Exclusive interview with Carlos Häuser, VP Payment & Risk and Shared Services, Wirecard AG

Wirecard AG is one of the leading international providers of electronic payment and risk management solutions. Worldwide, the Wirecard Group supports over 12,000 companies from various industry segments in their efforts to automate their payment processes and minimize cases of default.

Wirecard Bank AG is a Principal Member of Visa, MasterCard and JCB and operates as a credit card acquirer in 69 countries around the world, involving over 100 transaction currencies and 18 payout currencies. Part of

I. We offer a real multi-channel environment

When was the company founded and how has it evolved throughout time?
Wirecard was founded in 1999. Since then the company has enjoyed major achievements in the payment industry. Today Wirecard AG is one of the leading global and independent providers for online payments, thanks to its payment gateway services, merchant acquiring and collection services and state-of-the-art technology for risk management services.

What kind of approach does Wirecard offer to online payments?
We use one centralized platform to provide global best-in-class payment and risk management services out of the box, spanning the entire payment supply chain. As part of our service offering, the Wirecard platform provides access to a global network of acquiring banks and alternative payment schemes via multiple integration options. Customers can pick their preferred integration depth depending on their needs. In addition, we provide industry solutions tailored to the specific needs of our merchants. Such as integration into booking engines for the airline/travel segment and shop plugins for leading e-commerce platforms.

As the Wirecard platform is flexible and modular, we can bring in our expertise both on solution definition as well as on implementation side. We offer a real multi-channel environment enabling additional services around the payment supply chain, combining the channels and enhancing processing information. A central aspect is the sophisticated reporting, business intelligence and automatic reconciliation services for full outsourcing potential. As payment is highly coupled with processing of sensitive data, security is built-in in all our services enabling merchants to forget about risks on handling e.g. card data and therefore the efforts of compliancy to regulatory standards as PCI DSS. Broadening our global footprint and providing new market-segment specific solutions is central in our approach to payment – we aim to offer best-in-class service and additional value propositions along the entire payment and risk supply chain.

From your perspective, what are some of the consumer/merchant benefits from an online payment – centered approach versus mobile?
Online payments may also allow you to simultaneously cover mobile payments (at least for smart phones), and yet the user experience will not be as good as a native application. That being said, there will be no or only very minor differences in the near future. Mobile is just another sales channel, like any other, and the combination of multiple channels will make an integrated and seamless consumer experience a must-have. Right now, mobile payments are already in place, e.g. in smartphone-optimized web shops or via carrier-based billing. It makes no difference whether or not credit or prepaid cards will be stored on a SIM card when used for in-app payments.

What are your key markets (geographical segments)? What are the largest sectors for Wirecard by volume and value?
Europe is our core market. We have been building up hubs in Asia since 2010, for example in Singapore. Both markets have the same needs in terms of different currencies or languages and most important a huge variety of local payment methods, bank or card based solutions. Our largest sectors are Consumer Goods and Travel & Tourism followed by Digital Goods. Together, Consumer Goods and Travel & Tourism account for more than 70 percent of our transaction volume, which is forecast to reach around 14bn euros in 2011. The precise amount will be disclosed in our Annual Report 2011 on April 17, 2012.

How does Wirecard contribute to the development of the (online) payment industry and what challenges has the company faced in this respect until now?
As a technology-driven company, our key asset is an innovative product development unit. On the PSP side we have built a highly flexible and scalable gateway that allows completely new deployment models, e.g. running completely in a public cloud provider as white-label platform. We can offer a one-of-a-kind reporting and business intelligence feature set in our Wirecard Enterprise Portal with a WEB 2.0 usability experience. By adding more and more features to our service offerings along the value chain as acquirer we can offer all back-office process, e.g. dispute management, reconciliation, billing, settlement, banking services, etc. as outsourcing options to merchants. Still we can deliver all the necessary back-office integrations for the merchants to keep control on their side. For example, Wirecard started one of the first prepaid virtual card products specifically targeting the online payment market. The first step was to establish the concept within the organizations involved as regulatory bodies and the like, as the ideas behind the product were quite new and revolutionary. Based on the virtual card concept we were able to create a completely new product offering Supplier Commission Payments (SCP) using instant issued, on time preloaded credit cards for paying suppliers in a B2B environment. This solution is a perfect fit for lots of companies, e.g. in the travel segment.

We expanded our solution portfolio along the complete financial supply chain by anticipating industry trends, and this makes us unique compared to straight PSPs or Acquiring/Issuing Banks. The key challenge is to keep up with our own expectations and those of the market/customers in view of our innovation frequency. We are happy to face this challenge on a daily basis and to meet up to expectations.

Wirecard’s main achievements in 2011 are...
Our main achievements in the last year include, amongst others, a significant improvement of our global coverage with alternative payments, business intelligence tools for our fraud prevention suite, enhanced configuration and simulation options for risk management strategies, the online acquiring license for China UnionPay and a strategic alliance for collecting and processing Alipay.

 

II. Asia can be a source of inspiration

From your perspective, how does a PSP add value to the online merchant and consumer experience?
Nowadays merchants are faced with an increase of compliance challenges and complexity around payment acceptance. The support via a PSP, and in Wirecard’s case, from an acquiring and collecting bank, means that all services are linked in to each other. That provides a maximum service depth, such as managing charge-back risks, full transaction transparency, easy reconciliation and integration into financial back office processes.

A PSP’s payment method offering and the point mentioned above allow the online merchant to operate a cost-effective service with broad payment acceptance to optimize his conversion rates. This will improve the customer experience and thus increase customer satisfaction.

Under the terms of the agreement signed between Wirecard Group and China UnionPay signed in February 2011, the former provides its Asian business customers with further opportunities regarding the expansion into new markets and the availability of further payment options. What lessons can US and European players in the payments field learn from looking at the Asian e-commerce landscape?
Certain Asian markets demand a higher degree of sophistication in terms of software technology compared to Europe and USA. The markets are totally different in view of the sheer number of available payment methods, e.g. the 20 various payment card schemes just in Hong Kong. However, Asia can be a source of inspiration when it comes to integrating all flavors of mobile devices into e-commerce as well as the blurring of e- and m-commerce. Some Asian markets even give a glimpse of the future with mobile potentially merging all sales channels into one integrated channel. We can also see the broad acceptance and usage of voucher based payment methods and ways for cash-to-eCommerce.

Which key trends have dominated the industry in 2011?
Multi-channel commerce has been discussed for years, and finally last year we saw a real increase in the actual demand on the market and within our merchant base. Industry solutions as e-commerce shop plugins, GDS integrations, etc. offering additional benefits and making integration efforts for merchants easier to handle. Another key trend was mobile payment: from in-App payments to mobile wallets.

In your opinion, what is the largest missed revenue opportunity in online payments that could be addressed in 2012?
In Europe I would say that this is one of the potential lessons learned from Asian markets, namely voucher-based conversions of cash to an e-commerce enabled payment option. It is still the case that many people are reluctant to disclose banking or card details to online shops or that they don’t possess either of these. This opens a real new customer base that has still not been addressed by most e-commerce offerings.

Which organizations will stand out as the most likely payments innovators in the near future?
MNOs (Mobile Network Operators), companies such as Wirecard thanks to their full-service offering spanning the payment supply chain with a strong software-driven approach, global internet players and start-ups with innovative payment solutions.