Credit Card Processing Today: Decline or Dominance?

Credit Card Processing Today: Decline or Dominance?

The foundation of most e-commerce, including on the adult entertainment front, credit card processing is a vital concern for the vast majority of merchants — but not a resource that can be taken for granted.

As an increasing range of payment platforms and technologies takes the stage, XBIZ wondered where the tried-and-true credit and debit cards loved by Americans and other consumers fit into the scene in 2017 and beyond; and so asked a group of industry insiders for their insights on the most current trends impacting credit card processing.

The current trend is for the billers to supply all the support, expertise, goods and services required to encourage a client to use them for all their processing needs. As the business of adult grows, the billers grow as well.

NETbilling CEO Mitch Farber pointed to the impact of growing choices in payment methods, telling XBIZ that mobile wallet usage will continue to grow and will totally jump start in 2018.

“Mobile phone-based wallets have patiently been waiting to really take off since Apple Pay arrived in 2015. Even though there have been a number of competitors, Google Wallet, Samsung Pay and others, mobile wallets haven’t disrupted the payment industry as initially thought. But that is about to change in 2018,” Farber revealed. “According to Business Insider, between 2015-2020, mobile payment volume is expected to rise by a compound annual growth rate (CAGR) of 80 percent, which would bring mobile payments volume to $503 billion by 2020. This is for both in-store and online payments.”

For his part, CEO Doug Wicks points to limited banks in acquiring and back-end operations in all regions as significant trends impacting credit card processing.

DIMOCO VP of Sales Bettina Sommer says although direct-carrier billing (DCB) plays an important role in the online payment landscape, the company can’t ignore the fact that debit and credit cards have been the primary mechanisms for online payment since the beginning of e-commerce.

“European card spends, though facing heavy competition, on digital content will grow at an average annual rate of 7.9 percent over the forecast period, reaching €36 billion by 2021,” Sommer told XBIZ. “Furthermore, their attraction to merchants has increased since the implementation of the CVN (CVV/CVC2) and the strict security protocols demanded by card services such as Visa, MasterCard and American Express.”

Sommer notes there are an array of hot topics in regards to mergers, Visa chargeback rules and regulations floating in the market.

“This leaves it somewhat impossible for merchants to see the forest for the trees and calling out for a PSP specialized in not only processing but adding a human touch through personal consultancy, service and assistance,” Sommer says. “So, therefore, we decided to cater for this exact trend and need.

“Further strengthening our position in the payment landscape, we in late 2016 founded DIMOCO Payment Services, offering services to merchants, enabling them to process their payments from e-commerce environments. This addition to our product portfolio meant that we completed the online payment ecosystem,” Sommer revealed. “With 17 years of market expertise in direct carrier billing and a firm foothold in the adult market, we can now offer all major payment options to our clients already operating with DIMOCO on a direct carrier billing basis as a one stop shop solution.”

OrbitalPay VP Karen Campbell says billing companies are subject to fierce competition on the processing services side of things.

“First and foremost OrbitalPay exists to serve our clients and their customers with providing direct merchant accounts, gateway services, 24/7 call center services and coming soon, a proprietary check processing solution,” Campbell reveals. “The current trend is for the billers to supply all the support, expertise, goods and services required to encourage a client to use them for all their processing needs. As the business of adult grows, the billers grow as well.”

SegPay CEO Cathy Beardsley points to the need for companies to move money and tells XBIZ that many merchants are having trouble opening bank accounts to have their funds settled.

“Banks are nervous about non-vendor payments to affiliates and models where it is difficult to ensure they know your customer (KYC) requirements,” Beardsley explains. “Third-party solutions such as Payoneer, Paxum and PayrNet are good alternatives to help fund marketing partners and models.”

ChargebackHelp’s Raja Roy-Choudhury says he believes that adult merchants are running out of wiggle room with their acquirers.

“It used to be that merchants were given a few months to get their chargebacks/refunds in line, but now merchant accounts are being closed without any warning,” Roy-Choudhury told XBIZ. “It’s an alarming trend, and one that merchants have to look out for.”

Gary Jackson, CCBill’s VP of sales and marketing, cites several key billing trends impacting credit card processing, including omnipresence, personalization, product bundling, prepaid and reloadable cards.

“Because sites are being viewed on a variety of devices, from smartphones to tablets to desktops and laptops, all e-commerce websites today need a responsive, payment-friendly, checkout experience to reduce buyer hesitation and enable their end-users to make quick buying decisions, seamlessly from any device,” Jackson told XBIZ. “Making each customer feel like they are the center of the universe is not an optional item anymore — but a necessity to do business online. Personalizing goes beyond automated identification of the buyer’s geolocation, language and multi-level language prediction, and must include the personality of the website in the pre and post sale, to build a welcoming relationship with a demanding audience.”

Jackson notes many CCBill merchants are seeing very strong results from bundling their subscriptions with other offers, including hard goods, premium offers and complementary content.

“The concept of bundling connects with the concept of bargains, in order to offer their buyers more opportunity to purchase more, with expanded complementary products and service offerings,” Jackson explains. “Interestingly enough, we are also seeing a surge in the use of shopping carts for subscriptions, not only providing a comfortable checkout for most buyers but also allowing the merchant to easily update their ‘storefront’ with new offers at a single checkout.”

Jackson says pre-paid and re-loadable cards have surged in popularity with consumers, especially with those who wish to have more anonymity and pay with cash.

“But we have seen rising merchant frustration because of a series of limitations on these pseudo-grid-free payment options,” Jackson explains. “Geographical controls, low limit cards and volume caps are there to reduce international money laundering and aid in fighting against terrorism funding, but can limit regional sales and impact ongoing subscription payments.

“To help merchants who don’t want to automatically take this payment option off the table, they should consider using a billing provider that offers tools that put the merchant in control — tools such as automated card updaters and country controls, as well as automated communications,” Jackson added. “Those types of tools can help merchants develop stronger relationships and loyalty with consumers using these cards, to keep them returning to purchase more.”

Mobius Payments’ director of sales Matthew Mund told XBIZ the card brands are becoming stricter when it comes to calculating and enforcing excessive chargeback thresholds.

“Bygone is the era when a merchant could open and operate several merchant accounts to mitigate risk and spread liability,” Mund said. “More and more acquiring banks are aggregating the chargebacks regardless of merchant category code, which is why it’s more important now than ever to stay ahead of your chargebacks.

“An ounce of prevention is worth a pound of cure,” Mund added.

“What we’re seeing now is a doubling down of security in response to the pressure that digitization has inherently placed upon the systems already in place,” Outhouz CEO Christon “Doop” Le’John told XBIZ. “There will be a lot of trial and error, but this can’t be anything other than good news in the long run.”

Vendo CTO Buddy Love says Europe will see the birth of a new paradigm in the payment ecosystem with the implementation of PSD2, short for Payment Services Directive (EU) 2015/2366, in 2018.

“PSD2 will bring the compulsory implementation of a strong customer authentication for ‘all’ online transactions above €30,” Love explains. “Strong customer authentication will most likely take the form of 3D Secure V2, the standard that is being developed by VISA and MasterCard and will require end users to go through a two step verification (providing something they are, something they know or something they have) for most of their online transactions.”

Clearly, the days of credit and debit card dominance are not over, as technology boosts security and ease of acceptance cementing their position in the foundation of adult businesses around the world.

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