Over the past year, many merchants have reported earnings that were flat or even a bit down. This is due to three main factors: age verification regulations, click-to-cancel rules, and banks backing away from cross-sales due to regulatory requirements and the rollout of the Visa Acquiring Monitoring Program (VAMP). This month, we share tested solutions to help protect and grow your business despite these obstacles.
Challenges of Age Verification
Another great way to make up for missed cross-sale revenue is one-click purchases after a customer becomes a member, presenting them with additional website membership offers to choose from right after checkout.
Age verification for adult sites is now the law in over half of the U.S., with more state legislation on the way. The U.K. and EU also have strong age verification rules already in place, making AV a must.
Tours pages have been a particular challenge for many sites. Before age verification, the content a consumer could preview prior to payment might have included explicit material. With age verification in place, these tours must now be "safe for work." Only once the consumer pays and completes age verification should they able to view adult content on the site.
Merchants have pursued various strategies for modifying their tours in order to comply with the law while still attracting customers. Some have shot provocative but SFW material to entice customers to move all the way through the sign-up process. While this has worked well for merchants, it is also costly. Other merchants have tried modifying their content with AI to make it SFW. At least one of our merchants has found that adding more teaser content to his SFW work tour correlated with a greater conversion rate. However, different approaches work best for different sites. Ideally, merchants should test out different changes to their site tour in order to determine the best solution.
Merchants have also been experimenting with placement of age check, with some requiring verification upon entering the site, before accessing any content, and others requiring AV upon sing-up. Most merchants are finding greater success and less abandonment when placing age verification after payment has been made. Additionally, the majority of merchants feel it is important to notify the consumer, before purchase, that age verification is a requirement in their state.
Additionally, merchants are finding it important to provide support to customers having trouble navigating the age verification process. Older users may struggle more with technology and the AV process. Having a small team ready to help customers who get stuck can make a big difference.
Compliant Cross-Sales and Upsells
In January, the Federal Trade Commission announced that it was reviving its effort to update its rules concerning negative option plans. Although a federal court previously vacated a rule aimed at making it easier for consumers to cancel online subscriptions, that decision was about procedural issues, not the intent of the rule, so we are almost certain to see a new “Click to Cancel” rule. This will also complicate presenting multiple offers in order to retain a customer.
While it goes without saying that cross-sales and membership upsells help optimize revenue, banks are backing away from them because U.S. regulators are putting pressure on acquirers during their audit process, and because VAMP requirements mandate that banks and merchants keep their fraud and chargeback rates significantly lower than under Visa’s previous dispute and fraud monitoring programs. Opt-out cross-sales — where the offer is already selected, so that the consumer must uncheck it — are charged back substantially more than opt-in cross-sales. Opt-out cross-sales therefore increase merchants’ fraud and chargeback rates.
Mastercard is scheduled to follow with a similar rule later this year.
We worked with a few of our merchants to try to find a solution by modifying how we present upsell options. Here’s what worked: We modified our payment page to include a select all button that checked off the consumer’s certification of age, their agreement to the terms and conditions, the privacy policy and an upsell. This format allowed merchants to list multiple upsells and still be compliant.
Merchants also tested bundles where consumers could buy access to multiple websites. This format created the same revenue as a pre-check cross-sale but with strong consumer consent. Our compliance team was initially concerned that this model would create fraud and chargeback issues, but after testing, it was actually a compliant way to sell additional memberships to merchant URL portfolios.
Another way to capture missed cross-sale revenue is by offering one-click add-ons after signup. Present additional membership offers right after checkout, and don’t forget to add a one-click purchase option in the email receipt.
Try, Try Again
Merchants have also been testing their rebill-retry process. Moving rebill retries to Friday, when many people get paid, has helped merchants pick up additional rebills that might have declined on other days in the week. Letting a consumer retain access for the month for a small convenience fee, or offering a free month of access also helps with retention. Even canceled members can change their mind, so it’s worth the effort to remarket upon cancellation or throughout the year.
The AI Advantage
Merchants have also been implementing AI as a way to retain consumer engagement. AI tools enable merchants to track what customers are watching and to recommend content likely to keep them engaged. One of our merchants is now is now dynamically presenting content to match behavior and demonstrated preferences, similar to Prime Video and Netflix.
Cam, fan and subscription sites are also experimenting with AI-generated models, allowing them to expand consumer engagement beyond their core offering.
Finally, the key to all of the above tips is: testing. Constant testing and reviewing analytics leads to improvement. Roll with the changes, make modifications, find the best solutions, and you can continue to grow your business even in the face of increased rules and regulations.
Cathy Beardsley is president and CEO of Segpay, a merchant services provider offering a wide range of custom financial solutions, including payment facilitation, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. For questions or help, contact sales@segpay.com or compliance@segpay.com.
