As an experienced provider of high risk, third-party merchant accounts, CCBill is an informative source of information in these often confusing payment industry areas. In an interview with two of CCBill’s executive staff members, namely Gary Jackson, managing VP of sales and Internet markets and Jeff Adams, Director of Consumer Services for CCBill, we have tried to achieve clarification on these matters and hope that we have succeeded.
Payment Magnates: Tell us about CCBill’s place in the market and its added value with regards to its competition.
CCBill: CCBill celebrates 15 years this year, and much of our success comes from our all-in-one approach to payments – but more notably, from our focus on the merchant’s complete e-commerce solution. Initially building a payment platform and a business to handle the challenges of compliance, risk and consumers in high-risk markets has proven in the long-term to be a solid foundation to serve other growing markets, such as games, dating, publications, even continuity. As with the high-risk market of online entertainment, these other markets are faced with changing regulations, local laws, and challenging consumers – but they also rely heavily on the repeat purchase – all of which are part of our core, reliable subscription services.
In regards to our place in the market, one of CCBill’s standards has been to go beyond simply providing a payment service, to providing a bigger picture view of the whole purchase experience for those consumers who buy and subscribe from our merchants. To that end, CCBill has built an extensive platform of services and features revolving around taking payments globally – but providing a trusted and easy experience for the consumer. Providing a secure, trusted and recognizable experience has built a solid reputation for CCBill, which has proven itself for our merchants – when we are placed side-by-side with other payment providers, the choice of CCBill has been 10 to 1 over the competition.
Based on this approach, we have merchants dating back to 1998, who have grown with us, and we in turn have adapted our systems and business flows to the metamorphosis in their online business, as well as in payments online in the broader market. One of the key factors which keep us in the forefront of high-risk processing has been in our compliance and regulatory management, providing that bridge of expertise between the banks, card associations and regional governmental entities. Most online businesses do not have the expertise or the time to manage these components, and in conjunction with our included direct billing support for the buyer, the merchants are pretty well protected from sudden impacts, fraud and risks to their online payments business.
PM: CCBill is extremely reputed in the Adult industry, but are there other industries that it accepts?
CCBill: As noted above, the solid foundation built into the CCBill system has provided a strong support system for most any online business to thrive with CCBill managing the payments. The risk mitigation and support services, in conjunction with the robust subscription automation and retention tools, have provided an excellent platform for a number of other industries; such as online games, dating sites, live communications, and recently with the resurgence of online subscriptions for publications and media. We have seen significant growth in each of these markets in both single purchases and recurring subscriptions. As a solid high-risk processor at our core, over the years we have been able to take on some of the more complex business models, such as subscription tangibles (continuity), penny auction sites, and even file portals. And as with any high-risk venture, due to our standing in the market, we are in a trusted position to analyze the business model for risk and pitfalls, and should they meet our standards for protecting the consumer – we often work with the banking and card industries to take on new models. The CCBill platform is built to handle most any business model anyway – we just make sure that our core customer – which is the consumer – is well served and protected from scams.
PM: Can you please explain how your aggregation services work for e-merchants? Is there any kind of threat associated with the fact that the account is shared with other merchants?
CCBill: As an aggregator, CCBill provides a complete integrated payment processing solution which allows merchants to accept a wide variety of payments without taking the focus off of their business. While aggregation does pose additional risks as aggregators are responsible for both processing and distributing payments, one key factor is to partner with a provider who is properly registered with the card associations. Payment aggregators are required to register as both an IPSP (Visa) and Payment Facilitator (MasterCard) with the card associations and an aggregator is also required to gain sponsorship from acquiring banks. Subsequently, aggregators such as CCBill are subject to different regulatory and compliance standards and we employ highly trained staff to ensure we remain compliant. For merchants, this means the risks and complications of maintaining a merchant account are placed on the aggregator and there are several benefits with this model. Because CCBill is the merchant of record, we do not require credit history or other financial documentation and the merchant do not have to be PCI compliant. The ease of entry into payments with CCBill makes it an attractive solution for businesses of most sizes. Overall, payment aggregators are generally very easy to integrate with and provide a broad range of payment options. It’s important to research the services offered, ensure the aggregator is reputable, and decide whether this model is suitable for your needs.
PM: What are the advantages and disadvantages of third-party merchant accounts versus direct merchant accounts?
CCBill: It is really like comparing apples and oranges. Some of the advantages of merchant accounts really come from the misperception that merchant accounts provide more CONTROL over your account. With many third party providers, the merchant can be offered limited features, no customization options, and is quite often subjected to limitations and controls on the accounting/financial aspects of the accounts. Caps, minimums, and settlements with some third party providers can remove control of the funds and services from the hands of the business owner. Fortunately, that is not the case with all third-party providers – as in the case of CCBill, we carry no minimums, our systems are fully customizable to the merchant’s needs, and we provide the control to the merchants for the things that they need to control – while taking on the burden of the things they don’t want to hassle with.
The other key difference is in risk to the business. Direct merchant accounts also carry the responsibility of risk, approvals, customer satisfaction and compliance for the merchant – which must be addressed and actively managed by the merchant. There is little support for this directly from the banks and gateways, and the merchant’s reputation, credit and business is impacted by how the account is managed. A third-party processor like CCBill takes on much of that risk management, fraud protection and support issues, working on behalf of the merchants to address issues, problems – and even optimizing their payment flows for the cleanest, best throughput.
PM: Don’t you think that the pricing of third party accounts is too high?
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CCBill: It is a common question and we address it daily as you can imagine, due to the frequent misinterpretation of the ‘price’ of direct merchant accounts. What it really all drills down to is the difference between ‘cost’ and ‘price’. Third-party merchants generally provide a package deal with specific fees, surcharges, and rates bundled into a simplified package. And these fees are also packaged with the invaluable and business-costly services of back-end management, compliance, risk management, automation and communications and – in the case of CCBill – we also package 24/7 billing and password support for the consumer at no additional fees charged to our merchants.
So in analyzing third-party alongside a direct merchant account, we find that the majority of merchants only see a simple rate and define the ‘value’ of their processor on that single percentage. With a third-party like CCBill, the pricing includes a variety of services, which normally would cost the merchant in compliance, security, consumer support, manually managed services – and they have a significant cost to the business in time, headcount or outsourcing.
We think that there will continue to be some compression in the pricing – but the price of the third-party will always be higher – while we believe that the costs to the business are actually lower than a direct merchant account and the associated services.
PM: What would be your advices to online merchants in order to help them lower their chargeback exposure?
CCBill: CCBill recognizes that an estimated 85% of the chargebacks processed in a Card Not Present environment are directly related to fraudulent reason codes. To be effective, any strategies developed to reduce chargebacks must focus on mitigating said activity. CCBill relies on a multi-faceted approach which focuses on pre and post transaction analysis. Specifically, CCBill’s chargeback management and reduction strategy is implemented through global portfolio monitoring, merchant monitoring, and consumer experiencing profiling.
To avert fraudulent transactions, CCBill utilizes an extensive and proven proprietary fraud scrubbing platform. This platform has been developed and enhanced over CCBill’s business existence, and CCBill’s Risk Management team works closely with our merchants in creating a custom profile which meets their needs and allows them to penetrate target markets.
However, we realize that no automated system is perfect, fraud trends are constantly evolving, and no two businesses are alike. To combat this CCBill employs a team of analysts whose sole duty is to monitor chargebacks and fraud trends. These analysts review the information gathered, extract a plan of action, and adjust our proprietary fraud screening system to match the needs of the client and their business model. When an automated system is not enough, our analysts develop custom and creative solutions that fit the particular issue the Merchant is experiencing.
Each business model is different and while high-risk and non-high-risk business models vary in goals – the common thread is in understanding the consumer and how they buy. Our system does an exceptional job in anticipating and adjusting to the consumers purchasing habits for that business model.
PM: How do you see the future of the online Adult industry especially with regards to payment methods?
CCBill: The adult online industry has evolved since the advent of iTunes and the quick pay model. The consumer is smarter and accesses content from diverse sources and the industry has and is continuing to adapt to it. Buyers in all markets, not just adult, want the simplicity of one-click, one access across multiple sites – and in adult specifically, they want to trust that their purchase is secured, discreet and they don’t have any hassles.
The processor can offer that security and trust – and as we have seen with CCBill, the consumers will prefer a provider they trust for that purchase.
But the merchants in adult are also changing. With regulation changes, a direct merchant account cannot cross-sell with other direct merchant accounts – and the new adult industry is all about diversification and multiple revenue streams. So, providing a way to bridge the needs of the merchant and the consumer (such as our one-click cross sales) is where payments (and CCBill) are going.
Additionally, in adult, the purchase of any subscription, access, item or membership is still prominently initiated on the desktop – and then managed on the mobile device. But that is changing as well into what we call device payments. With tablets converging with desktops, smart TVs, larger mobile devices, the purchase now has to bridge all of these devices and the payment options needs to be unified and accessible from any one of these units.
And the crucial bridge to making this all happen will come from the payment provider