Kimmykims Thoughts on 3rd party billing et al

Nickatilynx · 02-20-2005

Kimmy found this post in another thread and thought it warranted its own thread.

Hope you don't mind.

************************************************** **********

For someone to successfully start a new processor, they'd have to be reputable, have big bank, have passed the IPSP process with the card associations, and be able to market.

Could it be done? Maybe. Will it be done successfully? No.

Jettis is a perfect example of this. I was working at CQ for Ken when he launched Jettis. At the time he didn't want to do third party, the only reason he did was because a few people bugged him to do it and it started out as a favor. But Jettis was late to the game (and remember this was '99), DMR had just gone under, Epoch was issuing promissory notes instead of checks, and the card associations had much, much looser rules about everything, and Ken Lawson had the respect of the entire industry.

Consequently as things got tougher, Jettis made the decision over the years not to aggressively court third party business or to offer some of the processing tricks (while perfectly within card association rules) that other processing companies allowed. The third party portion of their business never grew at a pace that would have given them the business that an IBill, CCBill or Paycom generated, and thus made it a much less important part of their business. Ken's never been accused of being stupid, especially when it comes to business, and selling that portion of his business to Paycom was a well thought out decision he made in order to focus on what makes money for Jettis with the least amount of headache and hassle.

There are no more Ken Lawson's in this business that will start processing companies. Sure, there are people that have worked for other companies who are attempting to process transactions, but with the current situation the way it is, both in rumors and actual card association policies, I don't see them creating a successful business solution as an IPSP. Most of them attempt, imo, to subvert the rules, do end runs around the banks, etc. And that's the kind of thing that sets such a business up for failure before it even gets its house in order to start running any kind of volume.

The thing I find most sickening about this business, as always, is that people just love to rumor monger and talk about impending doom. It's just like rain in California, people can't drive because the sky is falling.

Any processor, no matter how stable, exists at the whim of their acquiring bank. Whether it is your own merchant account (as we saw with the First Data wholesale dumping of adult accounts last year) or as an IPSP, your strength is only as good as your banks backing of your business.

My advice hasn't changed over the years. Diversify. Spread your rebills out among any and every method you can find that's somewhat trustworthy, and tailor your join pages to your surfers. Offer any form of regional billing solution to a non-US surfer that you possibly can. Offer check joins to US surfers as a primary method of payment. Yes, I understand the returns on checks are higher than the chargebacks and refunds on credit cards. But until the FDIC starts regulating checks in the same way that credit cards are regulated, there is never any worry that you'll lose your rebills. Get your own merchant account and spread some of the risk off to it, with your prime transactions. That's nothing different than banks or other lenders do -- they pass their best loan risks to certain backends with lower transaction fees and interest and the sub-primes are sent elsewhere and charged more interest because they are at a higher risk for default.

This isn't rocket science, it's a simple matter of risk analysis and doing what's best for your business for either a long term or short term strategy, depending on which way you think about your business.

Hell Puppy · 02-20-2005

I find it difficult to disagree with a single word of that...

I would go one step further. Anyone with a long term business plan would be wise to have a plan in their back pocket of what they'd do should iPSP processing suddenly disappear completely.

Anyone have any idea how many banks are left in the U.S. that will provide merchant services for adult? My guess is I dont need all of the fingers on one hand to count 'em.

JoesHO · 02-20-2005

KimmyKim is just to damn HOT to be as smart as she is !!!!!!

There should be some law against that shit!!!!!

cj · 02-20-2005

great post, and not much more can be said!

*KK* · 02-20-2005

Quote:

Originally posted by JoesHO1@Feb 20 2005, 04:31 PM
KimmyKim is just to damn HOT to be as smart as she is !!!!!!

There should be some law against that shit!!!!!

Lord, don't make me blush

cj-- you've been around even longer than I have -- though not by much -- and you've dealt with alot of the same people I have in even more critical positions -- I'd love for you to put up some thoughts on the matter. I could say so much more, really.

But I'm curious as to what a few other people think, you especially in this venue

Rolo · 02-21-2005

3rd party billing with visa and mastercard is not a booming market, and I think we are getting to a point where we have to realize that the 3rd party players have been found long ago, and its now a battle about being the last one (or if we are lucky two) standing. Merchant accounts are a good idea, but just like 3rd party there are risks, so look out before putting all of the egs in a new basket.

Personally I would like to see more region based - none visa and mc - 3rd party billing - ex. local debit cards, online payments etc. The cost and time to setup with every billing options on the planet is too great, but a 3rd party could do it, and if they stayed away from visa & mc, then everybody could use them...

02-20-2005	#3
JoesHO Members Want to see your own Advertising Here! Join Date: Jan 2004 Posts: 5,085	KimmyKim is just to damn HOT to be as smart as she is !!!!!! There should be some law against that shit!!!!! __________________ AEBN THE GLOBAL LEADER IN ADULT EVOLUTION something FIT this way comes!

02-21-2005	#6
Rolo Members Join Date: Dec 2002 Location: Six Feet Under Posts: 2,150	3rd party billing with visa and mastercard is not a booming market, and I think we are getting to a point where we have to realize that the 3rd party players have been found long ago, and its now a battle about being the last one (or if we are lucky two) standing. Merchant accounts are a good idea, but just like 3rd party there are risks, so look out before putting all of the egs in a new basket. Personally I would like to see more region based - none visa and mc - 3rd party billing - ex. local debit cards, online payments etc. The cost and time to setup with every billing options on the planet is too great, but a 3rd party could do it, and if they stayed away from visa & mc, then everybody could use them... __________________ "Chaos is the law of nature, order is the dream of man." ~Henry B. Adams (Historian) 1838-1918

02-20-2005	#1
Nickatilynx Banned Want to see your own Advertising Here! Join Date: Oct 2002 Location: Vancouver Canada Posts: 15,115	Kimmy found this post in another thread and thought it warranted its own thread. Hope you don't mind. ************************************************ ******** For someone to successfully start a new processor, they'd have to be reputable, have big bank, have passed the IPSP process with the card associations, and be able to market. Could it be done? Maybe. Will it be done successfully? No. Jettis is a perfect example of this. I was working at CQ for Ken when he launched Jettis. At the time he didn't want to do third party, the only reason he did was because a few people bugged him to do it and it started out as a favor. But Jettis was late to the game (and remember this was '99), DMR had just gone under, Epoch was issuing promissory notes instead of checks, and the card associations had much, much looser rules about everything, and Ken Lawson had the respect of the entire industry. Consequently as things got tougher, Jettis made the decision over the years not to aggressively court third party business or to offer some of the processing tricks (while perfectly within card association rules) that other processing companies allowed. The third party portion of their business never grew at a pace that would have given them the business that an IBill, CCBill or Paycom generated, and thus made it a much less important part of their business. Ken's never been accused of being stupid, especially when it comes to business, and selling that portion of his business to Paycom was a well thought out decision he made in order to focus on what makes money for Jettis with the least amount of headache and hassle. There are no more Ken Lawson's in this business that will start processing companies. Sure, there are people that have worked for other companies who are attempting to process transactions, but with the current situation the way it is, both in rumors and actual card association policies, I don't see them creating a successful business solution as an IPSP. Most of them attempt, imo, to subvert the rules, do end runs around the banks, etc. And that's the kind of thing that sets such a business up for failure before it even gets its house in order to start running any kind of volume. The thing I find most sickening about this business, as always, is that people just love to rumor monger and talk about impending doom. It's just like rain in California, people can't drive because the sky is falling. Any processor, no matter how stable, exists at the whim of their acquiring bank. Whether it is your own merchant account (as we saw with the First Data wholesale dumping of adult accounts last year) or as an IPSP, your strength is only as good as your banks backing of your business. My advice hasn't changed over the years. Diversify. Spread your rebills out among any and every method you can find that's somewhat trustworthy, and tailor your join pages to your surfers. Offer any form of regional billing solution to a non-US surfer that you possibly can. Offer check joins to US surfers as a primary method of payment. Yes, I understand the returns on checks are higher than the chargebacks and refunds on credit cards. But until the FDIC starts regulating checks in the same way that credit cards are regulated, there is never any worry that you'll lose your rebills. Get your own merchant account and spread some of the risk off to it, with your prime transactions. That's nothing different than banks or other lenders do -- they pass their best loan risks to certain backends with lower transaction fees and interest and the sub-primes are sent elsewhere and charged more interest because they are at a higher risk for default. This isn't rocket science, it's a simple matter of risk analysis and doing what's best for your business for either a long term or short term strategy, depending on which way you think about your business.

02-20-2005	#2
Hell Puppy Fat Fucking Nobody Want to see your own Advertising Here! Join Date: Oct 2002 Posts: 6,523	I find it difficult to disagree with a single word of that... I would go one step further. Anyone with a long term business plan would be wise to have a plan in their back pocket of what they'd do should iPSP processing suddenly disappear completely. Anyone have any idea how many banks are left in the U.S. that will provide merchant services for adult? My guess is I dont need all of the fingers on one hand to count 'em.

02-20-2005	#4
cj Members Want to see your own Advertising Here! Join Date: Oct 2002 Location: Down Under Posts: 5,202	great post, and not much more can be said!