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ACH, Debit Billing Still Running Strong

ACH, Debit Billing Still Running Strong

December 27, 2012
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" The U.S. embraces ACH, as it is the only electronic network that connects 100 percent of the banks in the country. The rules and agreements are all very stable and proven over time. -Melody Lashmar, L3 Payments "

Online adult entertainment is enjoyed in many different parts of the world, but exactly how consumers pay for it can vary considerably from one country to another. Although the almighty credit card continues to dominate e-commerce payments in the U.S., it is important that adult webmasters also have a thorough knowledge of alternative billing—and that includes debiting. There are different types of debiting, including debit cards (Carte bleue in France, for example) and direct debiting of bank accounts. And in the U.S., direct debits are processed by the vast Automated Clearing House (ACH) network. ACH debiting is a prominent alternative payment method for adult entertainment in the U.S., and direct debiting is the dominant billing method for online erotica in Germany and other european countries.

Two companies that are leaders in the area of ACH debiting in the U.S. are WTS and L3 Payments. Vinny Lipari, president of WTS, noted that next to credit cards, “ACH is the second largest U.S. payment option. Whether you run content, dating, membership or webcam, you can expect to see an increase of 8-12 percent in your U.S. sales when adding ACH as a billing option.”

Lipari elaborated: “We’ve seen continual growth in the amount of ACH transactions we process. This is partially (attributed) to the growth the industry has experienced in dating and webcam. WTS is the only ACH provider that has designed a program that fits the unique needs of webcam companies.”

Melody Lashmar, COO of L3 Payments, explained: “The U.S. embraces ACH, as it is the only electronic network that connects 100 percent of the banks in the country. The rules and agreements are all very stable and proven over time. Overall, ACH allows for trillions of dollars to move about the country every year, as it is used to pay bills, buy stuff online and get your payroll right into your bank account.”

Despite the prominence of ACH as an alternative billing method in the U.S., proponents of ACH billing believe that some misconceptions about ACH need to be cleared up. Lashmar noted: “I believe there are many misconceptions about ACH out there with American companies. The biggest one is that if the customer has provided me their banking information, then i have authorization to charge their account or issue refunds to that account. NACHA rules are very specific on the authorization requirements, and if you are not adhering to the rules, then the consumer transaction can be reversed. Another misconception is that it is real time. It is very much a batch process with the consumer’s bank having two banking days to decide what to do with that transaction. With the holidays and weekends, that transaction may return five or six days after the sale for reasons such as insufficient funds or account not found. Finally, I think some merchants just don’t feel like there is enough volume that can be gained for the (effort) of offering this payment method.”

Lashmar, however, estimated that webmasters who don’t offer ACH billing for the U.S. are missing out on the possibility of “an additional 8-15 percent” of revenues.

“In general, companies aren’t aware of the potential ACH offers to their bottom line earnings,” Lipari asserted. “There are many U.S. consumers that prefer to pay via ACH and/or don’t have a credit card or the credit limits available to make a card purchase. The more payment options that are presented to potential customers, the better chance you have of making a sale.”

ACH debiting isn’t something adult webmasters should offer American customers instead of credit card billing but rather, an option they can offer in addition to credit card billing. For adult webmasters, a comprehensive program of debit billing can include ACH for the U.S. market and direct debiting via local systems in european markets.

Daniela Ganick, former senior account manager for iTelebill and a recent addition to the sales team at Webbilling BV, said that if American webmasters are going to create revenue streams overseas, they need to realize that credit cards do not dominate european e-commerce the way they dominate American e-commerce.

“We have found that a lot of American companies are not aware that credit card penetration in europe is a lot lower than it is here in the U.S.,” Ganick observed. “On the other side of the pond, people are relying on payments via direct debit for their rent, phone bills, travels, online orders, etc., as they do not have a debit/credit card like we know them.”

Webbilling BV, unlike WTS and L3 Payments, does not offer ACH debiting, but it does offer debit billing for major european economies. Different billing companies offer different services, and webmasters can create new revenue streams by catering to a variety of billing preferences.

Adult companies that offer credit card billing for many of their U.S. customers can increase profits by offering ACH debiting for Americans who want it and european debiting methods for overseas customers.

“The biggest advantage of direct debit is simply that everyone has a bank account and no one needs a Visa or MasterCard to pay online,” Ganick noted. “In fact, only about 30 percent of the european population actually has a Visa or MasterCard at their disposal. So offering a non-card solution that is tied to the user’s bank account will immediately open up the remaining 70 percent of the (european) market to online companies.”


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