Monday, June 20, 2011

"Too many people today know the price of everything and the value of nothing.”

I wanted to write this quick post as alot of the time, especially at this show that I just went to, alot of the merchants were solely concerned with price. I want to point out - My pricing is always competitive and alot of the time I win deals on lower pricing. Now that is out of the way, I think that merchants who look at merchant accounts, gateways and any type of online processing solely on price, are making a big mistake. Instead of pricing, look at VALUE.

There are so many other factors to consider, and I do believe that pricing is important, but in there is a saying "you get what you pay for" and in payments that holds true as well. Questions that should be asked are:

1. Does the technology work for me? What features does it have that can make my life easier? Does it allow for recurring billing? tokenization?

2. How is the reporting? Do the reports help me streamline my business? It it in real time and available online

3. What is the customer service experience? If I have problem is there someone I can call and talk to? will they help me with technical issues? Its important to look at processors that have high merchant retention rates. Savy merchants won't just switch to get a better price unless its drastic and customer service is a very big reason for that.

4. How long will it take to get my money? As we know, cash (flow) is king, and businessess need it to survive - so would you rather pay a bit more and get your money faster, OR pay less and wait to get your money. I had a client who recently switched over because of this very reason even though I had quoted rates that were a bit higher.

So, just like everything in life, when selecting a payment provider, look at the VALUE. Maybe the actual pricing is higher, but the positive effect it can have on you and your business is what should be looked at.

In another post I will explain why you the pricing you are quoted is not always the pricing you get, and why you need to look at the effective rate.

Contact me if you have any questions about the above.

Internet Retailer 2011 - Review

Last week I was in San Diego for Internet Retailer 2011 - it was my first time going to this show. I go to the usual shows(AdTech, Affiliate Summit) and I wasn't exactly sure what to expect. My initial thoughts are that this is a very good show for certain suppliers to ecommerce but I found that traffic within the actual show floor wasn't as great as I would have liked and it seemed to be concentrated to one end more then the other. I think that alot of the attendees were busy most of the day in sessions and didn't have a huge chance to walk the floor. The people I want to speak to are the online merchants, and there weren't THAT many walking around. It seems it was alot of exhibitors and as much as I love the "maybe we can setup a referral partner" conversation...its not the best for business and I find those conversations don't usually lead anywhere.

I was expecting a completely different crowd, but I did get to see some familiar faces from the other shows I attend and hopefully can do some business with those guys. I also did get a chance to speak to a few new potential clients and I think something can happen there.

The days were very long (9AM- 7PM) so I know that next time I need to wear better shoes. Also, San Diego is a very beautiful city, its clean and from what I can tell very safe. The weather was slighlty colder then I expected, and seemed to get very nice everyday after 12 PM.

All in all, I dont think that this is the best show for the majority of online marketers, maybe a good show for retail companies that are looking to, or already have an online presence which I guess is the type of merchant they are going for considering its called Internet Retailer.....

Some of the exhibitors were Daily Deal companies that were looking for merchants to sign up. I see this as a waste or money. This was not the right show for that.....

All and all a great show, but I am happy to be home now. Travelling is overated sometimes...especially when you have been doing it for a couple of weeks.

Wednesday, June 8, 2011

Merchant Accounts for Online Dating websites and ways to mitigate the risk.

Typically, online dating sites that offer monthly memberships and especially those that offer free trials are considered high risk. The reason being that most banks and processors don’t want to deal with the high refund rate and chargebacks that are typically associated with this business Of course, that is not true of all dating sites as I am sure most would love to secure e-harmony’s business. But what I see a lot of these days are dating sites that are niche specific or have some other distinguishing factor (like being free). I have worked with quite a few dating sites and have helped them secure both domestic and/or offshore processing and at the same time helped them resolve the inherent issues of the business.

Dating websites do tend to have a significant amount of volume, which in turn equals higher chargeback’s, so you should definitely work with a company that understands this business AND has experience. Issues will come up and having a company that will work with you through the problems and not just shut you down is important.

In its simplest form, online dating is a way for people to make contact and communicate with the entire point of this to get an understanding of each other with the hopes of meeting in real life, if both parties feel comfortable in establishing a sexual or long term relationship. Its estimated that in the US alone, over 600 million is spent yearly on online dating.

So, besides the high volume and high chargeback/refund potential, there is also the possibility of fraudulent activities – which makes online dating processing high risk. Some examples of Fraud that has taken place is prostitution being advertised on the website. Also there are a bunch of scams that are being run, here are some recent examples:

“The woman who used a dating site was contacted by a person claiming to be an American soldier called Lt Brian Rivera.

After engaging in conversations over a month, she sent nearly £4,500 to an address in America, supposedly paying for flights for the soldier to come and visit her in Britain.

However, he failed to arrive and when she re-contacted his ‘site’, another soldier, Lt Troy said that he had been kidnapped and there was a £5,000 ransom.

At this stage the victim realized she had been ‘scammed’. “

I would advise a website to make it a point to tell their customers that sending money to someone they met online, but haven’t actually met in person is a VERY BAD IDEA. You would think that this is common sense, however its clearly something people do quite a bit of. Another example:

“Police say they woman was swindled out of nearly $13,000 by a man from Malaysia, and she's probably not going to get the money back.

The scam was reported to police last weekend.

Police say she met the man through a legitimate online dating service and developed a relationship via emails, text messages and telephone conversations. The man said he was having "financial difficulties" and she wired him money over several months.

Eventually he stopped contacting her and she discovered that his email address and telephone number were no longer in service.”

Prostitution scams are usually straightforward; they put profiles up on dating sites to get business. These profiles are usually recognized by sleazy names but, how do you combat all of this.

Here are some tips:

1. Consider using 3D Secure and AVS. Some people argue that this can decrease conversations and they may be right, but the alternative can be much worse.

2. Work with a 3rd party company that can help you review and moderate profiles on your website – contact me for recommendations.

3. Encourage your members/customers to report any scams or potential fraudulent behavior to you.

4. Work with a processor/company has different risk/threat tools that you can use. For instance IP checking, so you can block potential fraudulent activity based on parameters you set. For instance, a US credit card cannot be used at a Russian IP.

5. Examine your traffic sources and see if you are getting a higher fraud/chargeback rate from any source in particular. Its much better to have good quality traffic that you pay a premium on from a reputable source, then cheap traffic that is causing you a lot of headaches.

As always I am here to help. If you are interested in exploring options for a dating merchant account, have questions or even your own recommendations - contact me.