The New Player
Merchants and webmasters are getting new customers, and the word is spreading that this may be the answer to nearly all of the billing headaches adult entertainment has suffered.
"In the last 24 months, it's really become something the industry can embrace," Greg Moss, CEO of TrustCash, says. "It's just that no one's taken the time to understand it until now. It has the most value for adult and dating [websites]. If you look at the value proposition for these two industries, you have security and you have privacy. Adult is riddled with fraud at some levels, if you consider the non-legitimate companies that have screwed people in the past. That gives companies promoting anonymous billing or secure billing the advantage." TrustCash began its anonymous billing program more than two years ago and recently signed its 703rd website. Limiting its relationships to only larger programs such as New Sensations, Shane's World, Hustler, Club Jenna and Evil Angel, TrustCash has simplified its anonymous billing format to make it friendly to even the least Internet-savvy customer.
"We're like a web gift card," Moss explains. "We're a one-time payment, and it's like getting a gift card to a mall that lets you buy from dozens of merchants within the mall. So for the customer, it's a noncommitted purchase. When you buy TrustCash, you're not creating an account where you have to register your credit card, eliminating the threat that someone might hack into the database and uncover personal data. We purge personal data once the purchase is made, so if someone hacks into the TrustCash database, there's nothing to see. In essence, we've created a true proxy for cash on the Internet."
Customers can buy TrustCash with a major credit card or through Amazon.com, which delivers TrustCash virtually. They also can buy TrustCash at any of its affiliated stores with purchases ranging from $5 to $200.
The newest player in anonymous billing, however, does things quite differently. Years ago, when eBay bought PayPal, that billing system was removed from adult websites. NetCash, formed in November, is attempting to fill that void by replicating PayPal. Customers who buy NetCash receive an anonymous access code and PIN. Purchases are made by entering these codes at participating sites. No personal information is required during the purchase, and the site making the sale doesn't even know the customer's name or any other personal information. In fact even NetCash doesn't know how its customers spend their money.
"It's a single-click checkout," Peter Shapiro, CEO of NetCash, says. "We charge a fee to the merchant based on the retail price, similar to the rates that a CCBill would charge. We do not charge the consumer at all, unlike other players in this space. I'm trying to remove every possible barrier. You can join a site anonymously, put in your credit card information, check that you're 18 years or older and hit 'computer anonymous purchase' [on the NetCash website]. So in one single transaction, you have bought NetCash and spent it on a site membership."
Shapiro claims that NetCash is currently available to use on 900-1,000 sites and has business relationships with more than 50,000 retail outlets across the U.S.
"We're not just targeting adult space," he points out. "We are targeting the entire online audience. Obviously the adult market was the early adopter, and we've seen tremendous results there. If someone wants to join a site for, say, $29.85, they have to buy at least $29.85 of NetCash to pay for it. They could change that amount to $500.
In fact, our minimum is a penny and our maximum is $1000 right now. Our website allows you to review your balance, set up balance protection and buy more NetCash. If you want to buy something and you don't have enough NetCash, we'll charge your credit card for the difference. Also, to be very consumer-friendly we allow you to terminate your subscriptions. You click 'terminate,' and at the end of the current billing cycle you won't be re-billed. "If you join five adult sites, you're going to have a different username and password for all of them. How are you going to remember them all? They're all listed in your account on our site. It also contains your transaction history and your bank statement for NetCash, so you don't have to wonder about your balance."
Consumer friendliness is the key to the early success of NetCash, according to Shapiro, but what about the merchants? Is anonymous billing helping them, too?
"All the merchants are seeing at least a 5 percent incremental sales increase from this," Shapiro reveals. "Some are seeing 10 [percent] to 15 percent. Adult Revenue Service is getting over 10 percent incremental joins every single day, and that's without any falloff in their credit card sales. We know that conversion rates on adult sites are probably half a percent on a good day. And if just offering a clean, anonymous solution like NetCash can get one more person to buy, that's double or triple a company's business at the end of the day. It's found money for them."
Greg Moss of TrustCash finds that his company's slightly different anonymous billing system is having exactly the same effect on merchants.
"The advantage to the merchant is that we're capitalizing on their existing traffic," he says. "A typical conversion rate in the industry is one in 800. We're able to increase those conversions by two or three times. Without doing any heavy lifting, you're taking additional people who are coming either from an affiliate or through natural search and making more money. We've run dozens of control tests and learned that these new conversions are not at the expense of the merchant's credit card customers. Anonymous billing is all incremental revenue growth.
"This is true for the affiliates, too. The guy who sends the merchant 1,000 people a month only to convert one now converts two or three with no additional work."
On the surface, anonymous billing seems like the model for the future of online billing, but there is some risk. Chargebacks are one of the biggest concerns in adult online, and credit card companies have posted fines and caused trouble for billing outfits who exceed the half-percent limit the carriers have created.
"Years ago, chargebacks in adult were hitting 3 [percent] to 6 percent," Shapiro recalls. "But right now we're not seeing even a one-tenth of one percent. If chargebacks really skyrocket, we're going to have an issue, but that hasn't materialized. Part of the reason for this is that we're being so consumer-friendly about the whole process."
Shapiro admits that NetCash passes on part of the chargeback risk to the merchant, while sharing that risk with them. Moss, on the other hand, claims that TrustCash has no chargeback issue at all. "We're a chargeback-free solution," he insists. "When you bill through us, any and all chargebacks are eliminated. Many times, the company you signed up for has a totally different name on your credit card bill. That's confusing. When you buy TrustCash, what you see on your credit card statement is TrustCash."
Customer is King
Moss believes the greatest risk in anonymous billing is signing on with disreputable companies, so TrustCash pursues an intensive research program on every website they may sign. Their research ensures that the website delivers on what it has advertised, and that the content is of high quality. It also stresses the importance of customer experience and customer support.
"We choose our merchants wisely," Moss adds, "and we only work with reputable programs. About 99 percent of our programs fall into the top 10 percent of the industry. We just won't work with a small merchant."
Moss believes that the next important step is to convince webmasters to start selling anonymous billing with as much determination as they do with their own product.
"We've been trying to educate webmasters for the last three years," he says. "Everyone has always marketed sex because that's what gets the customer to convert. But they haven't thought about marketing alternative billing. Most of the traffic on the adult websites never even makes it to the 'join' page. If you promote alternative billing up front and let customers know that there are other ways to pay for the content — that's important."
Both CEOs agree that anonymous billing already has cleared the greatest risk — that consumers wouldn't adopt the new methods.
"The first step was getting the merchants to want to do it," Shapiro says. "It's a no-brainer for merchants because we're giving them found money.
"And according to what we've seen so far, it's a no-brainer for consumers, too."