A Must Read for Paysite Owners

[gonzo]

Rand from Epoch pens this article . . .

At the end of the day the most important aspect of your business is making it profitable and keeping it safe for longevity. You can have a beautiful site, market it well, and get all the traffic you need, but if you can't accept electronic payments your site is dead on the web. Choosing the best method of accepting payments may be the single most important decision you'll make to ensure your great business plan turns into a moneymaker.


Basically, webmasters in the U.S. have two options. The most common billing ideology is to use a third-party billing company that has been approved by Visa. There are two main U.S. Internet Payment Service Providers (IPSPs) that provide billing for the high-risk (MCC5967, the card association category for online digital content) digital content entertainment industry — Epoch and CCBill. The other option is to use a gateway service and process transactions to your own merchant account. The two best-known U.S. gateway services are Jettis and NetBilling.

Sites that choose to process transactions to their own merchant account have somewhat more control over certain areas of their transaction processing, and have a direct relationship with their bank. This allows them to adjust their level of risk and sometimes pay lower transaction fees.
There are several factors to consider, however, to decide the ideal way to accept your transactions. Both gateway and third-party billers have vast amounts of data from thousands of websites, which put them in a unique position to develop algorithms to detect fraud and identify transaction trends. You also enjoy the added protection of a billing company's fraud database, risk management and other clients who've identified fraudulent affiliates and card holders.

IPSPs, due to their popularity with start-ups as well as large established programs, have much more data to support their fraud control engines and are able to move quickly to protect their clients' interests by having full control over the filtering process. While it is true that processing fees may be lower with the gateway method of billing, once you consider other factors such as maintaining customer service; legal matters such as banking and card association rules, processing credits, retrieval requests and chargebacks; and monitoring your own fraud parameters to avoid penalties, the cost of maintaining the same services that an IPSP can provide may be substantially more than the fees charged by IPSPs.
When you use an IPSP, you do not pay for denied transactions, as opposed to using your own merchant account. In many cases, an IPSP also may be able to provide better throughput as they offer a more sophisticated analysis of transactions than the standard filtering methods offered by gateway companies which leave it to you to adjust your fraud parameters as you see fit. Additionally, third-party billers offer sponsored merchants a suite of marketing features that allows companies to cross-sell to each other, adding value to their programs and increasing sales. Each program must determine the level of risk and involvement they are willing to take on and make their choice wisely.

much much more to read here

[softball]

great article but heavily weighted in favour of aggragators with little attention paid to the advantage of a netbilling type solution.

[rand]

Originally Posted by rhetorical

great article but heavily weighted in favour of aggragators with little attention paid to the advantage of a netbilling type solution.

Perhaps. But the article starts off talking about those using their own merchant accounts and the truth of the matter is that the vast majority of subscription based online adult businesses use IPSPs. A start up can't use their own merchant account with NetBilling, for example, as they must be doing a monthly volume of at least $40k to qualify (I believe that is the correct threshold).

Thanks Gonzo for posting the article.

[gonzo]

Originally Posted by rand

Perhaps. But the article starts off talking about those using their own merchant accounts and the truth of the matter is that the vast majority of subscription based online adult businesses use IPSPs. A start up can't use their own merchant account with NetBilling, for example, as they must be doing a monthly volume of at least $40k to qualify (I believe that is the correct threshold).

Thanks Gonzo for posting the article.

THanks for taking the time to write it.