Payment Processing

Webmasters, particularly of adult-oriented pay sites, charge clients for access to their premium content, products, and services. This is how webmasters — literally — make money. There are many ways to process payments from customers. The most common ways are discussed below.

Merchant Account

A merchant account allows you to process and accept credit card payments over the Internet. It links your customer’s credit card account with your own business account. With a merchant account, you will have full control of the billing method. It allows for the versatility and ease-of-use, which can be translated into more sales. Industry estimates that a staggering 80 percent of sales come from credit card payments.

Generally, you have to meet certain requirements for you to be able to open an account, which are particularly strict for the Internet and adult-oriented industry. This is because of the high rate of charge backs, or payment for products or services that must be returned to the customer because the card was used fraudulently or the purchase was otherwise disputed.

It typically costs around $400 to $600 to open a merchant account plus a host of additional fees (i.e., discount rate, transaction charge, monthly minimum charge, statement fee, setup fee, application fee, batch header fee, etc.). Also, your website will need online processing software and a secure server for transaction processing.

And because of pervasive fraud and excessive charge backs, your account can be canceled. Once you are put on the banned merchants list, you can never get off of it.

Third Party Billing

Third Party billing works by collecting the funds or processing credit cards for the webmaster using the third party’s own merchant account and then depositing the funds into the webmaster’s account.

This is best suited for the initial start-up period when sales don’t justify the expense of monthly minimum merchant account fees. Third Party systems can have minimal or no upfront account opening fee; thus can easily be set up.

Several companies charge for a flat percentage of the transaction. Some can also provide membership management tools, customer service options, integrated affiliate programs, and even sales tools like cross-selling subscriptions with other sites and merchants.

Electronic checks (e-checks)

You can now accept checks over the Internet. Online check systems can link to your website and send customers’ checking information directly to the bank for processing. E-checks can also be accepted with the right printing software and validation programs. Your customers would only input their checking account and other identification information and you would print the check on blank check stock and deposit it as you would a written check.

To use e-checks, you need an Internet e-mail connection, a SmartCard and SmartCard reader, and the requisite software that interfaces into back-office accounting systems.

E-checking is flexible, secure, and platform independent; but not many people are aware of this yet.

Phone Billing

With the use of a phone dialer, customers can purchase content from pay sites and have the cost of the purchase billed to their phone. Customers are billed only for the time they spend browsing on your site. All they need is a dialer (if they have a modem) or a simple phone connection (for ADSL and cable modem users).

This method is private and anonymous. While some companies charge a predetermined flat fee, others charge inconsistently.

SMS Billing

SMS or Short Message Service is available on digital GSM networks allowing text messages to be sent and received via the network operator’s message center to your mobile phone, or from the Internet, using an “SMS gateway” website.

SMS billing is simple and anonymous. Customers can charge content and services to their existing mobile phone bill or post-paid account. And those with pre-paid accounts, the price of the application is immediately charged from the balance of the customers’ SIM card.

You are guaranteed of a wide subscriber base, but availability of access varies from network by network and country by country basis.

Other Payment Options

While it is true that 80 percent, or possibly more, of sales come from credit card transactions, many prospects out there either do not have credit cards or who are unwilling to use them for the purchase of adult content. So you need to consider setting up alternative billing mechanisms for consumers who are wary of sending credit card information over the Internet.

Alternative payment options that are available today include check and money orders in the mail, wire transfer, debit cards, pre-paid cards, token systems, etc. Study each option and decide whether they fit on your business set-up.

A Final Word

The more the merrier.

This should be your outlook in terms of billing options. Because, in a way, adult content (porn) is an impulse — usually a time sensitive — purchase. Consider having as many payment options as possible. This will make it easier and more practical for your prospective customers to join your site and buy content. More customers means more revenue.

Don’t limit yourself to just one or two payment solutions. You must give your customers the content they want, including the choice of how they want to pay for it. You should offer other alternative options not instead but in addition to your current payment options. Too many billing options are just never enough.

Whatever plan you may have chosen to use, you should be familiar with the features of each. Always consider all the costs involved in providing multiple solutions and whether these solutions will be supported by your existing technology. Furthermore, consider their quality of service, flexibility of terms, technical complexity, and customer care support.

Find out which ones work for you and which ones don’t. Strike out a balance as you go along.

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