E-PROCESSING
Whether gambling in Vegas or trying to accept VISA online, it’s easy to assume the odds are against you. And though the house almost always wins, a gambler’s chances fare far better online than in a casino.E-PROCESSING
Whether gambling in Vegas or trying to accept VISA online, it’s easy to assume the odds are against you. And though the house almost always wins, a gambler’s chances fare far better online than in a casino. At least, so said the billing panel recently during the “Adult Online Billing in the Year 2003” Internext seminar in sunny Las Vegas. The semi-annual panel included attorney Fred Lane (moderator), Mitch Farber (Netbilling), Ron Cadwell (CCBill), Clay Andrews (Paycom), and Sam Agboola (DH Media) – each having unique perspectives on both present and potential industry concerns.
The current Visa regulations and resolutions were discussed briefly, with Mr. Farber stating how gateway processing services give you complete control and avoid the –IPSP-related Visa fees. Dr. Andrews was excited to announce a prepaid debit card solution from Paycom and Mr. Cadwell added that everyone should expect new payment options to arise over the next year. Mr. Agboola believed solutions can be found in fraud-prevention techniques, “if you do it right.”
MasterCard’s future in the high-risk industry was a major concern for many Webmasters. Mr. Cadwell was quick to state that MasterCard would not be backing out and that any new regulations and formal titles, such as IPSPs, sponsored merchants and acquiring banks, put the billing companies in a much better position. Dr. Andrews made it clear that the rules were established to “get the bad guys out and keep the good guys in.” In addition, the panel believed new regulations from Visa-International (and possibly MasterCard) will be established in six to eight months.
Under current regulations, Visa-International allows transactions to be settled by nearly any acquiring bank outside the U.S.A. However, the new regulations would require the bank to be in the same region as a given sponsored merchant. While it’s easy enough for IPSPs to establish a relationship with the banks, Canada poses a significant problem because none of the few acquiring banks in that region want to settle high-risk transactions. When this issue was placed in front of the panel, “register a U.S. corporation,” was presented as the only safe option. Rest assured, all of us are working on other solutions for Canadian merchants.
One Webmaster requested that the four panelists verbally spar over two billing models: IPSP (central merchant account, third-party processing) and gateway processing (individual merchant accounts, central payment interface). After some jabs and laughs, Webmasters were asked to think about three basic questions: (1) How knowledgeable are you about merchant accounts, bank issues, etc.?; (2) How much time do you have to manage settings, keep up with regulations, etc.?; and (3) What level of control do you need over your account settings? Gateway processing is an option for those who need or have more of each of these while IPSPs will take great care to streamline all of them on your behalf, leveraging the increased transaction volume to keep chargebacks in line.
Much frustration was found over “friendly fraud,” caused by customers who take advantage of the chargeback process after receiving products. It is a growing concern for Webmasters. There are various solutions available, including Verified by Visa (VBV), which Mr. Farber stated would effectively eliminate chargebacks. Dr. Andrews then discussed how his company’s prepaid debit card solution was designed to close the loop. Both Mr. Agboola and Mr. Cadwell described what can be done to minimize chargebacks beforehand, such as smart scrubbing, and highly-accurate descriptions of the products being sold.
The focus then swung through a familiar line of questions. Chargeback ratios and age verification were discussed. Several Webmasters were concerned that Visa and MasterCard now had too much control over content. Mr. Cadwell made it clear that Visa was protecting its brand and that the regulations were simply designed to let it see who was selling questionable content. The other panelists pointed out that every company, including banks and billing agents, have moral limits determined by the principals. Mr. Lane concluded that when you’re dealing with private businesses there is no freedom of speech.
The final questions were those of conspiracy and Mr. Agboola noted various restraints by media streams and communities. But Mr. Cadwell laid the concerns to rest simply by illustrating the adult community’s transaction size compared to other industries. “We don’t even come close to Walmart.” Relatively speaking, our transaction volume is small yet our industry is a big source of chargebacks, complaints and support requests. Mr. Lane closed the seminar a few minutes late with Webmasters still in line with questions.
Be sure to check YNOTNews, chat boards, billing newsletters and other resource sites for the latest updates in the billing arena. Our thanks go to all of those who made the tradeshow and seminar possible, especially Renee Johnson, Missy Wong, Teri Owens, and Laura Washock.
Matt is the Executive Vice President of PSW Billing Solutions – the premier billing agent for countless Webmasters and online merchants. Trusted by industry leaders since 1994, PSW is renowned for critically acclaimed customer support, innovation and responsiveness and is committed to providing only honest, genuine, and respectable billing services to professionals and consumers throughout the world. Matt can be reached at matt@pswbilling.com.
