hetzel.net

Zaster Instead of Paydirekt

This translation was generated automatically.

Paydirekt is a mess, made in Germany. Back to the drawing board: let’s design ZASTER (quickly paying at online shops instead of a terrible advance transfer).

The goal is to connect online shops to online banking at low cost.There’s also pure self-interest here: I lose significant fees to Apple’s App Store, credit cards, and PayPal, which handle a large share of my shop revenue. As a consumer, I also sometimes despair at online shops that charge a hefty surcharge for anything other than paying in advance because their margins are so thin.

Customers want to shop quickly and get their goods quickly. That’s why near-free bank transfers in advance have two drawbacks:

  1. There’s no connection from the shop to online banking, so the customer must fill out the transfer form by hand.
  2. The transfer then often takes days to arrive.

Sofort solves these problems and charges a hefty fee for:

  1. Providing the connection from the shop to online banking—in other words, a scraper that fills out the transfer form for the customer.
  2. Guaranteeing the shop that the transfer was irrevocably sent, by entering the TAN into online banking on the customer’s behalf.

So we need to:

  1. Create a connection between the shop and online banking.
  2. Guarantee to the shop that the transfer was successfully sent.

The attentive reader will have figured out the principle by now. You don’t need a business degree or a team of consultants to work out the rest.

Or just look across the border to the Netherlands.

The solution there is called iDEAL. It:

  1. Connects the shop to online banking.
  2. Guarantees to the shop that the transfer was successfully sent.

Applied to our fictional Zaster:

  1. The shop sends the payment details to Zaster and receives a token in return. It uses that token to redirect the buyer to Zaster’s server.
  2. The buyer enters their BIC (or IBAN) and is redirected to their bank’s online banking.
  3. The buyer logs in and finds the transfer already filled out, then authorizes it with a TAN.
  4. The bank redirects the buyer back to the shop and confirms with the token that the money is irrevocably on its way.
  5. The shop can ship the goods the same day.

This isn’t entirely unlike GiroPay, which also doesn’t matter. This is a chance to start over; the banks and Paydirekt itself must surely be aware internally of how bad things are.

The big advantages would be:

  • No cost for “tiger leggings” customer marketing during the Olympic Games.
  • No login: any IBAN with online banking is already Zaster-ready.
  • Actual costs: €100 a month for a server in a German data centre and €5,000 for a full-stack developer/DevOps administrator. Let’s round it up to €100,000 a year.
  • Self-service sign-up for shops. Add €50,000 for ten shop plugins in the first year.
  • Sofort’s speed, with no extra costs.

Another Paydirekt login is madness. Lots of people barely know the difference between their App Store login and their email login. What has worked for the broad public? WhatsApp. You sign up with a phone number. Banks worked hard to get people using IBANs during the SEPA transition. Why not use that “login” together with online banking?

For the €100 million already sunk into Paydirekt, Zaster could run for 1,000 years. But we’re talking about inefficient banks. Even with a waste factor of 10 or 100, it would pay for itself for an almost infinite time. The banks would only need an API that accepts Zaster’s data and sends back a ping with the transfer result. Any bank that wants to participate can give its online-banking developers a small one-week task.

iDEAL isn’t as ideal as its name suggests, but we could learn from our neighbours. Wikipedia reports availability problems. We’ll just add a second server.

Sign-up needs to be even easier (self-service, with demo code), and fees need to be low. iDEAL charges around 20 cents per transaction, perhaps 50 cents through a service provider.

PayPal gave away millions of dollars to new customers in its early years to get a foothold. MasterCard got the memo too: its PayPal competitor MasterPass lures new customers with dozens of euros off their first purchase. The banks already have the customers; they just need to save them two clicks and two days waiting for a parcel. Online banking is established, and the security infrastructure with TANs, SMS, and all that is in place. And they need to save merchants fees, not block the way as Paydirekt does.

Germany is almost 20 years behind PayPal and needs to catch up. Zaster could run entirely free for merchants for five or ten years, then perhaps introduce fees of a few cents. Anyone launching in 2015 with fees higher than PayPal should have their head examined. Even with a 0.1% fee, Zaster could easily generate more than €5 million a year.

I’d like to see a merchant who wouldn’t jump at that. I would.

German banks took a big step into online banking with BTX in the 1980s and have slept through everything since. Now they have the chance to revolutionize online shopping overnight and make life difficult for the middlemen. iDEAL has more than 50% of online revenue in the Netherlands. Paydirekt needs several decimal places to express its share after a year.

Zaster is so obvious it hurts. Still, any bank that wants to implement it is welcome to pay me absurd consulting fees. More than €44 billion in annual revenue and around €1 billion in fees that German online merchants could save are waiting. Alternatively, Paydirekt can be steered straight into the abyss, embarrassingly, while an infinite amount of money gets wasted for nothing.