Many Web masters like the idea of establishing and running their own merchant accounts; but like many things in life and in business - the adult business in particular - that can be easier said than done.
So before we get to the meat of the matter, let's do a quick tutorial on "Adult Internet Billing 101": Essentially there are two basic solutions for Internet billing: having your own merchant account, or going through a third party processor. The advantages to the latter are numerous. One, the third party processor let's you use their merchant account; they handle your transaction processing, customer service and fraud control; and they cut you a check for your revenues earned. But of course, you have to pay these experts for their services, and you don't have direct control of your Web site's finances the way you would if you ran your own account. But that means you have to open an account with a bank (which can be difficult for adult Netizens) and maintain it yourself (which can be even more difficult). Because of problems such as chargebacks, you also must run your merchant account well enough to keep the bank from closing it; in which case you might want to use the services of an interface processor.
Mitch Farber, president of Netbilling Services, which provides an array of business tools for Web masters, says that there are a lot of reliable interface processors in the industry; but what distinguishes Netbilling from the others is that Farber's company offers several merchant services that usually only third party processors provide.
"They're a big deal and that's what we focus on," says Farber. "We offer complete setup from start to finish, including merchant account acquisition, shopping cart and partnership program installation, server and signup page set-up, and merchant training on all issues related to merchant account and Web site maintenance."
Founded in 1997, Netbilling serves more than 2700 merchants who run close to 50,000 sites - 80 percent of which are in the adult Internet industry. Farber says that because his company has deals with several merchant banks, it's easier for them to obtain an account for the adult Web master. "We have a 98 percent success rate in setting up adult and non-adult merchant accounts," says Farber. "Because we request to start a merchant account with a relatively low processing limit (anything under $25,000), it's easy to get a cap increase if the bank sees that the Web master is running the site correctly. Banks typically charge around a five percent rolling reserve from a guy with good credit. I know that third party processors usually take somewhere around 10 to 20 percent."
Typically, Netbilling can set a Web master up with an account within a week and have them processing within 24 hours. The company bills Web masters monthly, charging 1.5 percent and 15 cents per transaction processed. Their fees usually total six to seven percent of all transactions, which is about half of what most third party processors charge. Further, because funds are deposited directly to a merchant's account, that merchant has much quicker access to his money.
Netbilling allows its clients to select the amount of fraud control they want on their account. For example, they can choose whether they want to accept foreign credit cards, or to use a negative database. By the rulebooks, VISA allows a 2.5 percent chargeback rate, but generally banks start scrutinizing at one percent. "If one of our merchants says 'hey the bank says my chargeback rate is a little high and I need to get it down' we'll get on the phone with him and tell him exactly what he needs to do." This usually means upgrading their level of fraud control.
Merchants also have the option to use their own customer service or to have Netbilling do it for them. Because many adult Web masters don't want to hire a staff of customer service reps, this is an important and popular feature. "One thing we do better than a third party company is that we ask questions if somebody calls and disputes a charge," says Farber. "Some third party companies have customer service reps who don't question charges whatsoever. Someone could sign up for 10 adult sites, call up and say they never made any charge and the customer rep will just remove it."
Thanks to Netbilling's customer service and fraud control, only three of the company's merchants have ever lost their accounts. An impressive track record, to say the least.
