Alternative Payments Overcome Obstacles

Stewart Tongue

The alternative payments market is becoming a bit of a misnomer because many aspects of what used to be considered “alternatives” are now being absorbed into the heart of mainstream payment services. Aspects of paperless check transactions, online verification methods and geo-targeting were once the hallmark of people trying to think differently about payment processing and like most great ideas they eventually evolve their way into commonly accepted business practices and after a while the former alternatives are now the marketplace norms or best practices.

“Given the recent moves by massive companies like Apple and Google with new payment platform wallets including ApplePay, ease of checkout is the answer to what the ‘next big thing’ will be in the payment processing space, especially since more and more transactions are moving to mobile devices,” Cathy Beardsley, CEO of SegPay, told XBIZ.

The issue with the new and exciting things such as ApplePay (which I think will ultimately have some success) and Bitcoin, is that they need everyone to buy in to them almost immediately in order to be considered a hit, and that doesn’t always happen. —Jordan Stewart, OrbitalPay

“The issue with the new and exciting things such as ApplePay (which I think will ultimately have some success) and Bitcoin, is that they need everyone to buy in to them almost immediately in order to be considered a hit, and that doesn’t always happen,” Jordan Stewart, vice president of OrbitalPay, told XBIZ. “A perfect example of that is indeed ApplePay, it has only been available for a short time but the success/failure questions are already being asked.”

“Apple Pay is revolutionizing digital payments for customer present transactions more than Google and others that have tried with limited success,” Mitch Farber, CEO of NETbilling, told XBIZ. “At this time, there is no such solution for online sales, but many of our retail customers have been inquiring to add Apple Pay to their terminal setups. Typically this will require a new swipe terminal that will support it.

“Brick-and-mortar merchants need to be concerned with EMV (card chip) technology, which is being implemented here finally in the U.S. and the merchant liability shift that goes along with it.

“Due to the fact fraud will be reduced by EMV (chip) compatible cards and terminals in the card present transaction space, we will surely see a spike in fraud attempts to use stolen card info online. This was exemplified when Europe started using EMV compatible cards as online merchants saw a 75 percent increase in online fraud attempts.

“This is another reason to make sure you as a merchant are using a payment processor that provides exceptional fraud tools that go far beyond just address verification and CVV2 number check to protect yourself from fraud purchases on the Internet that can result in chargebacks,” he said.

“Whether you have your own merchant account or are using an IPSP, the acceptable chargeback rations are the same. It is important to be in control of how your fraud scrubbing is handled.

“Here at NETbilling, we provide an extensive set of fraud filters and other tools to help our merchant minimize fraud, and maximize their profits. Keep your eyes out for some new features that NETbilling is soon to release to help fight fraud to even a greater extent.”

“Meanwhile geo-locating and managing currency risk is still a great way to reach emerging markets and protect your own margin from currency fluctuations,” Beardsley suggested. “The next step is really to add in as many localized payment options as you can to capture those markets where Visa and MasterCard are not the primary form of payment.

“Direct debit continues to be a large form of payment in many of the European countries. We are also seeing Asia and Africa taking advantage of mobile technology to help facilitate payments,” she said.

“Look for your payment processor to partner with as many local solution providers as possible to help you expand your reach. It is difficult for a merchant to establish these kinds of relationships on their own.

“Utilizing a trusted third party to take advantage of new payment solutions is low cost way to supplement additional income to your top and bottom line.”

Geo-IP payment processing was a buzzword insiders became aware of years ago, but a surprising number of online merchants continue to ignore all the benefits of offering products and services with prices that are matched to the local currency and economic expectations of each local audience.

It stands to reason that someone in India is much more likely to buy a product you offer if it is available for purchase in Indian rupee rather than requiring them to convert from U.S. dollars to the monetary unit they are used to spending.

It also makes obvious sense that a lower price point is destined to yield greater revenue in a region with less wealth than a universal price offered on a global scale which makes much more economic sense to a first-world consumer from Silicon Valley than it ever would to an adult site buyer in Bangladesh.

Perhaps the resistance of some merchants to the new paradigm can be summed up as inertia caused by failing to find the right strategic partners to work with on payment matters.

“Geo-IP pricing combined with a dynamic checkout process based on different pre-configured risk groups per targeted sales region enhances the way of online sales in 2015. Our Pay.On Gateway took home The Florin Award for its innovation in this technology at The EPCA 2014 Payment Summit in Brussels,” Benjamin Bayr, CEO of Processing Partners Inc., told XBIZ.

Other payment systems have worked diligently to overcome regulatory enforcement inconsistencies that put many pornstars and vendors of the adult industry on high alert in 2014.

“In 2014 we saw Operation Choke Point being brought out in full force by the U.S. government,” Ruth Blair, who leads business development for Paxum Inc., told XBIZ. “This had some serious negative consequences for adult companies and individual adult performers. Many U.S.-based adult businesses discovered it was harder to conduct business internationally due to closer scrutiny from banks and federal agencies.

“Adult performers experienced sudden bank account closures purely due to the nature of their business. The FDIC issued a letter effectively ending Operation Choke Point at the end of January 2015, but the aftermath of these actions is still being felt by those affected in the adult industry.”

Getting beyond the chokepoint solutions, Paxum also continues to innovate by offering a service in 2015 that many webmasters have been waiting for since the 1990s.

“We recently introduced a new escrow transfer service that offers Paxum clients the option to request confirmation from both the buyer and the seller before the funds are released,” she said. “Upon release the seller can deposit all funds to their account, or they can split those payments to distribute to others.

“This service is very useful for clients such as cam studio owners who may not wish to deposit all cam performer payments to their own account. As a result cam studio owners can enjoy clearer money management, which is particularly handy for tax calculation and compliance purposes.”

The role of alternative payments follows two distinct paths: Innovating to create new opportunities for forward thinking business owners on the one hand, and evangelizing the solutions that have already succeeded at becoming major trends in the industry so that even the slowest of adopters is given every opportunity to maximize the efficiency or their processing from point of sale to final payment throughout the entire profit chain of transactions.