MoneyBookers- story of legendary european payment system

Moneybookers is one of the payment services' options that within past couple years getting the large expansion in the cyberspace and considerably increasing the number of transactions processed as well as the number of active accounts opened. Unlike other payment option - PayPal (which is a registered and regulated in accordance with American legislation and licensed on the state-to-state bases), Moneybookers was established as money service business with HM customs and excise in the United Kingdom, and headquarters in London. In some sources it is stated that Moneybookers is the subsidiary of Gatcombe Part Ventures limited. Company is licensed to operate within EU (covered by Financial Services and Markets Act 2000 and EU directives to e-money). Note, that in accordance to the direct meaning of it Moneybookers isn't licensed to operate in the territory neither CIS countries nor USA. However, Moneybookers becomes more and more popular and many sellers have already switched from popular PayPal to Moneybookers offering it to their customers as one of the available payment options.
In accordance to the Chairman of the Board Dr. Thomas Middelhoff within 2007 year company was able to triple its revenue reaching EUR 1.5 billion- point with 4 million accounts, operating in over 35 countries, in 12 languages, and handling 29 currencies, which is an incredible step for the company originally targeting the UK and Europe consumers. Moneybookers had taken some important actions to ensure the future growth of the company's revenues. In January, 2007 the company‘s web developers announced their readiness to launch a new image of web, however, the promise was actually fulfilled only in March 2007. The other improvement was implemented in October 2007. The company had announced its joint of forces with AfterBuy, one of the leading software providers for eBay PowerSellers and online merchants, releasing the most comprehensive all-in- one payment solution (also known as Split Gateway). After the beta test, officials of Moneybookers stated that the new advanced solution would be unveiled to all AfterBuy clients. As the result of such joint work of two companies, AfterBuy customers can receive payments via more than 40 international options instantly, so there would be no need for further integration with any payment or credit card processing company. Auction buyers would be able to skip the usual lengthy registration process (also known as Fast registration) and if required Moneybookers can also offer its clients a zero chargeback guarantee. All received funds would be instantly available on PowerSeller Moneybookers' s account and ready for settlements remaining the cost effective payment solution.
So here comes a question - what distinguishes Moneybookers from let's say popular PayPal What are its advantages and disadvantages, its key mile-stones ?
1. Territorial and industry coverage
Unlike Paypal, a leader among online payment services with 195 countries acceptance, Moneybookers is accepted only in 35 countries, however, unlike Paypal, it is able to handle 29 currencies (17 in PayPal) and operate in 12 different languages, including Russian (PayPal offers only four) that facilitates both the registration process and account operation. As to the industry coverage, Moneybookers don't accept payments for adult entertainment services, pharmaceutical, tobacco, firearm and unlicensed download products. Unlike PayPal, Moneybookers accepts the payment and e-wallet refill transactions for online gamblers (however, it is not possible for any US operated online casinos).
2. Registration process
The main advantage of Moneybookers can be considered as fast and simple registration process with the identity verification applied in the initial step before even starting to use the services. The verification mail is sent right away after your confirm your intention to open an account and set up the contact e-mail and password. It doesn't verify neither the billing address, neither the account, nor the main credit card. PayPal wouldn't let you complete the registration process without verifying the billing address (for example asking you to provide with the expanded use number, that has to appear in the next bank statement that the seller with business account has to enter prior being able to transfer the first funds) and the correspondence of the provided credit/debit card with the expiration date, cardholder name and security code at the reverse side of the card. In addition, to the sellers registering for the overseas business account PayPal would charge all together $3.95 (instead of as declared $1.95) as enroll program fee. In addition, what might be the most confusing fact, especially for the beginners, PayPal has different pages of registration form, depending on location of the account.
3. Services provided
Both payments systems are offering such common payment services as sending, receiving money, accumulation of funds on their internal accounts, paying for auction, mobile payment. PayPal offers its consumers the e-mail invoicing, sent to the customers and opportunity to include customer service contact information visible for the payees. As the solution for a small and mid-size business PayPal has developed Web Pro system, offers the online loans to trusted sellers and allows to loan money though PayPal acting as private lender, as well as to pay for student, home equity, personal and other types of online loans. Note, that PayPal offers to apply for PayPal credit card or PayPal Plus, not available by Moenybookers.
Moneybookers offers completely new, unusual services such as to send sms (general charge for sms sent to Russia is EUR 0.15/ message); to send/receive Fax (fee depends on destination country, as to Russian recipient it would cost EUR 0.75/page with text upload 1000 KB for pdf files). The recipient would receive the fax as e-mail attachment. This service became available as the result of partnership with eFax. The consumer has to sign up with eFax to receive a real fax number. Faxed (sent by e-mail attachment) would be stored for 30 days upon receipt. The customer may choose own fax number from over 2000 world-wide cities. At present time Moneybookers is offering free 30 trial-period with eFax.
Moneybookers escrow service is a totally new option integrated in online payment system. A special security deposit of 2% would be paid by the buyer that would ensure the swift action in the acceptance procedure and it would be released back to buyer only upon successful completion of the transaction. The seller doesn't get paid until the buyer's acceptance (limited by 14 days period or buyer has to reject or claimed as non-delivered) or upon expiration of the inspection period. Fees for service are paid by the buyer, calculating 1% from the purchase price (but a minimum of EUR 2.00).
As to variety of accounts - Moneybookers offers only two types of accounts - personal and merchant, with the transfer restriction imposed on the latter (for example, if your company sends over 20 000 British pounds within 90 days period be prepare to special terms and conditions' regulation applied and additional account verification procedure. PayPal is more creative at this point offering personal, premium and business accounts (included the special merchant rate) plus Web Pro solution, ideal for small and mid-size business wit major revenue coming from online trading without setting up any restrictions of transfer volume. Although, the seller while registering for business and Web Pro money option should specify the expected monthly turnover.
4. Fees and charges applied
Moneybookers is regarded as the most cost-effective payment option. The main advantage is that the fee applied to sender of funds not to a receiver. The general cost for sending money is 1% (but not less than EUR 0.50 or in its dollar equivalent $0.80), the receiving is free. PayPal usually charges from 1.9% to 2.9% + $0.30 for any transaction for domestic (US) accounts, as to international accounts Moneybookers would charge 1.90% or ($5.10 for international check applied to OCED residents), PayPal would increase their charges to 3.2% + $0.30, plus flat rate that might be applied by local bank. Conversion rate of Moneybookers is modest too. The exchange rate is determined basing on daily reference rate with 1.75% added to Internet bank rate, against the determination of exchange rate applied by PayPal that might be settled based on sole discretion of PayPal, including 2.75% kept by PayPal for provided conversion services. Both options offer free personal account and no monthly payment, except Web Money Pro PayPal with $30 obligatory monthly fee charged.
5. Payment options accepted
PayPal, generally, accepts only bank account or credit/debit card as the sources for withdrawing or depositing money, in difference, Moneybookers has enlarged the number of accepted payment options including mainly international checks, wire transferring to bank account, SWIFT international transfer (mostly for OECD countries), credit/debit cards.
6. Chargeback policy, frozen accounts.
In comparison to PayPal, Moneybookers is taken itself as "hard" currency and all processed transactions are non-reversible. However, as stated in the policy of Moneybookers, company has the right to withdraw this policy without any notification for any particular merchant determined by sole company's discretion "as not exercising due diligence or operating in a way which results in higher than normal exposure". PayPal sellers had experienced a lot of troubles with customers' chargebacks resulted in many cases - frozen accounts or downgrade of sellers' accounts depending on number of chargebacks to even the closure of seller's account.
7. Fund transfer time
Both payment services are claiming the real time deposit and immediate availability of transferred funds. However, depending on payment option the time might differ. The wiring in Moneybookers might take regular two-three banking days as for any wiring transaction between banks, moeny transferred between the credit/debit cards or directly from Moneybookers account are available for withdrawal immediately. As to PayPal many current and ex-PayPal customers are well aware about numerous class-action lawsuits charged the company with frozen accounts or unauthorized fund withdrawal or withholding by PayPal. Usually, it takes 8 days to receive the money deposited to PayPal account with no interest earned, by the way.
8. Security option
Both payment services are offering the highest data protection level, including the client verification system, CAPTCHA (a picture with random combination of letters and numbers). Moneybookers stated that it uses Secure Sockets Layer technology and that their servers sit behind an electronic firewall and are not directly connected to Internet, so the customers' related information is only available to authorized computers. PayPal has introduced the tocken key with $5.00 value that supposedly increases the security level.
In conclusion, we would say that Moneybookers might be considered as a simple and cost-effective solution to a user that doesn't intend to transfer big amounts of money on a regular base, whose business is generally circled around European consumers or in countries not supported by PayPal payment service and willing easy integration of payment option into existing checkout page. As definitive advantage let's mention the variety of currencies and languages available, easy process of registration and operation of account, great customer support (unlike PayPal). As the key disadvantage we would cite the limited number of accounts and countries where its service is accepted and limited number of sellers offering Moneybookers as payment option. However, with the growth of revenue shown in 2007 and ambitious plans the company has good chances to become a serious competitor to PayPal in the next several years.

Natalia, Reporter of Ecommerce Journal