Taking a Look at Some Myths About Processing

CCBill Staff

No, this isn’t an article about the popular TV show on Discovery Channel. But when a good concept like that presents itself, we can’t help but think to ourselves, what are some common myths out there about payment processing? Or software development? Or online transactions? Or CCBill?

And trust us, when you’re part of a company that has been around for more than 16 years in this arena, you hear some common opinions from time to time. But are they accurate? Or are they myths? In the following passages, some noted CCBill business experts will take a deeper look into some things that we’ve all heard, and weigh in with their thoughts. Our industry has seen a lot of changes the past 16 years, and no doubt it will see more. So as 2014 comes to a close, let’s take a closer look at some common industry myths.

As appealing as some alternative payment methods may be, credit cards are still king for online consumers. More than 65 percent of online consumers favor credit and debit cards over alternative payment methods, and this percentage is actually growing in favor of credit cards.

MYTH: Credit cards are losing popularity among online consumers

Jeff Adams, director of consumer services:

As alternative payment methods become more available in regions all over the world, some merchants are looking for alternatives to avoid paying the high-risk registration fees imposed by the card associations. However, making the decision to forego credit cards entirely in favor of some alternative payment methods can be a very costly decision. Merchants need to understand their consumers’ purchasing behavior in an online environment before making such a decision.

As appealing as some alternative payment methods may be, credit cards are still king for online consumers. More than 65 percent of online consumers favor credit and debit cards over alternative payment methods, and this percentage is actually growing in favor of credit cards. Consumers generally cite the following characteristics as influences for their preferences:

1) Fraud Protection: Credit cards offer zero liability for unauthorized purchases and consumers prefer feeling that money isn’t technically taken from their account, but rather from the card company. The ability to easily dispute unauthorized transactions also provides a level of consumer confidence not seen with other payment methods.

2) Widely Accepted:Visa and MasterCard are the most widely accepted forms of payment in the World. Consumers inherently choose these options as they feel more comfortable with the buying process.

3) Rewards:Credit card rewards and discounts have proven to be a very effective influence on payment behavior. They provide the perceived benefit of getting something in return for purchasing an item, compared to if the purchase was made via checking account. Issuing banks have also expanded their offering of 0 percent balance transfers to further promote the use of more credit cards.

Overall, merchants should be aware of their consumer’s behavior and payment preferences prior to choosing payment types. Merchants should understand where their products are being consumed, and what payment types are preferred by online shoppers in those regions. Making an uninformed decision can prove detrimental, and like anything else, any final decision should always be based on facts.

MYTH: Custom forms are better as they provide a higher throughput rate

James Anderson, merchant support manager:

When it comes to growing a business and trying to expand in an often overcrowded online marketplace, many retailers want to focus on getting their personal brand out to their consumers. It needs to be marketable, it needs to stick, and it needs to bring people back to your offerings over your competitors. Without question, the site itself needs to stand out as well as the offering. And using all the tools in the toolbox to get consumers to click the ‘buy’ button is important. But just how in-depth to take that branding approach can often be a source of confusion, for both merchants and consumers. Is it better to have everything hyper-stylized and heavily designed to look the same? When it comes down to the actual purchase page itself, is flashy the best route to go? While it may seem that keeping a similar visual styling across the board will help increase the chance of a purchase, unfortunately, that isn’t always the case.

One thing that doesn’t always come into consideration is often times the most important, and that is trust. In the current age of ID theft and fraudulent transactions, consumers are often wary when it comes to putting their credit card or banking detail information into an online site, especially one they are visiting for the first time. It is critical that your consumers trust the purchase they are about to commit to is safe. Flashy payment forms often do not drive confidence and can also be very problematic in terms of displaying properly to your consumer, as the variety of different browser types, versions, and systems can be nearly endless. The last thing that any business wants is a consumer backing out of a purchase due to poor or slow payment form display.

This is where both trust and simplicity come into play. Using a processor that people are familiar with instills that level of trust needed in order get the buy button clicked. And when looking at some of the larger processors, one trend is very clear —simplicity. A basic, properly branded form will often trump the most stylized of forms due to the higher confidence level that consumers feel regarding their payment information. PayPal, Amazon, Google, and other e-commerce giants use basic forms for a reason. Sometimes, less converts to more.

MYTH: The affiliate model is dead

Gary Jackson, managing vice president of sales and Internet markets:

For the past few years, we’ve all heard that that affiliate model is dead. Or that business just isn’t done that way anymore. While there may be some truth to the fact that there has been a decline in the legacy affiliate business model, or that it is not what it used to be, by no means is it dead. In fact, many merchants are expanding their partnerships with affiliates to drive traffic and sales, and doing so successfully.

But let’s be clear, the affiliate definition has morphed into something more than what we knew even five years ago. There was a time when it was no problem for merchants to find affiliates and vice versa. And several companies and payment processors developed systems to help facilitate these engagements. However, as the market has continued to evolve and change over the years, the very nature of bringing affiliates together with merchants has as well. This gave rise to the “marketplace” concept, wherein online stores were developed to help people quickly and easily find complementary software and services. Amazon’s AWS Marketplace is perhaps the most prevalent example of these marketplaces for retail sales. And what works in that scenario can certainly be applied in some fashion to digital and tangible goods in the adult market, or any market.

But seeking new channels for traffic can be daunting, and time consuming. So these marketplace-type portals and connections provide a streamlined, accessible option to reach a group of new opportunities. As we see these portals pop up to offer merchants a place to list their programs, we also see more cooperation and more control being offered to the business in managing new traffic sources. Business owners are using the portals to open their minds beyond the old individual affiliate relationship to expand to ad networks, traffic sellers, and especially to other merchant connections. The traffic sources are able to present themselves more readily within the marketplace portals as well, enabling businesses to strategically select any from which it would like to receive traffic. This more strategic approach can then impact throughput and offer a better quality of buyer as well, when compared against the past “free-for-all” method for getting traffic.

The affiliate model may not be what is used to be, but it is better for many. And with newer options, more control, and greater accessibility, the evolution has only started.

MYTH: I should never use beta software for my business

Jason Kirk, vice president of product development:

In some circles, “beta” seems to have a rather negative connotation, causing people to shy away from using new software for their business. However, the bad rap that beta can get is very much misplaced. In fact, the reality is that by participating in early releases of software/products/services, users can help shape the future of that very product to ensure it meets their needs.

Recently, the method by which businesses release things has changed, as many organizations have adopted the MVP process for software development and beta releases. Minimum Viable Product, or MVP, is a concept and approach that helps get products to market while at the same time offering clear avenues for user feedback and future software iterations. As the application is developed, thought is given to its market readiness as follows: does it provide enough value to get users interested? Does it demonstrate enough future benefit to those users? Does it provide a feedback loop to help guide future development? These questions are all addressed before any beta release occurs, enabling organizations to create a product that meets a market need, and get it in front of customers in a timely manner.

The really nice thing about this approach is the mechanism for ongoing improvement. If an aspect of the software product can be improved upon, the beta participants can provide that input so it can be considered and/or addressed with the next update release. And they can do all of that while using the beta product to help manage their business.

Less time to market, more user feedback, and better overall products. MVP beta releases can and do feature those things. And by not participating in a beta, businesses could be missing out.

MYTH: There is a scrub dial in the office of CCBill’s CEO

CCBill fraud department:

We hate to disappoint you, but no, there is no scrub dial. We looked. And then we looked again to be sure. While the dial is often jokingly referred to in conversations at trade shows and online communities, the truth is we do pay attention to transactions flowing through the system to help minimize fraud.

Employing a variety of criteria, transactions and card holder data are responsibly scrubbed and checked against our database to ascertain their validity and/or if they appear in our blacklisted accounts. This process is so comprehensive, that if it were to be adjusted on-the-fly, all that would happen is banks would decline the transactions. And no one wants that. So yes, the processes and systems we use do monitor patterns, trends, and behaviors on a global basis. However, it is all done with one thing in mind, to maximize throughput of good, valid transactions.

As far as any dial goes, well, that is a myth.