Billing Outlook 2006

Stephen Yagielowicz
For the paysite operator, as well as other online merchants selling products and services over the Internet, having a robust and reliable way of processing transactions is one of the most basic needs and vital areas of ongoing concern. After all, positive cash flow is the lifeblood of any commercial enterprise.

When you think about online billing options, consider that it's an issue with two sides: one in which the merchant has his or her own merchant account — with the resulting control and flexibility that comes from working with the banks directly — and the other, where the merchant makes use of third-party solutions and the wealth of support features they offer.

This is not to say that merchant account holders have nothing available to them in the way of third-party support tools and value-added features — with companies like Netbilling leading the way in merchant account services — but despite its many advantages, there seems to be a perception that "you get more" by using a third-party Internet payment service providers (IPSP) than you do from having your own merchant account.

The reality is that the use of a cascading billing system, beginning with your own merchant account and cascading back to as many reputable processors as possible, is the way to go when processing membership subscriptions.

The foundation of e-commerce, including within the online adult market space, IPSPs provide merchants with the ability to accept credit cards as a way of charging consumers for their products and services — and do so under an increasingly challenging market and regulatory conditions. In order to distinguish themselves in this competitive market, most companies go beyond simple processing to provide additional value-added services such as membership services, affiliate program management and a wide variety of other ongoing support services.

The Internet billing landscape is one that is in a constant and dynamic state of change, with billing no longer being as simple as asking: "Will that be Visa or MasterCard?"

Examples of this dynamism include the death of the once-ubiquitous dialer (now replaced by voice call and password- by-phone systems), the rising popularity of prepaid cards (especially in emerging markets), the growing acceptance of white label and privately branded cards and the increasing shift in demand on the part of surfers from recurring memberships to individual content offerings (as enabled by the PayAsYouClick system, video-on-demand, pay-per-view and other micro-payment schemes).

Despite the number of obstacles that billing companies face, more continue to open, while others close — and still others thrive — or scramble to hold on to their ever loyal, or in some cases, few remaining clients.

Local Billing and 365 Billing are good examples of recent entries into the IPSP market.

According to the company, Local Billing offers a variety of international billing solutions in all major languages using localized currencies, fraud control and collection methods, plus customer service personnel that answer customer questions in their own language via email, chat, fax or phone.

365 Billing is a U.S.-based IPSP specializing in billing for online subscriptions, processing for credit cards, phone billing and SMS-based transactions, with password, risk and affiliate management services, plus retention tools and other features.

Each program approaches the needs of merchants and consumers in different yet complementary ways — one focused on the global market, the other specializing in the domestic market. The synergies of these two offerings make them perfect candidates for inclusion in a cascading billing system and illustrate how the online processing market is changing to serve the needs of a wider range of "niche" applications.

Companies like 2000Charge, myVirtualCard, Verotel and Web Transaction Services, to name a few of the most popular, also fill their own niches, as does e-gold (serving as a clear example of "niche processing").

Competing in the mainstream adult processing arena against industry heavyweights such as CCBill and Epoch won't be easy for any billing company, new or otherwise, especially given these companies' reputations for long-term stability. For an example of just how important stability in a billing company is, perform a search for "iBill" on any adult webmaster message board.

While reading the messages on the many threads, consider the concept of "trust" and how vital it is to the whole billing cycle. Then, when you're evaluating billing companies, ask yourself, "Do I really trust them?" Keep this in mind the next time you see a spam posting for a new billing company in some distant land — or even "a new plan" from one closer to home.

With all of the online billing options available to webmasters in 2006, those choices are now easier than ever to offer. It only makes good business sense to diversify your online payment options and avoid putting all of your eggs in one basket by offering as many choices as possible.

Make wise choices; diversify your revenue streams today.