Eurodebit Opening Europe to E-commerce

Eurodebit is a third-party processor whose unique services give E-stores and others access to the estimated 80 percent of European consumers who have a checking account but may not have a credit card, or who simply may not use a credit card online.

The company started doing business in 1998 under the guidance of German-born Bernard Schaer, who immigrated to the U.S. in 1985. Schaer developed Eurodebit's cardless billing solution specifically for the lucrative German market, which is fueled by an affluent populace - nearly one-fifth of whom surf the Net on a regular basis - but seldom make online purchases via credit card. Under Schaer's management, the company has prospered; Eurodebit is currently based in Reno, Nevada, with branches in Seattle, Washington; Las Vegas, New Mexico; and Monheim, Germany.

We spoke with Schaer recently and asked him about his product, how Eurodebit came to be, and where he hopes to take the company in the future.

Can you tell our readers a little about the history of your company?

First, you have to understand the European market. The problem is that European standards of doing business are different than American. Only 19 percent of Germans own a credit card. Most people use their checking account, and the people who do have a credit card are reluctant to use it online... It's always baffled me... my siblings and parents are the same way, maybe because not a week goes by that there isn't negative press regarding using your credit card online.

What was the appeal of doing business in such a tough market?

Thirteen-and-a-half million people in Germany, about 17 percent of the population, regularly use the Internet. And many people in Europe are affluent, which gives Web masters a whole new audience to cater to. So of course that market would be attractive to adult Web sites... I came up with the idea of debiting checking accounts, primarily German accounts, back in 1997. So I hired a programmer, because I didn't know anything about programming, to create a system that could do what I had envisioned. In February of 1998, we started our "trial run" if you will, with a number of Web sites we already knew, and who knew us, who were willing to test the program. We tested for over a year. Then in the summer of 1999, we went out and signed up other clients, like ( Right now, we have a couple of hundred sites we service.

How does the Eurodebit system work?

We do process credit cards, but primarily we do auto-debit system processing... [which is] the preferred method of doing business. It's used exclusively by more than 80 percent of all German consumers, including Internet users. When a customer makes an online purchase, the money is deducted from their checking account. This is done in real time and most transactions are approved in 30 seconds or less.

What about fraud and chargebacks?

We have access to a very large database through our Monheim office, that allows us to verify age and account information. Companies outside of Germany don't have this access. So even if a German does use his credit card online, it's better to use our system. We have better fraud control because we're in the country where the transaction is taking place.

What support services do you offer?

Our online transaction service is staffed 24 hours-a-day, seven days-a-week. We also provide daily sales reports, membership renewals, real-time database synchronization, and cancellation reports. We can even reformat forms to match the design or programming requirements of your Web site.

Do you only do business in Germany?

Within the year we should be expanding into Austria, Belgium, the Netherlands, Luxembourg, and the United Kingdom. Our second phase of expansion should include France, Spain and Italy. Right now, we process the American dollar, the German Mark and the Euro.

Are you strictly adult, or do you serve the mainstream too?

Most of our clients in the U.S. are in the adult business. In Germany, our business is split. Approximately 60 percent is adult, and the other 40 percent is mainstream, companies that sell CDs, books, and similar items.

What do you see for the future of your company?

We exhibited at our first American trade show at the October 1999 Miami ia2000. We were very positively surprised by the response to our company. Many Web masters came up to us and said that they always wanted to get into this market, but didn't know how. We also received business from other third-party processors who want us to process the European transactions for their customers.

And as I said, soon, we want to have offices in Paris, London... Much of it depends on the banking rules and regulations [regarding auto-debit transactions] in individual countries... We're working on those deals now. It could mean a lot of money for Eurodebit and of course, for our customers.