View Full Version : Jettis passed Mastercard fines?
Do not process with Jettis, but have heard that Jettis have passed Mastercard fines to all their 3rd party clients doing more than 1% chargeback/credit.
Anybody got more info?
Mike AI
05-21-2003, 11:41 AM
I cannot speak for others, be we have been fined and they were passed on - actually I think it was taken out of our reserve... it was not that much, but Mastercard is a slimmy outfit... My chargebacks are under 1%, but when put in with credits - I do not know how anyone can keep under 1%
Winetalk.com
05-21-2003, 11:41 AM
and why should they eat them?
Marc De
05-21-2003, 12:05 PM
Serge - Jettis was the ONLY 3rd party processor that passed the fines along. I know that those fines cost Global (the paysite owners) 7 figures and that is not cool... Especially since it affects their payments to us :(
X amount of 3rd party clients taking the hit instead of the processor will probably make sense in the long run. Makes everyone interested in providing good service, and makes sure that the processor will be around. Not the first time a processor passed on fines, and probably wont be the last time.
The thing I find interesting is all the processors and merchant who are getting hit with fines because of 1% chargeback and credit rule. As Mike AI said no matter what kind of online business you run, then staying below 1% is almost impossible, unless you do very low volume, and are just luckly.
More of the industry should get behind or stand beside Epoch against Mastercard - someone at Mastercard needs to understand that their "chargeback/credit" problem will not go away by lowering % to under 1%. It will only create problems for the "good" merchant accepting Mastercard. People/compaines wanting to do cc fraud will just move to a "hit and run" setup, where Mastercard will have even less control, and where Mastercard or their banks probably will be left holding the bill.
Mastercard will be booted from alot of adult sites - even good ones providing good service - because of their 1% chargeback AND credit rule. Credits are a part of running a business on the internet, and who wants to risk their business because of accepting Mastercard, when there are so many other ways for consumers to pay (local european debit cards, online checks etc.).
The only ones who will keep accepting mastercard is merchants with very low volume and those who want to do fraud.
A shame that some in Mastercard do not have more foresight, then what happende last year....
Winetalk.com
05-21-2003, 12:25 PM
Originally posted by Marc De@May 21 2003, 11:13 AM
Serge - Jettis was the ONLY 3rd party processor that passed the fines along. I know that those fines cost Global (the paysite owners) 7 figures and that is not cool... Especially since it affects their payments to us :(
isn't Jettis the smallest of them all?
SIZE does matter, I guess...
Yeah, and if Mastercard have their way, then being "super micro sized" will be survival of the fittest in the Mastercard game...
First, let's get our facts straight. Jettis did NOT pass on fines to all clients, only to those who were in violation of MasterCard's regulations. Many of our clients were not effected by these fines at all.
In addition, Jettis absorbed millions of dollars in fines that were not passed on to clients. For those that we did pass along fines to, we did it in a way that would least effect their cash flow - spreading the fine out, taking from reserves, etc.
Anyone who thinks that no other processor will pass on fines, is very naive. At least one of our major competitors has already publicly stated that they will also be passing on fines. Others are holding out as long as possible, but will ultimately have to pass along fines or delay payments.
The fines that are being levied against all the major processors are so excessive that they far outweigh what processors earn in net profit, so it is not feasible for any processor to absorb fines over the long term.
Some people have a very short memory in this business. Do we not remember how other processors just stopped paying clients or delayed payments for weeks on and off for years? Jettis dealt with this issue head on, we were honest with our clients and have continued to pay them on-time.
Originally posted by Serge_Oprano+May 21 2003, 08:33 AM--></span><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Serge_Oprano @ May 21 2003, 08:33 AM)</td></tr><tr><td id='QUOTE'><!--QuoteBegin--Marc De@May 21 2003, 11:13 AM
Serge - Jettis was the ONLY 3rd party processor that passed the fines along. I know that those fines cost Global (the paysite owners) 7 figures and that is not cool... Especially since it affects their payments to us :(
isn't Jettis the smallest of them all?
SIZE does matter, I guess...[/b][/quote]
Serge - you're right...size matters a lot.
Look at what happend to DMR when they took on too many risky transactions (multiple blind cross sells, etc). They ran from the chargeback problem by generating more and more transactions - sound familiar? Then when it alll finally blew up, they were to big to place that piece of risky business anywhere else. Nobody would touch it....
You can count on one hand the number of banks taking high risk adult business these days. If a big guy blows up, that's it....game over.
Jettis on the other hand has remained very select with the clients we take and what we allow those clients to do.
In tough times, who do you think will have an easier time keeping the banks happy? ;)
Originally posted by Marc De@May 21 2003, 08:13 AM
Serge - Jettis was the ONLY 3rd party processor that passed the fines along. I know that those fines cost Global (the paysite owners) 7 figures and that is not cool... Especially since it affects their payments to us :(
Marc,
We share your pain, trust me. These fines hurt us all and Jettis also ate fines to the tune of millions of dollars. But from a business perspective, the fines really do belong to the merchants who are selling the products and creating the revenue and in many cases bending rules or pushing the limits to generate more sales. So I'm not sure why you think it's "not cool"?
Is it ok for paysite owners to earn the majority of the revenue, not take any risk and have no consequences? That's not cool in my opinion. As you know, If you have your own merchant account, you would get fined directly. Being with a third party processor is no different, there is just a middle man in between handling the money.
Mike AI
05-21-2003, 01:47 PM
Ken, I have been saying all along, any program doing more then 50k a month in processing should have their own merchant accounts. Man big programs hide behind processors who allow their risky billing schemes to make their cash.... but in the long wrong it always catches up, and many times leaves the processor and their smaller clients in a lirch.
I am very happy with Jettis, they have always been great, and I expect that to continue long term....
Originally posted by Mike AI@May 21 2003, 09:55 AM
Ken, I have been saying all along, any program doing more then 50k a month in processing should have their own merchant accounts. Man big programs hide behind processors who allow their risky billing schemes to make their cash.... but in the long wrong it always catches up, and many times leaves the processor and their smaller clients in a lirch.
I am very happy with Jettis, they have always been great, and I expect that to continue long term....
Mike,
You have always been one of the good guys who runs a tight ship, has good sites and provides a value for your surfers. We LOVE clients like you.
As always, we appreciate your business and your good words.
Winetalk.com
05-21-2003, 02:23 PM
Originally posted by Ken@May 21 2003, 12:44 PM
Jettis on the other hand has remained very select with the clients we take and what we allow those clients to do.
In tough times, who do you think will have an easier time keeping the banks happy? ;)
the one who runs the tightest ship and has enough reserves to make banks AND CUSTOMERS happy,
it's a fine dance to play on the very shaky rope,
I wouldn't wanna be in your shoes...
as I say nowadays, the one who dies LAST - wins!
;-))))
Kjell
05-21-2003, 02:36 PM
In an effort to further clarify facts, our approach to this problem, we felt, was an opportunity to differentiate ourselves in the marketplace with respect to how the issue was handled. This was our first real hit/fine in our 5+ year history. Over time, we've seen some of our competitors handle these issues well and others, not so well. It was important to us that we ease the burden for clients and, in every case possible, ensure that the cash flow of our clients was not affected so they could continue to run their businesses. Nearly every client is back on track and receiving full payments each week. If we are successful receiving fine amounts back (we are diligently fighting the fines), we will most certainly refund reserve balances to all clients that were affected. The industry has gone through many challenges and will go through many more. Jettis is well positioned to endure them.
Winetalk.com
05-21-2003, 02:43 PM
Kjell,
when is the baby due?
Hooper
05-21-2003, 02:46 PM
I doubt anybody would be complaining if the agreement had always been that "we'll pass fines on to you".
As sponsored merchants that decision could make some sense, but as a true 3rd party aggregator it seems to me that the aggregator should be responsible for it, especially with regards to transactions that occurred without sposnored merchant status.
Personally i'd rather have processing rates go up and just know that i wont be hit by any suprise fines than get a great deal on processing only to find out a year later that i have to pay a hefty six figure fine.
When you have a large recurring database, you have to continually add more and more and more new transactions.. it seems almost impossible that a larger organization (not the ipsp.. but the actual sponsored merchant) gets into a position of being unable to find enough new transactions to offset the refunds and cb's resulting from the recurs.
If you're not already aware of it ken, you should be... but you are taking much higher risk transactions than any other processor i have seen. If you dont know what i mean i'll be happy to show you because it's gonna create a chargeback nightmare for you and i'd hate to see anybody lose in this biz.
Last edited by Hooper at May 21 2003, 02:56 PM
Originally posted by Kjell@May 21 2003, 10:44 AM
(we are diligently fighting the fines)
Are you talking with Epoch?
Winetalk.com
05-21-2003, 02:54 PM
hmmm...come think of it,
I understnad the people's complains.
Site owners are charged PROCESSING fee which should be standing for something...seems like Jettis wants to have the cake and eat it too...
Originally posted by Serge_Oprano@May 21 2003, 11:02 AM
hmmm...come think of it,
I understnad the people's complains.
Site owners are charged PROCESSING fee which should be standing for something...seems like Jettis wants to have the cake and eat it too...
Serge,
Processing fee covers - Visa/MC charges, bank charges, customer service charges, fraud scrubbing charges, etc, etc.
Again, if you had your own merchant account you would still need to pay these fees and you would still be resonsible for your own fines. What's the difference?
With your logic, why doesn't the bank pay the fines? They charge processing fees too us? The answer is simple. The fees we charge and the fees the bank charges are VERY small compared to these fines.
It's a mathimatical impossibility that any processor can absorb fines over the long run. The margins are simply not there...unless they decide to stay in business to lose money. Make sense now?
Originally posted by Hooper@May 21 2003, 10:54 AM
I doubt anybody would be complaining if the agreement had always been that "we'll pass fines on to you".
As sponsored merchants that decision could make some sense, but as a true 3rd party aggregator it seems to me that the aggregator should be responsible for it, especially with regards to transactions that occurred without sposnored merchant status.
Personally i'd rather have processing rates go up and just know that i wont be hit by any suprise fines than get a great deal on processing only to find out a year later that i have to pay a hefty six figure fine.
We've been lucky thus far not to have any fines and are working triple time to improve product quality and customer service. but when you have a large recurring database, you have to continually add more and more and more new transactions.. it seems almost impossible that a larger organization (not the ipsp.. but the actual sponsored merchant) gets into a position of being unable to find enough new transactions to offset the refunds and cb's resulting from the recurs.
If you're not already aware of it ken, you should be... but you are taking much higher risk transactions than any other processor i have seen. If you dont know what i mean i'll be happy to show you because it's gonna create a chargeback nightmare for you and i'd hate to see anybody lose in this biz.
Hooper,
Every processor reserves the right to pass on fines, so it HAS always been in the agreement. We are simply being upfront and honest about it, instead of delaying payments with no explanation.
We could have delayed payments and made up some excuse. It would sound better , but ultimatly it's the same difference. Other processors have passed on fines, but have hidden it with lots of smoke and mirrors. We just prefer to be honest about it.
I understand what you are saying about raising processing rates instead of passing on fines, but that doesn't really work. First of all, we would have to raise rates to about 20% or more to even get close to offsetting the amounts of the fines. Second, that would penalize customers who have very low chargebacks, which would not be fair. Fines are passed on to clients in a direct perportion to the chargebacks they actually created, which seem like the only fair way to handle it to me.
Regarding those transactions - I think I know what you are talking about and that model is in beta test with about 20 transactions a day going thru it. Trust me....we won't put anything through our system unless we know it's good clean business.
Winetalk.com
05-21-2003, 03:14 PM
Ken,
I am sick and tired of doing accounting for my bond porfolio,
playing with 1/10th of % point on the day to day basis is no fun.
I refuse auditing 3rd party processors!
;-)))
Personally I agree with Ken's logic on this one.
1. Anyone doing a high trans volume is going to get smacked on cb's, especially if credits are counted in the same penalty column.
2. Most of the major programs have tried running on their own accounts at some point, I can't think of one that's done it without losing accounts and having issues with Visa compliance. It's no secret that Martin Elliot's mission in life includes putting some people out of business because he doesn't like them.
3. Sites that are running high cb ratios -- especially in proportion to other clients in the IPSP portfolios, are aware that they are doing this -- it's one of the reasons they go thru an IPSP -- so they are not terminated, which they would be on their own accounts, or at the very least put on the monitoring programs and having to pay their own fines.
4. Using an IPSP and running high cbs is still a better risk management strategy, including paying the fines, than having your own merchant account and running at these same levels -- at least with an IPSP you have someone who can go to bat for you with compliance if you run into a problem that would otherwise cause massive issues with your own merchant account.
If some of these lawsuits don't bear fruit and Mastercard in particular is allowed to carry on the way they have with credits and cbs and fines, I think you will see ALL the IPSPs going to this model. They will have no choice, since at the end of the day they have to stay in business.
It's no good for anyone if a single IPSP goes down, it only makes it harder for the ones that remain in business.
slavdogg
05-21-2003, 04:20 PM
is there a method to mastercard's fines as in X amount per chargeback or are they just random fine amounts ?
Penthouse_mike
05-21-2003, 06:41 PM
If I remember correct here are the guidelines:
Criteria
Amount
Number of monthly chargebacks at least 15
And
A monthly ratio of CB dollar volume to
interchange Sales Volume
At least
2.5%
Or
A monthly ratio of the number of CB transactions
to total sales transactions
At least 1%
In month 3 and beyond, there will be fines, as follows:
Months 3-5 US $25 per CB per month and US $25,000 monthly fee
Months 6-7 US $50per CB per month and a US $50,000 monthly fee
Months 8-9 US $75 per CB per month and a US $75,000 monthly fee
10 months or more US $100 per CB per month and a US $100,000 monthly fee
sextoyking
05-21-2003, 07:20 PM
Ken, Kimmy
good point from both of you. You guys are correct. Normally I would shout my mouth off as alot of isps are charging 13-20% or whatever, but those fines are just killers.
Will verified by visa help, mabey some if everyone gets in the ball game. Sure 1 way to lower cb's is get rid of recurring, but who would do that, and mainstream companies have alot bigger recurring dbases then we do, match.com, norton, etc, etc, etc.
Damm I wish they would of got that keyboard with a card slider going yrs back like they said they would. Also, I wish there was a secure and possible way for people to use there debit / check card and or credit card with a pin #, like an atm transaction, that sure would solve alot of problems.
We want the Jettis's, Epoch's, CCbill's of the world around, especially if you run paysites.
Isn't it Globill that sends out an email to every customer before he or she is re-billed every month? Sure that sucks, but I have heard of worse ideas.
Ah well you guys and gals will fig. it out. With the patriot act, money laundering, funny biz, right wingers who hate porn, it's getting tougher and tougher..
Vote Dem, 2004 :D
peace
todd
What the Mastercard bullshit basically breaks down to is this.
If you run 3001 Mastercard transactions a month (which is not very many when you factor in recurrings) and you have 15 cbs and 16 credits issued, then you are at risk with those morons. That is all it takes. That's giving you a cb ratio of .495 and a cb and credit ratio of slightly more than 1% combined on the cdc number itself.
The fact that Mastercard can arbitrarily choose to enforce or not enforce this rule based on what the weathers like in town, whether or not there were bagels in the break room or Krispy Kremes, and any other criteria they deem fitting in a particular instance is what boils down to monopolistic powers. When you add to that the fact that the merchants bear the cost of fraud as well as the risks for fraud and that MC makes money off of fraud, it becomes what many consider to be an untenable situation.
Mike AI
05-21-2003, 11:28 PM
Ah well you guys and gals will fig. it out. With the patriot act, money laundering, funny biz, right wingers who hate porn, it's getting tougher and tougher..
Todd you need to seek professional help soon.....
KK I agree totally with your post above... Mastercard is shafting people by combining credits with chargebacks.
sextoyking
05-21-2003, 11:31 PM
:rokk: :rokk: :cdance: :bjump: :bwave: :P
Hooper
05-21-2003, 11:57 PM
my favorite part about this whole this is the complete hypocracy.
mastercard says zero liability to consumers. encourages them to request refunds. puts the burden on merchants to issue refunds at the whim of the customer.
then they tell us that issuing refunds is something we can be penalized for?
i mean.. seriously.. pick and choose.. either you get to tell merchants to issue refunds without question.. OR you get to penalize us for them... that to me is the biggest crock of shit about this whole thing.
not to mention that they are holding adult to a higher standard than the rest of the internet. as though a lot of people are embarrassed to tell their wife that they bought a justin timberlake cd? or a membership to a video game site?
it's too bad caues they are going to push scammers to scam harder and honest biz will take the rap.
sextoyking
05-22-2003, 12:02 AM
Hooper,
That's how I kind of see it too.
Mike, whether you belive it or not, politics does come into some play with visa / mc. Belive they have been talked to in the back room, i.e. online porn, etc.
>>>>
whether or not there were bagels in the break room or Krispy Kremes,
>>>>
(typing in Serge accent)
Well then I just send them 5 dozen Krispy Kremes and my recurrings would last forever! I've never seen a sad face eating Krispy Kremes Just look at Mojo!!! :-))))
(End typing in Serge accent)
Kidding aside, the MC issue is outrageous. I keep my billing as clean as humanely possible. Toll Free numbers on the site and on the cc statement, prompt customer service, the site and content are as promised....
Last month my Visa was 2/3 of my business and I had 4 chargebacks. MC was most of the remaining 1/3 and I had 30 chargebacks.
Much like my ex-wife.....you can't keep them happy no matter what.
Last edited by Mojo at May 22 2003, 06:10 AM
We will make changes in our backend, so we can catch more of the potential chargebackers (this is on top of all the scrubbing already taking place at the processors)... We will also make additions, which will bring total credits paid back via the mastercard system down. Getting more "good" transactions (low risk) at the site will also be a good thing.
Planning to introduce more payment options in 2003/2004... no, its not the same dialer everyone else are pushing ;-)))
Oh, we are also talking about calling madam cleo, and read her the names on the people who signup each day, so she can use her psychic powers to tell us, which ones will credit or chargeback (will probably be cheaper, than having to pay all the future fines from Mastercard and Visa) :rolleyes:
These really are interesting times....and this class action lawsuit will set a huge precedence.....no matter which way it goes.
Originally posted by Mojo@May 22 2003, 06:09 AM
Much like my ex-wife.....you can't keep them happy no matter what.
Send her a box of bagels then and forget the alimony check ;)))))
Last edited by *KK* at May 22 2003, 11:53 PM
Winetalk.com
05-23-2003, 05:02 AM
Much like my ex-wife.....you can't keep them happy no matter what.
************************************************** ********
Being the OLDEST in this thread and therefore the wisest,
I figured out what makes our ex's unhappy...
they MISS us and come to realisation that money can't buy them happiness...
it's just not the same when we are not around
;-)))
Forest
05-23-2003, 06:55 AM
Originally posted by Rolo@May 22 2003, 06:42 AM
Oh, we are also talking about calling madam cleo, and read her the names on the people who signup each day, so she can use her psychic powers to tell us, which ones will credit or chargeback (will probably be cheaper, than having to pay all the future fines from Mastercard and Visa) :rolleyes:
I had a sit down with one of the owner/partners of ms cleo's acouple weeks ago
they are looking to get into the industry
I didnt like the trail of FEDS they have following them so I said
Thanks but No thanx
:okthumb:
Marc De
05-23-2003, 04:52 PM
Ken - I'm not saying its not cool for Jettis, I assumed the amount of fines you guys received (especially in the case of Global) far exceeded your profit margins for such an account. However, I do know that ibill was fined millions of dollars by MC and based zero of those fines to their merchants.
I'm quite pissed about the volume of the fine and how MC actually gets away with it.
That said, Jettis is cool in my book - I'm just waiting on word on the exact amount of the fines and more detail. I'd like to know how long I'll go with that lost revenue :( That OBVIOUSLY hurts...
Had I been in your shoes I would have done the same thing, any business man would have.
Winetalk.com
05-23-2003, 05:03 PM
Marc, if you need a loan,
3 points over prime is my rate and for you no collateral is needed
;-)))
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