Home > Features > Payment Strategies To Maximize Profits • Bookmark   • Newsletters   • Register Search Options

FEATURE

Payment Strategies To Maximize Profits

Payment Strategies To Maximize Profits

December 29, 2012
Text size: 
View in Digital Mag
Get XBIZ News
XBIZ Research
Will virtual reality boost the paysite market?
Yes, it will soon
  39.66%
Yes, but in a few years
  37.36%
No
  22.99%
Out of 174 votes. Results based on votes submitted by members of XBIZ.net social network.

" We’re now at an inflection point, as recent global economic woes have combined with the continued rise of alternative payment methods to finally mount a serious threat to the traditional credit card. -Bill Zielke, PayPal "

Long-established billing mechanisms are proving inadequate in the face of evolving consumer needs, causing a growing number of adult website operators to embrace alternative billing and payment means in ways that are not “typical.”

One of the first things to get out of the way is a definition of what constitutes “alternative billing,” which in our case entails an alternative to credit cards such as Visa, which is by far the most dominant online billing platform for adult related websites. MasterCard, among other credit cards, is also popular — but the extension of consumer choice goes far beyond these U.S.-centric options.

For example, mobile billing services (covered elsewhere in this special section of XBIZ World) are better suited to the needs of consumers on the go, while direct debit billing is a hit with Europeans.

According to GXBill (www.gxbill.com), adding alternative payment capabilities to a website is the fastest and easiest way to increase its online sales revenue. The company has provided international alternative payment solutions since 2002, in more than 35 languages and in more than 200 countries, with offerings that include landline, mobile, text message, and WAP phone-based billing, plus European Direct Debit, Bankpay and localized bankbacked billing systems.

Despite the depth of its services, GXBill notes that while more than half of online consumers want to use alternative payment options, less than 30 percent of online merchants offer these payment choices.

Taking these figures at face value reveals that seven out of 10 of you are leaving money on the table.

According to PayPal’s Bill Zielke, although the credit card has become entrenched in countries across the globe, consumer behavior is rapidly changing when it comes to making purchases, especially online.

“We’re now at an inflection point, as recent global economic woes have combined with the continued rise of alternative payment methods to finally mount a serious threat to the traditional credit card,” Zielke stated, citing a report by Javelin Strategy & Research that notes a continuing decline in the use of credit cards, which fell to around 40 percent in 2010. “Today’s savvy consumer expects a different experience, and the bottom line is the credit card wasn’t designed with the Internet (and certainly not with an Internet-connected mobile device) in mind.”

The Javelin report finds online alternative payments reached $43 billion in 2010, and predicts that they will exceed $86 billion by 2015. Other findings include the revelation that approximately half of all online consumers used alternative payment methods within the past year, with a significant portion of them claiming to base their choice on “greater protection from fraud or other misuse of information.”

While PayPal has a mixed history with the adult market space, the company believes credit cards are riddled with functional deficiencies when it comes to completing online transactions — and expects the mobile wallet to become the billing method of the future — providing strategic insights to merchants.

“The mobile device holds the key to the future of payments, for both consumers and merchants, because it blurs the lines between online and offline,” Zielke concluded. “I predict it won’t be long before the credit card will be the alternative payment method and services that were designed for the online experience from the start will become the norm.”

The lesson is clear: Sales come much more readily when you allow customers to use their preferred payment platform, while automated cascading billing systems, such as MPA3 and NATS, make adding different billing options easy — but there is much more to the story than these well provisioned tools.

As for true alternatives in billing strategies, a wide range of viable options exist, especially when the concept of “billing” is extended into the realm of “monetization,” which eliminates the burden of direct sales efforts — replacing consumer payments, such as a pay site’s subscription fee, with other means of harnessing a website or mobile app’s profit stream. This includes free, advertising-supported access.

For example, “freemium” offers and exchanges in-kind where content is obtainable by performing a specific task, such as filling out a survey — the results of which are marketable data — are intriguing for forward-looking promoters, but obviously not the best choice for all applications, especially in adult.

Creative, out-of-the-box thinking may pay dividends, however.

“Alternative billing” in context of companies wishing to maintain profitability while providing more service options for customers, is vital when trying to stand out from the crowd, as a variety of industries seek to unlock new ways of better serving their markets.

Pre-paid legal fees fall into this category, providing better budgeting and enhanced services that are suitable for many clients who may want to offset a potential risk of enormous, unplanned legal expenses in a way not unlike the purchasing of insurance.

Colin Cameron, a management consultant focusing on optimizing the revenue streams of legal firms, emphasizes the need for all companies to offer a unique value proposition, reminding his clients to ask, “What do you offer that no one else offers for the same value as you do?” along with “Why should I use you instead of your competitors?”

“You will need a unique value proposition in order to succeed with alternative billing,” Cameron explains. “If you don’t, it’s just about price, and that’s a losing game in the end.”


OPINIONS & VIEWS

Adult Industry Keeps Fighting On

On Nov. 8, we had one of the most momentous — and to political observers, improbable — victories in the history of our industry. We defeated, by popular vote, a purportedly progressive measure... More »

Finding the Right Payment Business Model

One consistency among nearly all paysite owners is that they are creatures of habit. After all, how else could someone tirelessly produce or procure similar content steadily in order to update their commercial... More »

What Payment Plan Suits Your Bottom Line

The most disappointing aspect of merchant processing is having to tell a merchant that all domestic options have been exhausted and that there isn’t a bank in the U.S. willing to open a merchant... More »
XBIZ NEWSLETTERS
Stay informed of the latest industry developments. Get XBIZ newsletters delivered to your inbox. Subscribe today!
Enter email address:

* To manage existing subscriptions click here.






POPULAR PRODUCTS & SERVICES
Submit your press release to
multiple news outlets with 1 click.
Subscribe to RSS news feeds or
add free content to your website.
Access XBIZ news and articles
with your mobile device.
Subscribe to XBIZ Premiere magazine, the industry's leading adult retail trade publications, delivering the most timely and comprehensive business news and information to producers and retailers of adult products.

UPCOMING EVENTS

XBIZ 2017

Jan 09 - Jan 13
Hollywood, CA

XBIZ Awards 2017

Jan 12 - Jan 12
Los Angeles, CA

ANME Founders Show

Jan 14 - Jan 15
Los Angeles Marriott Burbank Airport

Everything To Do With Sex Show

Jan 20 - Jan 22
Montréal, Québec
Everyday thousands of business professionals browse XBIZ's industry directory for quality products and services. Not listed yet? Your company could be losing potential new business. Submit your company today!
Use XBIZ RSS feeds to stay informed of the latest industry developments or as a content syndication tool for your website!