trends

Payout Automation

Stewart Tongue
For years the trend has been to start in adult online marketing by managing affiliate sites and pushing web traffic to established affiliate programs before trying to "graduate" to the more complicated, more expensive and more competitive program owner side of the business.

Affiliate program owners new to running their own sponsor sites have tended to use all-in-one back-end processing packages from well-known companies like CCBill and Epoch. Now, as some dynamic new companies enter the U.S. processing segment of the industry, things are becoming much more wide open.

Well-established affiliate programs with large office staffs and support personnel process thousands of payments each month; and many obtain their own merchant accounts and handle all of the administrative tasks in-house. Some create their own custom stats software and manage every detail of their operations internally from point of sale to stuffing affiliate payout checks into envelopes before mailing them out every two weeks.

Smaller or newer affiliate programs have frequently been advised to go with all-in-one processing for many reasons. A company like CCBill backing a new program's operations adds a level of stability that webmasters readily trust and it greatly reduces the amount of time needed to manage mundane operational tasks. When a webmaster sees that a trusted processor like CCBill or Epoch is handling payouts for a new program it greatly enhances the level of trust many webmasters are willing to put into that new entity.

Affiliates are familiar with how these institutional processing companies work because they have likely sent sales to other CCBill- or Epoch-backed programs before. That reduces the fear of anyone from that new business running off to Mexico with their weekly payout checks and the additional familiarity makes it easier to attract some affiliates to a program. Smaller webmasters can also aggregate their payouts from multiple sponsors to reach low minimum payout thresholds more easily and can be paid weekly instead of once or twice a month, which makes managing their own overhead easier.

While there are many advantages to all-in-one processing, there are also disadvantages as well. The most obvious shortcoming is a simple matter of cost. Program owners with significant sales volume seeking to maximize revenue will quickly realize that there are cheaper alternatives for billing and payment processing. Just like anything else, the more work you do yourself, the less expensive the task becomes. Other restrictions also exist that prevent webmasters outside of North America from utilizing these all-in-one services without taking additional steps to create a business presence inside the United States or Canada.

Webmasters outside the U.S. (and some within) prefer payments by ePassporte, which are not possible from within these all-in-one systems. Meanwhile, site owners may also find themselves excluded from using these premium all-in-one services because the content on their paysites is deemed too extreme for risk management to approve. So while CCBill and Epoch are an excellent choice for many affiliate programs, "all-in-one" doesn't necessarily translate into "one-for-all."

Until recently, this has left some program owners out in the cold, with the handling of their site processing done through overseas companies with less-polished reputations; and often not offering payments by check because of the bank fees in some countries, as well as bureaucratic hurdles, that make it difficult or impossible for them to issue paper checks.

Now that is all rapidly changing as a few companies enter the U.S. payment processing and payout automation arenas. In business handling mainstream companies since 2005, WebmasterChecks.com has recently started pressing its way into the payment automation segment of the adult online market as well.

WebmasterChecks does not process transactions or track stats for programs and affiliates; the company is purely a check issuing and payment remittance service. Put simply, once a program owner knows whom to pay and how much to pay them, WebmasterChecks does all the rest: check printing and delivery, wire transfers, ACH direct deposits, ePassporte payments, RevUpCard and even PayPal payment transfer and disbursement services are all offered.

"We noticed a need for a service like WebmasterChecks within the adult segment of the online affiliate marketing industry and our decision to fulfill that need is already resulting in greater efficiency for our clients and better revenue as a result," CEO of WebmasterChecks Rich Lloyd, said. "We've been in this business long enough to know that building our reputation within the industry as a secure, stable and accountable financial services company is the key to our future success.

"Developing the relationships and level of trust that our clients expect will always be our primary focus. Once people are aware of how much time and effort they can save by automating their payouts by delegating the process to a professional firm like ours, the value becomes obvious."

Charging a fee per payout based on the total volume of payouts per month, WebmasterChecks even allows program owners to add their fee to each payout sent, thereby passing the cost of the service along to affiliates and making the services essentially free for their clients. Also, while WebmasterChecks does not handle any part of stat tracking directly, they have already arranged strategic partnerships with Mansion Productions (makers of affiliate stat software MPA3) and TooMuchMedia (makers of NATS) to integrate their product directly within the stats software already currently being used by many programs.

Especially for overseas webmasters who thought payment by check was an impossible service for their program to offer, or companies seeking to add ePassporte and a variety of other payout options to their existing operations, WebmasterChecks is quickly filling a void in the marketplace and making payment automation a true stand-alone service option.

The all-in-one business model is also being pressured by big moves on the transactional side as well. As seen in a report published by XBIZ, CommerceGate, the leading IPSP in Europe during recent years, has announced a landmark agreement with its new strategic partners SegPay and DHD Media, which will allow the company to step into the U.S. market as another alternative for American companies.

Clearly there will always be a place in the industry for institutional all-in-one firms like CCBill and Epoch, especially handling neophyte business owners who are entering the adult market as affiliate program owners or making the transition from webmaster to sponsor for the first time. There will also be a place for individual entities that handle everything in-house from their own stat tracking software to putting stamps on each and every envelope.

Now it seems, however, there is also a new middle-ground forming and companies are being given an expanded range of choices that allow them to pick and choose which functions they want to deal with internally and which ones they believe would be easier and more profitably delegated to professional, respected firms specializing in those specific tasks.

"We believe plenty of room exists in the adult online industry for several companies to succeed by offering services designed to reduce back-end overhead and procedural tasks," Lloyd said. "As with any other maturing industry, an increase in specialization should be expected. Allowing experts to handle a particular aspect of your enterprise frees people to focus on their own core skills instead, often resulting in ancillary expenses far smaller than the resulting increased profits."

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