VISA new chargeback/credit ratios

[puchih]

Thanks for the replies. Wig & cj, let me address both of of your questions below:

do you do anything with ACH?

Yes, we do, actually. We haven't done any "chargeback" type activity (i.e. customers who reverse a settled ACH transaction). What we are doing is going after customers for NSF transactions. In fact, we're very successful getting money from NSF transactions. Remember, in the United States it is a crime to bounce a check. I'm going to use you as an example wig...

Suppose you bounce a check with one of our clients. Our mission is now to recover the NSF fee for our client (usually about $3-4 depending on the processor) along with a little bonus. So, we do a little digging. By looking at your sign-up informtion and phone number, we will find out where you live. Let's say you live in Austin, Texas. I know that you're in Travis county. I also know that the county attorney for Travis county is David Escamilla. Our in-house collection agency has a copy of the NSF laws for every state, so I know that in the state of Texas, failure to pay me on an NSF check within 10 days after notice by certified mail is prima facie evidence of intent to defraud, which makes passing the NSF a misdemeanor crime under Sections 31.03, 32.41, and 132.9022.

I will then send a registered letter to the address I have on file for you stating what I just said above. I'll also be calling you just to make sure you know. My letter will state that if you don't pay me within 10 days, I will turn over all evidence of the NSF transaction for prosecution under Texas law to the office of:

The Honorable David Escamilla
314 W. 11th St., #300
Austin, TX 78701
Phone: (512) 854-9415
Fax: (512) 854-9316

Imagine for a minute you got a letter to that effect in the mail -- with a notice that the NSF would be turned over to your local county attorney. Would you pay? I bet you would. Most of our clients' NSF customers pay also -- they get back whatever the amount of the transaction was, plus a $20 NSF fee that we ask for. Usually their ACH provider is charging them way less than $20 for an NSF item, so they're making some money here.

Just like with chargebacks, we give them a polite e-mail first asking them to mail in payment. We never get nasty until the customers stop doing what we ask. Hope this clears things up with regards to ACH.

the way i interpret this is that we pay you according to how many members we have, not how many of those members you actually have to work with ... it seems to me that this pricing is so that you can take a piece of my member base instead of just charging me for chargebacks and/or members that you actually have to deal with ...

am i interpreting that right?

Not exactly. If you were just to purchase the Chargeback Combat service, I'd either charge you a flat rate per chargeback we handle or give you a flat fee for a range (say... between 100-150 chargebacks per month). However, most of our clients (well over 90%) choose to buy our other services as well.

When we do anti-attrition work and customer care work for sites, we typically come into contact with 25% of a site's member-base in any given month. That may sound high to you, but think about how many declined transactions there are -- we're calling all those people asking for a new card number. Imagine you had a live chat button on your site, avaliable for members to use at any time they want, to ask whatever they want. They make good use of that. The vast majority of our customer care reps are female, so we have some customers who just call every week to have someone to talk to. We're always very polite with people and if they want to talk to a girl on the phone for 10 minutes, we're not going to hang up on them -- as long as it keeps customers with your site longer.

When you add everything up, on a 5000 member site, we can come into contact with 1300 customers in the month via e-mail, online chat, by phone, by mail, etc. Sometimes we have to call or e-mail a customer 3 or 4 times just to get a response. It would be extremly burdensome for us to bill based on a per-contact scenario. Can you imagine getting a bill in the mail with 4000 line items with different prices depending on the contact method, whether we made contact with the customer, how long we talked with him, etc.

We find a member-based bill to be fair for all concerned. The amount of work we do increases or decreases as the member-base to the site increases or decreases, so we find that it is a good way to approach things. As a side note, we do log every e-mail, phone call, chat session, chargeback, etc. So, we have records of all incoming/outgoing contacts that we make. Our reports to clients summarize everything we've done for them for the month.

Thanks again for the questions. Let me know if there are any more. Have a good 4th!