Fortunately, the current marketplace circa 2007 is quite favorable to e-merchants ,with most of the marginal Internet Payment Service Providers (IPSPs) now out of business, and a host of stronger, more professional processors offering a wide array of payment options. These include choices of payment method, such as credit cards, online checks, phone account billing (including SMS), pre-paid cards, virtual tokens and more, as well as choices in the payment currency, the frequency and duration of billing, along with anonymous billing mechanisms and more.
When seeking out payment processing options, it's important to differentiate between those that require you to have your own merchant account — with the resulting control and flexibility that comes from working with the banks directly — and those that don't, where the merchant makes use of third-party solutions and the wealth of support features that they offer.
Merchant account holders also can benefit from third-party support tools and value-added features offered by companies such as Netbilling — the sophistication of which makes the choice of whether or not to use your own account more a question of which choice offers the greater profits, than one of which best provides a given level of infrastructure.
Despite the advantages of processing online transactions via your own merchant account, especially for those billing more than $50,000 a month, there remains a perception that "you get more" by using an IPSP than you do from having your own merchant account — even if it costs you a little extra.
The backbone of e-commerce, IPSPs provide merchants at every level with the ability to accept credit cards and other payment options as a way of charging consumers for their products and services. IPSPs operate in an increasingly challenging and ever evolving market with ongoing regulatory concerns and a high level of competition. To distinguish themselves in this competitive market, most companies go beyond simple processing to provide additional value-added services, such as membership and password management, customer service, affiliate programs and a wide variety of other support services.
The industry heavyweights in this arena are CCBill and Epoch, two companies with great reputations and long-term stability. We may have now seen the last of former player iBill, whose lingering death may finally be over. This is just one more example of the volatility and challenges in the IPSP space, something to keep in mind the next time you see spam for a new billing company offering you a great deal.
This isn't to say, however, that new choices should be avoided. 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?"
Dialers have been replaced by voice-call systems and phone-based mechanisms such as Password-by-Phone's geo- IP targeted billing systems. Prepaid retail cards like those offered by Pure Vanilla allow for anonymous access, while the growing acceptance of white-label and privately branded cards as well as video-on-demand, pay-per-view and individual content marketed via the PayAsYouClick or other micro-payment systems, illustrate the demand for flexible and redundant payment architectures.
With all of the online billing options available to webmasters in 2007, 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 to consumers as possible.
The easiest way to do this is to use a cascading billing system, such as MPA3 by Mansion Productions or the NATS system, perhaps beginning with your own merchant account and cascading back to as many reputable processors as possible. This may be the best way to go when processing membership subscriptions and is an excellent way for you to diversify your revenue streams.
The two main issues that I see driving the billing market in 2007 and beyond are that of compliance and increased competition among online merchants.
On the compliance front, everyone is receiving increased scrutiny; anti-adult forces are pressuring Congress to ban adult site credit card transactions in the same way that online gaming transactions have been restricted. The card association, the banks, the IPSPs' own compliance departments - everyone is taking a closer look at what each other and their customers are all doing. Accountability for the source and nature of the material that is being published, as well as the terms under which it is offered and the means by which the offer is made, are all areas of concern that are receiving much more attention lately — a trend which I believe will continue and accelerate on into the future.
This isn't necessarily bad news for the good guys within our industry; however, as the brightening light makes it harder for criminals to freely operate from within the shadows, while increasing the legitimacy of those remaining players able to withstand the scrutiny.
Practically speaking, for most operators, this increased scrutiny can come at a cost that includes more and higher fees, additional paperwork, plus longer approval waiting times and enhanced levels of business and ownership transparency. A big inconvenience to be sure, but once again, it's not necessarily bad news for the good guys.
The impact of competition can be found in two places as relates to online billing. The first is the role that competition plays between IPSPs, a situation that necessitates noticeable improvements in existing services, the deployment of new offerings and the introduction of new players to the market. While having too many options to choose from can be quite confusing for consumers, choice is always a good thing to have, so this is all a plus.
The marketers themselves are engaged in the other arena in which increasing competition is having an impact on billing. Take a typical paysite operation, for example: No longer is it making uncountable sums of money — everyone has a paysite these days and that bad situation is compounded by the vast glut of free porn, so folks don't really need to buy it — no wonder their signups aren't what they used to be. These operations cannot afford to ignore customers without credit cards, or that need to pay in Yen or that speak German — not anymore — and their adoption of new and enhanced billing services is a productive and profitable way to address these issues.
While there are challenges on the billing front to be sure, they are not insurmountable and in this observer's opinion, the future of e-commerce and its dependent billing solutions couldn't be brighter.
