New Technology, VAT Rules are the Focus of Billing in 2015
As adult entertainment continues to evolve, so do the methods in which consumers pay for it. 2015 is shaping up to be an interesting year for adult billing, and major trends to watch out for in the new year range from new VAT regulations in the E.U. to chip-and-PIN technology making its long-awaited debut in the U.S.
The chip-and-PIN and EMV (Europay, MasterCard and Visa) technology has long been the standard for in-person card payments in Europe, but not until 2015 is that technology being implemented in the U.S. — where the majority of payments for erotica these days are online card-not-present transactions rather than brick-and-mortar transactions.
Mia Hyun, founder and CEO of Mobius Payments, asserted that if chip-and-PIN technology discourages fraud at the brick-and-mortar level in the U.S., criminals will turn to online fraud.
“The first deadline for EMV in the U.S. is October 2015,” Hyun noted. “Much of Europe and Canada have already implemented chip-and-PIN technology over four years ago, providing historical data on the subject. EMV has been proven to reduce fraud in retail environments, as the PIN is not retained in the chip. However, this technology provides no benefit for online transactions, and experts expect a surge of fraudulent activity. Adult merchants will want to look at a continued strategy to implement consumer authentication such as Verified by Visa, 3-D Secure and MasterCard Secure Code.”
Mitch Farber, president and founder of NETbilling, stressed that adult companies will need to be proactive in their scrubbing and anti-fraud efforts when chip-and-PIN makes its U.S. debut.
Farber explained: “The payment card networks plan to shift liability for fraudulent transactions to the party to a transaction that has failed to deploy EMV technology, whether the card issuer or the merchant. That is intended to pressure both card issuers and merchants to make the investments necessary to move to chip card technology.”
“In other words, if fraud happens on a credit or debit card and the merchant is not EMV-enabled, they could be liable for that charge and associated fees. So what does this mean for online retailers, adult and mainstream, in the U.S.? With in-store transactions presumably safer as more consumers use EMV-enabled cards, criminals will surely increase their efforts at targeting online retailers. In the E.U. and Australia, online fraud has increased 10 percent since they have implemented EMV. This is an important reason for online retailers to tighten up their fraud controls.”
Cathy Beardsley, CEO of SegPay, said that wise people in the adult billing sector have been carefully making preparations for chip-and-PIN’s U.S. debut.
“Many people point to the numerous data breaches in 2014 with major corporations as the last attempt by hackers to gain access to U.S. consumer data before the chip-and-PIN mandate happens in 2015,” Beardsley observed. “The U.S. has the benefit of learning from other countries’ rollouts, so I believe we are well-prepared for the increase in fraudulent attempts. At SegPay, we are expecting the increase of fraudulent credit card activity and have already prepared so that our merchants are protected.”
Many adult webmasters in the U.S. are earning sizeable profits from European customers, which means having to pay close attention to billing trends in the E.U. Beardsley pointed out that even if they are based in the U.S., adult companies need to be aware of the E.U.’s new online VAT (value added tax) standards for e-commerce. “Starting January 1, 2015, there will be significant changes in the E.U. value added tax (VAT) regulations on the sale of digital goods,” Beardsley noted. “If you are selling to a consumer located in the E.U., regardless of where your business is located, merchants are required to pay VAT on the country location of the consumer sale. No longer will a merchant pay a single VAT rate, based on its own location.”
Another important trend for adult billing in 2015 will be the ever-increasing consumption of erotica on mobile/wireless devices and the need to make sure payment pages are as mobile-friendly as possible.
Ruth Blair, business development manager for Paxum, said: “We believe that mobile billing will continue to increase its foothold in the billing industry. It seems that annually, more consumers are opting to use their mobile devices and other gadgets to make secure online purchases compared to traditional credit card processing.”
Beardsley explained: “Optimizing payment pages to be adaptive to all different types of mobile and tablet devices will continue to be important in 2015. Close to 60 percent of SegPay merchants’ pay page hits are coming in through mobile and tablet devices. Focusing on a simple checkout for consumers will continue to be a big focus for SegPay in 2015 to ensure we are converting as many users as possible for our clients.”