An interview with Amran Khalid, Director International Sales of SEPA specialist ‘P4 Solutions’
From 1 February 2014, the new, uniform European SEPA direct debit will replace all previous direct-debit processes in all European countries. Thus SEPA simplifies all domestic and cross-border transactions for bulk ACH (automated clearing house) payments and collections, and reduces the costs for all parties involved. This will simultaneously pave the way for cross-border payments in the e-commerce sector.
P4 Solutions provides a SEPA e-mandate solution for payment service providers, independent sales organizations and banks. Dr Amran Khalid has over 20 years of experience in sales and business development. Before joining P4 Solutions, Dr Khalid worked for Ricoh, TeleCash (a First Data company) and TNS Transaction Network Services where he was responsible for the business in the DACH region.
a) SEPA is a hot topic in the market; however, the acceptance of market players, such as banks, payment service providers and independent sales organizations, is rather slow. Why is that in your opinion?
Amran: From my perspective, the review is very positive because the parties involved are working on the implementation. Currently, it is more about the financial sector (banks and payment service providers) because some countries now are not pressed in terms of time when it comes to completely switching to SEPA. For example, in Germany, of the approximately 3.6 million retail companies, only 800,000 have requested their creditor IDs, but the course is set. In contrast, there are a lot of countries where SEPA has already been very well implemented – for instance, Finland, Spain, the Netherlands, Greece and many more.
b) What potential do you see in SEPA, and how will it facilitate cross-border e-commerce for merchants?
Amran: SEPA direct debit will unite 33 European countries and will make cross-border e-commerce simpler than ever before. Online merchants already offering direct debit will retain their direct debit sales. Online merchants integrating SEPA direct debit will simplify their recurring payment processes to a minimum, and will increase their conversion rates because of direct debit’s high level of customer acceptance. The new scheme enables merchants to do business easily in 33 countries with only one bank account and one creditor ID number in the whole of Europe and part of the European Union. Furthermore, SEPA offers international merchants direct access to 500 million potential customers. It is essential for international payment service providers to implement SEPA to satisfy their European merchants.
c) Regarding SEPA direct debit and mandate handling, what are your recommendations to payment service providers/independent sales organizations?
Amran: In countries where direct debit is used intensively, it is essential to provide SEPA. In countries where SEPA has not been introduced, there is a great opportunity to expand transnational business. Through the mandate, whether created electronically or in hard copy, the merchant has a great tool for reducing the chargeback risk from thirteen months to eight weeks. With an existing mandate, the merchant saves effort and expense on reinsurance and can thus better control liquidity. With the e-mandate, process handling is simplified to a minimum and drastically reduces costs. Thus, merchants save in terms of expenses and have a clear and secure alternative to the paper mandate.
d) Are there any costs for SEPA and, if so, when are they incurred?
Amran: Costs do arise for SEPA processing, but it is worth mentioning that other schemes are also associated with cost structures – and these are ultimately paid by customers. Thus, for merchants costs are incurred for processing and clearing. In comparison to the costs, the opportunities far outweigh them. For example, in Germany direct debit is settled with a market share of over 16%; in other countries, this share is far higher. With SEPA, e-commerce has direct access to the bank accounts of all European citizens, and this is the reason why direct debit is a successful payment method and will remain so.
e) How does P4 Solutions enable SEPA processing and what do you offer to the PSP/ISO?
Amran: The e-mandate solution from P4 Solutions enables services to be provided electronically and in a secure manner. This involves transaction processing with the bank of the PSP as well as the management of the various e-mandates on a secure e-mandate server, format reconciliation and bank file generation. This fact allows payment service providers and independent sales organizations to easily continue to use their own bank. The P4 SEPA transaction system is a fully managed solution which includes seven processes –the label payment page, conversion into IBAN/BIC, risk management, different possibilities for the signature of the e-mandate, bank-file generation, conversion into the SEPA XML data format and communication with the bank via EBICS for sending the files to the customer’s bank for the transfer of funds. However, the most important part is that we generate the e-mandate and the mandate ID that is stored for the next 36 months on our secure server.
f) What distinguishes you from other players?
Amran: P4 is one of the leading specialised solution providers in Europe for technical processing of direct-debit transactions for almost ten years. We understand what payment service providers/independent sales organizations need to be successful in handling their direct debits. Our SEPA solution with e-mandate is the result of this experience. The managed SEPA e-mandate system from P4 provides secure and fully managed processing especially for online businesses. For payment service providers/independent sales organizations already connected to the platforms of PAY.ON, it is very easy to be SEPA-ready: all they have to do is open P4 as a connection. That’s it.