Miriam Wohlfarth, co-founder and managing director of RatePAY.

Payment Observer: You are one of the founders of RatePAY. How did you come up with the idea for RatePAY?

Miriam Wohlfarth: Before founding RatePAY, I headed up the German branch of Ogone, an international payment service provider. I quickly realized that open invoicing was hardly offered for online merchants in Germany, even though studies have shown time and time again that German internet shoppers still prefer to pay by invoice. Payment by installments also remains largely unknown in the world of internet shopping.

Merchants shy away from letting their customers pay by invoices, because the risk is too high. If the consumer is not liquid, the merchant can get stuck with the receivables. The risk of invoices going unpaid is high for both small and large shops.

One of RatePAY’s most important jobs is to raise awareness about invoices and installments among online shops and explain to them that these payment methods lead to considerable increases in sales.

Payment Observer: RatePAY is part of the EOS Group, a company in the Otto Group, the world’s largest mail order company. What are the advantages of being part of such a big international company?

Miriam Wohlfarth: RatePAY is partnered with the specialists at Otto. Otto has years of experience in the mail order business we can benefit from. That helps us optimize our processes to meet the needs of e-commerce companies and mail order merchants and to further improve our risk management and fraud control.

Payment Observer: Can you give us some details about the services that RatePAY provides?

Miriam Wohlfarth: RatePAY offers online retailers e-commerce solutions for offer instalment payments, open invoice and direct debit. There is no site change for the consumer during the payment process. He or she remains on the shop’s own webpage.

For merchants, RatePAY takes on the full risk of defaults. We credit the store owner for the full amount of the payment directly, minus the RatePAY markdown. What’s more, we handle all the processes related to payment, i.e., the whole process and the invoicing. Upon request, we also monitor incoming payments and issue overdue payment reminders.

The advantage for merchants is that fewer visitors to their website cancel their purchases, because they are able to use their desired payment option. It has been shown that this increases the average cart size of existing customers, who end up buying more. The dealer also gains new customers who would not have bought before.

This increases both revenues and customer loyalty. At the same time, store owners have fewer expenses and do not have to assume the risk of a default. They always receive their money, even if the customer doesn’t pay the bill.

Payment Observer: You enable online merchants to offer their customers the option to pay by invoice without taking the default risk. How does that work?

Miriam Wohlfarth: As the customer is placing his or her order online, a multi-level point system is already calculating the risk of default. This process is called real-time scoring. The merchant can help determine which parameters should be looked at and how narrow the grid ultimately is. For risk management, RatePAY works closely with major vendors like Schufa, Bürgel, Infoscore and Creditreform.

Payment Observer: Travel Overland, a large online travel agency in Germany, recently integrated RatePAY. How can a travel agency benefit from offering deferred payments to its customers?

Miriam Wohlfarth: A large number of trips are now booked online. Travel Overland set up its own online booking platform all the way back in 1996 and is one of the pioneers in the field. When customers also have the option to pay for travel by invoice or instalments online, suppliers can bring in new clients. That also applies here, of course. Fewer cancelled purchases mean higher sales for the merchant.

Payment Observer: What are RatePAY’s plans for the future?

Miriam Wohlfarth: We are constantly developing our products and features. Also, we are already working hard to develop new, innovative variations. Our goal is optimize our products to meet the requirements of merchants and users. Because we have very high quality standards, over the long term, we would of course like to become Germany’s market leader in the type of e-payment solutions that we provide and that are most widely used in the online retail business.