PAY.ON SEPA: a truly smooth solution

By Josef Etz on 15. October 2013 in Market Insights, Open Payment Technology

Today I want to write to you about the SEPA solution PAY.ONoffers. Our solutions concentrate on smoothly transitioning from national online payment processing schemes to SEPA direct debit. It targets existing PAY.ON clients as well as companies in need for SEPA processing – either because their existing providers won’t be able to provide a migration in time or someone wants to leverage the new potential through a cost effective cross border scheme. It targets senders who usually know how to handle mandates and have their own accounts. For payment service providers and their merchants in need of an all-in-one solution including collecting services, PAY.ON provides partner solutions like with P4, who integrate seamlessly into our system as an asynchronous payment method.

A typical merchant using PAY.ON’s SEPA solution is a merchant who processes a large number of direct debit payments. What are the needs of this merchant?

1.) First and most importantly, he/she wants to keep processing direct debit transactions after the 1st February 2014.

2.) He/she wants to keep (or even increase) his/her conversion rate.

3.) He/she needs his/her risk checks that protected his/her business over the last years to work.

4.) He/she needs his/her back-office processes, such as chargeback handling or matching of receipts, to work after the switch.

5.) He/she wants to take the chance to increase his/her market reach through SEPA.


If we have a look at these requirements, how does PAY.ON’s SEPA solution help the merchant to meet them?

Keep processing: PAY.ON’s goal is to make the transition as smooth as possible. We reduce the impact of switching to SEPA to a minimum. From a technical point of view, this means that direct debit requests currently being sent in will still be processed from the 2nd February onwards without exception.

We can achieve this with:
a) Intelligent defaults: If the merchant doesn’t send an explicit mandate ID, we replace it with the merchant’s transaction ID, and in case of recurring payments, with the ID of the initial registration transaction.

b) Applying best-of-breed conversion rates: We still accept national account details and convert them.

c) Flexible configuration: Vital SEPA information is configured in the merchant account. Switching from a merchant account with national details to a SEPA merchant account can be completed with just one click.


With these functionalities, the switch can be prepared and tested. Once everything is set up and test transactions have proven that everything works, the merchant or PSP can freely choose the point of time at which the switch should occur. Of course, we will support you with all steps in this process.

Conversion rate: The offered payment form has a large input on conversion. What if the shopper just does not know his IBAN or BIC if you ask for it? What if the shopper refuses to enter his/her national details after the 1st February because he/she heard that this is forbidden?


Our payment forms offer three variants: a national only version (using our back-end conversion), a SEPA only version and of course a combined version.

Risk checks: Blacklists, check digits, fraud detection or velocity checks. All our risk checks will work with IBAN/BIC as well as they do with national account details. We reach this by applying our back- and forth-conversion mechanisms wherever they are needed.

Back office processing: Not only online processing will function as it used to after the SEPA switch. Also your back-end processes like chargeback matching or receipts will work as always.

Increase market reach: SEPA opens the market for new customers abroad. While in the past, it was hard to charge a shopper’s bank account from another European country, this problem does not exist anymore for direct debit processing –in theory. In practice however there are limits. It is strongly suggested to apply COR1 with a reduced notification period for the countries where COR1 is offered by banks. But what to do with a shopper coming from a country where COR1 is not offered? Our merchant account dispatching mechanisms make sure that transaction processing occurs the right way.


So is PAY.ON’s SEPA direct debit approach a smooth solution? Yes, it is!


Josef Etz

About the Author

Josef EtzView all posts by Josef Etz


Add comment

Leave a Reply

Your email address will not be published. Required fields are marked *