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 have been a particular challenge for many sites. Before age verification, the content a consumer could view prior to payment might have included nude images. With age verification in place, these tours must now be safe for work. Only once the consumer pays and completes age verification are 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 scenes 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 content to his SFW work tour correlated with a greater conversion rate. However, different fixes may work best for different sites. Ideally, merchants should test out changes to the site tour in order to determine the best solution.
Merchants have also been experimenting with placement, with some requiring age verification upon entering the site, before accessing any content, and others requiring AV only after an SFW tour. 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 the 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-Salesand 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 ruling was about procedural issues, not the intent of the rule, so we are almost certain to see a new “Click to Cancel” rule to make canceling a membership as easy as signing up for one. This will also complicate presenting multiple offers in order to retain a customer.
It goes without saying that cross-sales and membership upsells help keep revenue in a good place. However, banks are backing away from cross-sales because U.S. regulators are putting pressure on acquirers when they go through 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 at a substantially higher rate 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 modify our cross-sales page, trying a few things to find a solution. Here’s what worked: We modified our payment page to include a select all buttons 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 began testing bundles where consumers could buy packages of 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 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. And don’t forget to add a one-click purchase on the receipt.
Lastly, it is important to form partnerships with other merchants. Cross-sell and upsell with merchants that offer unique content, or other verticals that might be of interest to your members, like cam sites and gaming programs. This way, you can earn additional revenue and also keep your members active.
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 a small convenience fee for the month, or offering a free month of access, can also help merchants hold on to customers. Canceled members are still important and might change their mind, so it’s worth the effort to remarket at the time of cancellation or throughout the year.
Having as many payment options as possible can also boost sign-ups. If a credit card declines, having the option to present any other form of payment, like PayPal, direct debit, crypto, or a local pay-by-bank option, could help that sale to go through.
The AI Advantage
Merchants have also been implementing AI as a way to retain consumer engagement. AI tools can help merchants work smarter, tracking what customers are watching and recommending content likely to keep them engaged. One of our merchants is now grouping content to match behavior and demonstrated preferences, much as Prime Video and Netflix offer romantic comedies if that’s what you already tend to watch. AI chatbots can also help site visitors navigate to the content in which they are most interested.
Cam, fan and subscription sites are all experimenting with AI-generated models. This allows them to continue consumer engagement beyond just being live on a cam platform or fan site, and gives the subscription site the ability to engage with consumers as if they were a fan site.
Finally, the key to all of the above tips is: testing. Constant testing and reviewing analytics can lead to success. 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.
