The Current State of Billing at Cybernet Expo

SAN DIEGO, Calif. – While the Current State of Billing panel at Cybernet Expo featured the standard lineup of major online adult payment processing companies, moderator Brandon Shalton made a point on the third day of Trade Show Productions' webmaster event to encourage the audience to really feel out the billing reps and explore new issues not previously discussed on other panels.

The event, now in its seventh year, was partnered by YNOT.

On hand for billing questions was Mitch Platt of, Mitch Farber of, Douglas Wicks of CCBill, Chris Mallick of Epoch/Paycom, and Mark Smith of iBill.

With an increasingly challenging billing landscape and ever-changing regulations from Visa and MasterCard on adult companies, Shalton warned webmasters that any and all illegal dealings in their business practices will only worsen the already jaundiced view of online adult.

“All things point back to Visa,” said Shalton, listings issues related to spam, non-compliancy with 2257 age verification record-keeping, celebrity content, membership cancellation practices, and cross-sales as all being issues Visa and Mastercard are increasingly concerned with.

“It will just go right up the food chain to Visa,” he said. “Everyone is involved in the money trail and if you don’t act responsibly, you’re going to get more regulations.”

Last year, Visa imposed a 1 percent chargeback ratio on online adult companies, a steep drop from a more comfortable 2.5. Several large credit card companies and processors like American Express and PalPal pulled out of the space altogether, along with Cardservice International, which only a few weeks ago terminated all dealings with companies affiliated with the pornography industry.

Visa also decided in 2003 that new accounts generating from the online adult world were required to pay a $750 start-up fee, with a subsequent yearly fee to keep in good standing with the credit card behemouth.

According to panelist Mallick, even just gaining a merchant account in today’s business climate is “incredibly difficult to get and just as difficult to keep.”

Panelists agreed that membership sites were by far the most difficult to secure merchant accounts for, but that there were many options out there, including taking business offshore.

Smith encouraged the audience to develop a good relationship with their account managers and to really leverage that relationship to stay ahead of the regulations curve.

Mallick added that adult payment processing companies only make money when their webmasters do, and that the goal of finding safe and secure solutions was paramount to both parties’ success.

Farber encouraged webmasters to fully explore the billing options that work best for their product or program, be it credit cards, online checking, phone billing, or other alternative options.

As a wakeup call, Platt recited both inspiring and discouraging statistics for webmasters, including a recent UCLA report stating that 93.7 percent of end users still feel uncomfortable using a credit card over the Internet.

On a brighter note, research firm H202 traced an 1,800 percent growth spurt over the last five years in the online adult industry, and Internet World Stats determined that 111 percent of end users are over the age of eighteen.

On the other end of the adult world, Doing Business in Adult was another big draw for webmasters, who, despite the early hour, put in the time to listen to veteran porn actor, producer, director Dave Cummings and personality Wankus review the do's and don’ts of putting together an adult video.

Cummings, who also teaches the same material for a Learning Annex class in Los Angeles, ran the audience through a pre-prepared shopping list of everything from recruiting and paying talent, budgeting the project, getting location permits, to the right camera equipment to buy, the editing process, and advertising and marketing the final product.

Wankus, well-known within the adult industry for his KSEX Radio show, has recently brought his popular on-air radio concept to a new level and formed a distrubution partnership with Adam & Eve to market DVD tapings of the KSEX show, but with all the sexual theatrics intact. Titled KSEX 1: Sexual Frequency, the first taping is in the editing process and will be released within the next two weeks.

Both panelists agreed that some of the most important aspects of conducting an ethical, clean and successful video production include remaining in thorough compliance with all the rules and regulations pertaining to the age verification regulation 2257.

Wankus and Cummings also pressed the point that maintaining proper records across the board is crucial for both dealing with federal authorities and the Internal Revenue Service.

“We make sure that we are completely pro,” said Wankus. “Go the extra mile and make sure that your papers are in order, contracts are honored, and make sure that HIV tests are valid and current.”