“Worse still was the revelation that MC / VISA was recording some “refunds” as chargebacks!”At the recent CyberNet Expo in New Orleans I attended a seminar called “Billing: Transacting Business on the Internet.” In it, the top online billing companies presented their views on the current state of the industry, and the growing problems that face us. One of the biggest of these problems is the response of credit card companies to the twin issues of fraudulent business practices and the resulting “excessive” level of chargebacks.
While “scrubbing” site membership applications using negative user databases and / or positive verification systems, as well as providing excellent customer service, can reduce those chargebacks resulting from fraud or ignorance on the part of the consumer, it is the unscrupulous – or careless – webmaster who is most to blame for rising chargebacks.
Throughout the discussions, it became evident that the credit card companies are profit oriented, and not necessarily making moralistic decisions when issuing new policies that affect adult webmasters; they are simply trying to avoid being a party to the fraudulent practices that have so often plagued our industry.
Consumer deception is the problem, and industry self-regulation is the preferred answer – because if we don’t do it ourselves, somebody will do it for us, and unfortunately, that somebody is likely to be the US Federal Trade Commission. Two years ago they were upset over the misuse of the word “FREE” – today it is the fraud and deception that so often leads to chargebacks.
Heading Offshore
Offshore merchant account processing was another hot topic of discussion. Only a handful of US based financial institutions are still granting merchant status to Internet businesses, and even for those who currently enjoy merchant status, going offshore seems to be more and more the accepted norm.
Currently, offshore account processing fees average from 6 to 8% plus 30 to 60¢ per transaction. Despite the increased processing fees, offshore accounts are becoming ever more popular due to their increased leniency regarding chargebacks – and while the rules are a little more relaxed with offshore accounts, you should be stringent in your business practices because deceptive billing practices and poor customer service all lead to increased chargebacks.
“Worse still was the revelation that MC / VISA was recording some “refunds” as chargebacks!”
If something is not done about the excessive rate of chargebacks, VISA / MC may be forced to follow AMEX’s led and decline to process charges for all adult websites. This *will* kill our industry as we know it. Will it eliminate online porn? No, I don’t believe so. Will it fundamentally alter the way in which we do business? You can bet your next member sign-up or sponsor check it will!
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Reader Comments on this Article:
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StephenWhat Do YOU Think?
OzGood article, but… 🙂
StephenReturn of the Niggler ™
McSpikeIndustry can alter, but will never …
OzAgreed.
WingzIts not only porn…its anything on…
David KnellDialers as an alternative?
AlexTHIS SIMPLE SOLUTION!
