2016 Outlook: Payment Processing in the New Year
2016 is now upon us. And when it comes to billing and payment processing, adult companies will have much to think about in the New Year. From fighting online credit card fraud to monitoring payment regulations in the European Union, 2016 is shaping up to be a busy year for adult billing.
Mitch Farber, founder and CEO of the payment gateway NETbilling, emphasized that mobile optimization will be even more important for adult billing in 2016 than it was in 2015.
“It’s all about mobile,” Farber told XBIZ. “Mobile devices over the past few years continued to increase by leaps and bounds; 60 percent of people are now accessing email and websites on mobile devices, and this will grow even more in 2016. Online purchases are yielding numbers almost doubled from last year, and many of those purchases are being made on phones and tablets even if a great amount of content is still being accessed on desktop computers.”
Because the implementation of chip-and-PIN technology in the U.S. will deter credit card fraud for in-person transactions, Farber noted, criminals will concentrate on the Internet in 2016.
“In the U.S. and abroad, increased online fraud will continue due to retail EMV chip card adoption here in the U.S. even though initial adoption has gotten off to a slow start in the U.S.,” Farber warned. “Be sure to use a payment processor/gateway that offers customizable fraud tools and 24/7 call center services to help reduce fraud and increase customer satisfaction.”
Mia Hyun, founder and CEO of Mobius Payments, stressed that in 2016, avoiding credit card chargebacks will remain a major concern for adult companies.
Hyun told XBIZ: “An oldie but an important goodie, one of the most important billing trends in the adult industry will be maintaining chargeback ratios. In this world of friendly fraud, the adult and dating industries, unfortunately, are the hardest hit industries for chargebacks.”
“In the U.S., Visa and MasterCard require that a merchant remain below 100 chargebacks for each card type or under 1 percent on the chargeback ratio,” she said. “When there is one chargeback for every hundred sales, the ‘or’ becomes important. A merchant won’t find himself in any sort of chargeback monitoring or excessive chargeback program unless they breach both the count and the ratio for two consecutive months, per the card brand regulations.”
Hyun continued: “While these are Visa and MasterCard’s regulations, some banks have replaced ‘or’ with ‘and’ — which is somewhat problematic for merchants who don’t do a lot of volume. For example, if a merchant has 500 sales in a month and gets just ten of those charged back, they’re at a ratio of 2 percent. Most banks won’t terminate because the count is so low, but if the bank’s policy is that the merchant must remain below the count and the ratio, the merchant will find himself without a merchant account in very short order.”
Thierry Arrondo, managing director for the Barcelona, Spain-based Vendo Services, predicted that in 2016, adult companies will “get smarter about which payment methods to use” in order to avoid “flushing cash down the toilet.” And one payment method that can hurt an adult company’s bottom line, according to Arrondo, is mobile carrier billing.
Arrondo told XBIZ: “Billing through carriers takes between 30 percent and 60 percent. If you are paying your affiliates on a revshare, then you are most likely losing money. In the best case, you are working for free. If you are on PPS, it’s even worse because the lifetime value for these customers is low. The place for billing through carriers — if you want to use it at all — is deep in the cascade, the last stop, the caboose.”
Ines Petersen, global operations director for the Netherlands-based Webbilling, stressed that in 2016, adult companies will need to pay close attention to payment regulations in the E.U.
Petersen told XBIZ: “The general trend for the E.U. payments landscape will be very much directed towards more regulations and extensive consumer protection. There will be no revolutionary new method other than the optimization of existing ones.”
“Especially with the introduction of the Single Euro Payments Area, SEPA, a few years ago, I see more and more improvements in the usability for the consumer. And we will definitely see an increase of transactions from countries where direct debit has not been known or used before.”
Karen Campbell, vice president of OrbitalPay, asserted that adult companies will need to be especially vigilant with their online antifraud efforts in 2016.
Campbell told XBIZ: “We as an industry are expecting to see an increase in online fraud. The implementation of EMV in the retail space is going to force some of the fraudulent activity into our space online, and merchants are going to have to be prepared for it.”
“For this reason, it’s important to align yourself with a payment processor who has experience and can help you if times get tough. Merchants should be asking their payment processors what kind of fraud protection tools they have available and how best to utilize them …. 2016 is going to be another great year for the reputable billing companies in our industry.”