As a result of the new set of regulations mandated by credit card giant Visa, many Internet Payment Service Providers (IPSPs) have been forced to make some changes in the way they do business.
As AVN Online.com reported last week, as of Oct. 1, Visa will lower their monitoring thresholds of its Merchant Chargeback Monitoring Program for all merchants, regardless of their business classification, from 2.5 percent to 1 percent. In conjunction with that threshold decrease, Visa has raised the minimum number of chargebacks allowed per month to 100 from 50. Furthermore, as of Jan. 1, 2004, Visa will alter its Global Merchant Chargeback Monitoring Program, lowering international chargebacks from 2.5 percent to an international sales ratio of 2 percent, while increasing the minimum number of chargebacks to 200, up from 100.
In response, many IPSPs are making announcements as to how they will handle these changes. Most recently, CCBill issued a list of suggestions to the public as to how to forge ahead in this new climate, and stated that the new changes will not affect their business.
CCBill advises people to be selective with their business partners/referrers and to monitor their performance, provide clear and accurate marketing to the consumer, and make cancellation a reasonable process. “One way or another, if a consumer wants to cancel they will, so allow them to do so,” read a statement from CCBill. “Otherwise, they will go to their issuing bank because they have no other option.
“Even if those ratios they are releasing now had been in effect for the last year,” CCBill.com’s Ron Cadwell told AVN Online.com, “they wouldn’t have affected us, as we’ve been working under those ratios for the last year. We’ve always taken fraud very seriously because we’re the only IPSP I’m aware of that doesn’t pass the chargeback on to their Webmasters. We’ve always worked very hard to reduce and maintain chargeback ratios.”
Cadwell suggested ISPSs should run revenue-sharing referral models. “Flat pay and pay-per-signup referral models invite fraudulent referrers,” he stated. “Although we are all aware that 70 to 80 percent of all chargebacks and refunds come from consumers that actually received service, it is in everyone’s best interest to minimize any additional opportunities for problems.”