Page 42 - AVN April 2016

by STEWARTTONGUE
The Processing Perspective Billing experts offer tips on staying ahead of the curve
Doug Wicks, CEO of Payze.com. “I am more
concerned with the new Visa regulations coming
this year and heads of banks, because their impacts
are far greater on this community as a whole.”
Speaking of Visa and the banks, are there
any new regulations on the horizon that
you believe will impact the industry in
2016?
cognizant of the increase in fraud in ecommerce
due to the implementation of EMV for face-to-face
transactions, as it has been evidenced that there is
a direct correlation between EMV implementation
and increase in online fraud. We highly
recommend stronger enforcement of AVS and
CVV2, at the bare minimum, for online businesses
to continue to combat fraud in their sector.”
Karen Campbell of OrbitalPay agreed, “PCI
and EMV are two items that affect any company
that accepts credit cards. Payment security is
paramount for every merchant, financial institution
FEATURE
As many now acknowledge, the adult industry
was the driving force behind much of the world’s
ability to engage in ecommerce, and throughout
the history of adult online the processors have
continued to evolve in ways that shape many of the
monetization strategies used by business owners today.
AVN spoke with key decision makers at several notable
payment processing companies to see what the world
looks like from their point of view and to get insight
into upcoming events that will lead to another round of
adaptation for executives interested in staying ahead of the
curve or amplifying their own competitive advantages.
In November of this year a new president of the
United States will be chosen. Focusing strictly on
an adult processing perspective, is one candidate
better than any other?
Thierry Arrondo, managing director of Vendo, analyzed
the race this way: “Clinton will maintain the status quo.
That’s good for adult. Sanders used to write erotic fiction.
He’s a big fan of Sweden. He’ll follow their example and
leave adult alone. Trump is personally as liberal as Hugh
Hefner but he plays to a conservative, fearful audience.
He’s said that his daughter is so hot that if he weren’t her
dad he would sleep with her. That doesn’t sound like a guy
who would go after adult. But he’s full of contradictions.
He employs foreign workers and attacks them because they
are a convenient target for him. Cruz is the ideal consumer
and a nightmare candidate. Moralizing, repressed = great
conversions and lifetime value; however, it could also lead
to prosecutions like we haven’t seen since Larry Flynt’s
youth.”
For others, the notion of political correctness was at the
core of the issue. “My choice may be ‘politically incorrect’,
but I believe Trump would be the best candidate for the
adult industry … and he probably loves porn too!” Mitch
Farber of Netbilling.com exclaimed.
There did seem to be a consensus among processors that
the leader of the free world was actually much less likely to
impact the industry than some of the nameless, faceless,
association executives who set billing policy more directly.
“To be honest, whether the new president is Democratic,
Republican, male or female, there is very little it means
to the online adult industry in my humble opinion,” said
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“Yes!” said Cathy Beardsley, president and CEO
of SegPay. “The biggest announcement is the
alignment of the Visa Inc. chargeback policies to
all sub Visa regions. In a Visa EU member letter
dated February 3, 2016, Visa EU announced that
they would be aligning their chargeback policies
with Visa Inc. Effective July 1, 2016, Visa EU will
require all merchant accounts to maintain 100
chargebacks and a 1 percent chargeback to sales
ratio in order to be in compliance. In addition, Visa
Inc. rolled out new early warning thresholds that
all regions will have to abide by moving forward.
Each month, any merchant that exceeds 75
chargebacks and a .75 percent chargeback to sales
ratio will receive an early warning notification. Visa
Inc. is encouraging acquires to have merchants
that hit the early warning threshold develop action
plans to get below these thresholds quickly.” She
notes reads can download the updates on the
SegPay.com site.
Others pointed toward the summer when new
rule sets codifying these changes will likely be
released. “Visa will be the big news in 2016 with
its intended changes to the current Visa regions
and rule sets coming this summer. I wouldn’t
be surprised to see stricter policies and lower
chargeback ratios allowed,” said Payze CEO Wicks.
There is some hope, however, that high risk may
wind up being unaffected by the broader changes
in regulations. According to Vendo’s Arrondo, “The
big talk is about a change in European chargeback
ratios. The guidance right now is ambiguous. It
seems that they could go to 1 percent and 100 CBs
per month. But it also could be that this change
does not affect high-risk processing. In fact, they
have said that high risk processing could maintain
its current 2 percent threshold and the count could
go up. We’ll watch and see.”
A strong case could also be made for the fact
that the biggest changes of 2016 are ones that
are already affecting day-to-day sales numbers.
“It’s not a change on the horizon ahead of us,
rather, the horizon behind us,” said Mia Hyun,
president of Mobius Payments. “The liability
shift for EMV has come and gone and not nearly
enough merchants are compliant with the EMV
regulations. Granted, this only affects a small
sector of the adult business, as EMV is only for
face-to-face transactions. We need to be acutely
or other entity that stores, processes, or transmits
cardholder data. If you accept or process payment
cards, the PCI Data Security Standards apply to
you. Our PCI compliance system includes breach
insurance for our merchants in the unlikely event
they are storing credit card data and get hacked.”
In the ACH market segment newly mandated
chargeback fees were recently enacted. “In
September of 2015, NACHA.org released a new set
of rules that pertain to ACH Total, Administrative
and Unauthorized Return percentages. We
started preparing for those changes 18 months in
advance” said Vinny Lipari, president of WTS. “In
September of 2016 (affecting transactions back
to August 1, 2016) a new ACH rule will become
effective and will impose a mandatory chargeback
fee on unauthorized ACH returns. From a
business owners’ perspective, it all boils down
to minimizing claims of unauthorized debits by
placing focus on the user experience, managing
affiliate channels and working with billing partners
to achieve a common goal.”
Of course, one of the primary ways to combat
chargebacks is by providing the easiest access
to support services. “While we continue to
add new gateway features, new banks and new
retail merchant services to our current offerings,
Netbilling has just introduced online chat services
into our call center” said Farber. “This feature
allows expanded coverage beyond phone and email
support, for our merchants and their customers.”
Beyond Visa and the U.S. are the significant
obstacles being created by some local governments.
“From a regulations standpoint, the biggest
thing to keep an eye on is the politically driven
government regulatory changes, as we have seen in
the U.K. and the regulatory leanings from other EU
countries,” said Paul Kluzak of CCBill. “Random,
localized regulatory changes and laws are an
absolute issue for any business attempting to work
globally. Honestly, this is where leveraging the
expertise of a payment services provider becomes
valuable, as they are quickly addressing and setting
up solutions to adapt to these changes for their
entire portfolio, thus removing much of the heavy
lifting.”