Visa Regulations Hit GloBill Hard

Webmasters may be surprised to find this message when they visit the affiliate or membership sign-up area of Signups are no longer being accepted"." A chilling reminder of the rippling effects of credit card giant Visa?s new set of regulations, GloBill is one of many Internet Payment Service Providers being forced to change the way they do business in this new climate.

" has ceased processing," reads a statement posted on The statement explains that "the sudden and astonishing turn of events" has "decimated GloBill within a matter of days.

"In what we believe is an unfortunate example of Visa abusing its power against the adult industry in a stunningly arbitrary and patently unfair manner, we were advised that our bank was instructed to terminate our processing in order to avoid threatened fees in the hundreds of thousands of dollars. ZMA Industries, Inc. is already in the process of preparing legal action in response to the recent developments and further information regarding the precise nature and grounds of the imminent litigation will be forthcoming in the future."

As AVN Online previously reported, as of October 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 of sales to 1 percent. In conjunction with that threshold decrease, Visa has raised the minimum number of chargebacks threshold to 100 per month, up from 50 per month. In addition, as of January 1, 2004, Visa will alter its "Global Merchant Chargeback Monitoring Program" from 2.5 percent of sales for international chargebacks to 2 percent, and increase the minimum number of chargebacks from 100 to 200.

In its statement, GloBill said it will maintain certain user-related systems, and that users will still be able to log in to their accounts. Users can manually add new users to their password file and obtain users lists, and commands will still be sent to servers to expire users whose memberships have ended.

"All GloBill clients who are owed funds will be responded to in writing by our corporate office in St. Kitts. In order to receive our settlement documentation and other pertinent information, you must send us a letter detailing your payee name, contact information and all site IDs that you held under GloBill by Monday, September 15, 2003.

Mail your letters to: / Settlement:

c/o ZMA Industries, Inc. :

Amory Building Victoria Road :

P.O. Box 1058:

Basseterre, St. Kitts:

West Indies:

More information will be detailed in a settlement and explanatory package that will be sent to GloBill Webmasters that send in a letter [see the statement for more detail on the specifics on the letter?s content]. GloBill discourages Webmasters from cashing any checks that they currently hold for GloBill payouts, as these checks will be returned. ZMA Industries, Inc. will issue new checks as part of its settlement process."

GloBill did not return queries for comment.

IPSPs like CCBill and PSW Billing have announced that these changes are unlikely to alter their day-to-day business, as their chargeback ratios are already extremely low. Other companies, however, have made some significant adjustments.

For instance, last week Las Vegas based Adult Revenue Service announced they will be discontinuing all free trials. Likewise, Cybernet Ventures, who is getting away from third-party billing, is selling standalone Electronic Gateway Services (also known as AC Pay or EGS Pay) and re-focusing Adult Check to solely deal with age verification and adult Webmaster affiliate programs. Adult Check will do its own in-house payment processing and plans to phase out current versions of AC Free and Gay Mega Sites programs "to focus on our core products," like Adult Check, AC Movie Pass, AC Prime, and AC Sex Toys, said president Tim Umbreit told AVN Online July 26.

"It?s unfortunate what happened to GloBill," First Amendment attorney Larry Walters commented to AVN Online. "They are another casualty of the heavy-handidness with which the merchant banks and credit card companies are treating adult material.

"The regulations that are being pushed on the third-party billers by the credit card companies could result in potentially catastrophic consequences for the industry and for Internet users. I predict we?re going to see a number of smaller billing companies go under, and the smaller Websites and Webmasters are going to have a very difficult time in the marketplace because of the increased fees, chargebacks and other regulations."

"I think this happened because the card associations are tightening down on the processors in this space," noted Epoch director of corporate communications Rand Pate. They are determined to make it difficult for anyone who is not willing or cannot comply with their rules, particularly charge back ratios. I think that's what happened to GloBill.

"It's as if the card associations are ferreting out all those who don't want to put up with their rules. To us, that's basically a good thing. Though some of these rules are, in our opinion, unnecessarily tough, we know that at the end of the day, we can basically comply with them and help our clients to do so. We have a long term view of this business and believe when the other's are gone, we will still be standing."

"To understand Visa, you must first forget your common sense and sense of fair play," Ron Cadwell posted on "The best way to understand them is to think of it this way. It is their bat, their ball, their field, and most important their umpire, and did I forget to say they get to change the rules during the middle of the game."

"What it does is it goes back to the old days," PSW Billing CEO John Lombardi commented on the changes last week. "If you?re a Webmaster, you give the people what they paid for, let them cancel when they want to, and you don?t do blind cross-sales. Basically, don?t screw your customer, update your members areas and keep your chargeback rate down."

So what does the future hold?

"If any of this is being pushed by the US government," Walters theorized, "they have to be careful what they?re asking for, because if all of these smaller players go under, they are going to look for alternative processing or try to come up with means other than credit cards to sell adult material. Then you?re going to end up with a number of alternative currencies on the Internet that if they tale off could potentially replace the U.S. dollar.

"Look at how the gaming industry approached this issue," he continued. "They created a number of online currencies, such as E-Gold, where you create a virtual account and have some unit of currency that represents dollars. Whoever is pushing this, be it the U.S. government or credit card companies, could be putting themselves out of business. They are forcing the adult and game communities to come up with innovative solutions.

"All of this has the unfortunate impact of lessening the availability of free speech and protective communications to the end user, who now can?t use his credit card with certain companies," said Walters.