Sign up for The Paypers newsletter Follow The Paypers on LinkedIn Follow The Paypers on Twitter Follow The Paypers on Facebook Follow The Paypers on Google +
The Paypers, paypers, Insight in payments, News, Reports, Events
 advertisement
Interviews

Exclusive interview with Martin Ott, CEO of Skrill Holdings

Friday 25 March 2011 | 11:11 AM CET

"Due to its history and the origins of the company, Skrill has always been strong"

History

Moneybookers, which is part of Skrill Holdings, was founded in 2001 and shortly after the group company was awarded a European e-Money license by the FSA. Back then not many people had a credit card, which is still true today in many countries and various demographics. The idea was that an eWallet enabled those customers to instantly pay online with their balance, funded by their local bank or preferred local payment option in their local currency, rather than waiting 3 to 5 days for a bank transfer to reach the merchant. The company`s focus then was to provide access to as many local payment methods as possible to enable as many customers as possible to go shopping online – irrespective of having a credit card or not.After nearly a decade of operations, Moneybookers which is part of Skrill Holdings, has grown to one of Europe\'s largest online payments systems and among the largest eWallet providers globally with over sixteen million account holders. Continuing its theme of innovation, evolving to better meet the needs of customers, merchants and retail partners, Moneybookers recently rebranded to Skrill. Skrill better captures the ease and functionality of the company’s online payment suite which will continue to roll out through 2011 and Skrill will become shorthand for a safe and innovative way for customers to shop online with greater choice, flexibility, reliability and peace of mind.Speaking exclusively to The Paypers, Martin Ott, CEO of the company offers some insights into the company\'s growing presence, services and strategy.

A company with a smart vision

What was state of the online payments market in 2001, when the company was founded?
Initially the trend was facilitating the classic offline payment methods in an online environment. A highly fragmented banking market with high fees and long waiting times moved to the Internet. In the past few years, we have seen this trend change. People understand that they don’t have to give in to the same limitations online as offline, and are demanding more tailored and easier solutions. Instead of entering the 16 digits of a credit card, followed by a detailed address, expiry date, CVC code and 3D secure; eWallet systems like the one Skrill offers can provide the same amount of security whilst making the payment process a lot more convenient. This has obviously had an impact on our merchants, as an increased conversion on the payment gateway immediately equates to more revenue.

Also the merchants became more sophisticated and understood that they need more than credit cards to reach all their potential customers. Along the way many merchants got hit by fraud in markets which they did not understand as hackers and fraudsters also became more sophisticated. So our focus has also shifted in providing a safe and fraud free payment service to our customers with escrow services, chargeback protection or mediation services between merchants and customers.


What are the product brands your company has to offer? Could you provide any additional information on who primarily uses these products?
Skrill offers a range of products and services. The eWallet is our best converting payment option. Users can simply store their payment data with us and pay with a username and password, and our security token adds another layer of physical protection to the digital account.

Within the last year we have also launched a new prepaid card that allows its users to access the funds in their eWallet directly at any ATM or point of sale displaying the MasterCard Acceptance Mark, anywhere in the world.

Through this new development, Skrill has transferred the unique benefits of the eWallet into the offline world whilst giving its customers instant access to their cash, wherever they are. Unlike many existing prepaid cards, customers using the Moneybookers MasterCard do not have to split funds and separately preload the card. Instead, the Moneybookers MasterCard synchronises automatically in real time with the funds in the customer’s eWallet.

For merchants our Direct Payment Processing offers over 100 local payment options with just one simple integration and our experienced risk management team ensures that the merchant is protected in over 200 countries and territories. Additionally we also offer our chargeback protection service managing all of a merchant’s potential fraud risk.


What is your main proposition and how is it delivered? What are some of your company’s strongest selling points?
Skrill Holdings offers a highly comprehensive payment system, delivering a larger international network of local payment options than other providers. There are many different payment systems out there: some customers prefer to pay with credit cards, some with their local bank option, but Skrill has the ability and experience to serve an extremely diverse market and consolidate this complexity for its merchants. The rates are cheaper than most competitors and the system offers many more local payment methods. For example, in Germany only 35% of the population has a credit card, so if as a merchant you only accept payment in this form, you will miss out on 65% of potential business. Skrill offers its merchants all of the payment options they need to accept in a specific country to get the highest conversion rate within their checkout process.

Merchants choose Skrill because it offers a comprehensive network of payment options at a low cost, and because of its sophisticated anti-fraud and risk management technology, as well as the no chargeback policy.

Customers get a free eWallet account, through which they can receive money and make payments online at no cost. Sending money costs only a few Cents per transaction and it is instant. This is also a unique selling point for merchants in that Skrill can facilitate payouts to their customers be it for freelance jobs or as winnings. Enhanced security for both customers and merchants has become one of the most important issues in the online payments industry. The eWallet acts as a security buffer as customers only need to enter their financial data once. All payments are then processed through the eWallet transaction system, where customers can trust in the highest security standards. Moreover, having acquired the first European eMoney license nine years ago, Moneybookers has one of the most reputable and experienced anti-fraud, risk and IT-security teams in the industry – offering merchants and customers complete PCI Level 1 compliance and fraud protection.

What are your key markets (geographical segments)? What are the largest sectors for Skrill by volume and value?
Due to its history and the origins of the company, Skrill has always been strong in Western Europe. We also have seen strong traction in the Eastern European payment market which seems to be picking up in terms of internet distribution and eCommerce growth. We are serving the long-tail of SMEs today, but integrations by the likes of eBay.com in the United States or Alibaba.com have opened up other new opportunities. In terms of business verticals, we are also seeing an incredible growth in the digital goods sector. Our integrations with the likes of Bigpoint, Gameforge, PerfectWorld and others are driving this new business for us.

Moneybookers and the online payments landscape

With the online payments sector continuing to grow, particularly the adoption of eWallets as users look for easier and safer options to enable their digital lifestyle, there is plenty for Skrill to capitalise on. In 2006, the market was worth $518 billion. At that time, eWallets accounted for 7% of the market. Estimates for 2011 show market worth increasing to around $1,009 billion.

The current focus is clearly on maximising the operational potential of the business and looking for complementary opportunities that will add value to products. Additionally, the company will continue to invest heavily in service operations, to ensure the existing high level of customer support continues.

How does Moneybookers contribute to the development of the (online) payment industry and what challenges has the company faced in this respect until now?
The external commercial environment is expected to remain competitive in 2011. Skrill expects to continue to introduce new products within the e-wallet and online payments market with the introduction of new features, to its existing e-wallet technology and online payments network.

In terms of our eWallet one of our biggest challenges is keeping up with fraudsters. Skrill has one of the most reputable and experienced anti-fraud, risk and IT-security teams in the industry – offering merchants and customers complete PCI Level 1 compliance and fraud protection. However, there is still a need to educate consumers on how to stay safe online and the protection using an eWallet provides.

Continuing its theme of innovation, evolving to better meet the needs of customers, merchants and retail partners, Moneybookers recently rebranded to Skrill. Skrill better captures the ease and functionality of the company’s online payment suite which will continue to roll out through 2011 and Skrill will become shorthand for a safe and innovative way for customers to shop online with greater choice, flexibility, reliability and peace of mind. Skrill remains committed to its existing strategy and vision and believes that the objectives currently being pursued will lead to improvements in the business performance and results over the medium term.

What other payment systems or products do you consider to be the main competition for Skrill? Why?
– PayPal (part of Ebay): Is a great company with a good customer base in selected markets. However, Skrill has its roots and focus in Europe and is used to serving an extremely diverse market with more local payment methods.
– ClickandBuy (part of Deutsche Telekom): ClickandBuy does not have a strong customer base outside its home market of Germany, unlike Skrill which offers international expertise. Skrill also offers its customers chargeback protection even in riskier verticals or countries.
– GlobalCollect: While being one of the larger PSPs, GlobalCollect does not have any end-customer relationship with customers paying via their system. In addition to offering numerous payment options, Skrill builds on its advantage through the end-customer relationship: the eWallet gives customers increased ease-of-use when paying a merchant and, in addition, it provides merchants with marketing opportunities to its customer base. Skrill also manages the complete risk process where, for certain merchants, it takes on the complete chargeback risk.

How did the economic downturn affect your business?

As the economic downturn gained momentum, the focus of the business has been to achieve the right balance between continuing to meet the needs and expectations of its customers, shareholders and other stakeholders while making sufficient profit to support its growth plans, by controlling its costs and managing cash efficiently.

The last year has seen the Skrill Group continue to strengthen its position within the online payment sector, delivering 40% growth in revenues. This was achieved even with a business model that is dependent on the success of other companies, as Skrill’s main income as a payment provider is a share of other companies’ turnover. In a difficult trading environment high quality service, a wide product range, good operational skills and the experience to service end customers continues to provide Skrill with a competitive edge and helps attract new clients.Whilst other companies have cut back on their spending, we have increased our investment in future growth. We invested further into our technology and people to increase our system functionality and reliability and expand our international capabilities. We continue to invest in the business, in line with our strategic objectives.


The future

What changes occurring over the next 5 years will affect the market the most?
At the moment a suitable uniform industry standard for handling transactions made via mobile phones is not yet in place. It is very important to equip newly issued cards with NFC chips as standard – however their use amongst consumers is still quite limited, despite large marketing budgets. So educating the customer is key – alongside the need to build up the necessary infrastructure. 

Another big change will be the wide acceptance of “always-on” smart-phones which will drive a whole range of new consumer users, be it through location based services or mobile couponing etc. So the purchase behavior will change to anything, anytime, anywhere.

Another problem lies in data security and privacy, with fears that NFC chips can be used as a "spy system" and that mobile phones are not safe enough etc. No doubt exaggerated by fear-mongering, but still a further reason for the early implementation of a uniform, industry standard and clear messaging and education for customers. When it comes to setting these standards we will need to place our trust in the major card schemes such as Visa and MasterCard who will be extremely helpful and influential.

Does your company have products, projects or plans for mobile?
We believe the future lies in mobile. In five years you will be able to pay at most supermarket cashiers with your mobile phone and will be “always on” – connected to the internet through your mobile device. Somehow people will need to consolidate all their cards and offline payment methods into a digital device. Our eWallet does this already.

 advertisement
 advertisement
 advertisement
 advertisement