Bank of Germany http://www.bundesbank.de/zahlungsverkehr/zahlungsverkehr_pruefziffernberechnung.php Valid sort codes (Bankleitzahlen) are available as well http://www.bundesbank.de/zahlungsverkehr/zahlungsverkehr_bankleitzahlen_download.php For fraudsters, it is easy to get “real” bank information that will pass any of the algorithm checks For customers it is very easy to make a chargeback Internet Merchants need additional customer validation, e.g. -PIN (SMS or bank statement) -phone validation -address verification -initial active fund transfer by customer (prior to direct debit)

11 Page 11 Meet you there Lycos Europe, Sven Krahn – 25./26.04.2006 Summary and conclusion Direct debit is a MUST for Lycos Europe Direct debit is perceived as the most consumer-friendly and “secure” payment method in DE and NL. Direct debit (DE and NL only) makes 30% of all our European payment methods. Direct debit ranks up to 85% in DE and NL. Relevant parts of our target groups do not own a credit card (credit cards are not common in Germany) Other countries (besides DE and NL) have too complex requirements and/or direct debit is not so popular


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