As the actuality of Internet Billing Corp. (iBill) losing a bid in court to keep First Data Bank processing its adult Internet credit transactions took hold September 22, reaction around the adult Net community seemed above all to grope for hope that iBill had suffered only a temporary setback and not a permanent and irrevocably damaging hit.
Earlier September 22, a New York state court rejected a motion by iBill to keep First Data processing its online credit transactions and help it make a transition to another bank, following the expiration of a contract between iBill and First Data earlier this month.
Calls to iBill from AVNOnline.com have continued to go unanswered thus far.
But a First Data spokesman who asked not to be identified said the bank gave iBill "multiple notices" that the contract between them wouldn't be renewed. "iBill sought court intervention to require First Data to provide processing after the expiration of iBill's agreement. On September 22, the court denied iBill's request for a preliminary injunction against First Data. First Data is no longer processing payments for iBill."
Some adult Net players told AVNOnline.com they believe iBill may have a contingency plan for just such an event, while others said there was a prospect of some iBill clients or sponsors dropping considerably because they use iBill for sizeable enough portions of their business.
"I think I would be very surprised if they didn't have a backup strategy to hold them over between now and October, which is when the new bank contract comes into play," said Al Case, chief operating officer of DuoCash, which signed a deal with iBill a week before the First Bank court motion, a deal to let iBill client merchants accept prepaid telephone cards as a credit card alternative.
"My understanding is they have a new merchant bank which is supposed to start with them in mid-October," Case continued. "Knowing those folks as I do, I would be shocked if they didn't have some bank in the wings, potentially at ridiculous rates for them, but who would tide them over until then."
"The smart ones for a long time have always had backup processing," said Tom Fisher, executive vice president of automated adult credit payment processor CCBill. "Our hope is that iBill will be okay, and that this is a temporary situation.
Fisher said his company didn't have firsthand knowledge of the full extent of iBill's dilemma, nor had CCBill begun experiencing any large influx of queries from existing iBill clients looking for processing alternatives just yet.
"Other than what we read on the [message] boards and on [AVNOnline.com], we don't have any firsthand knowledge," he said. "Obviously, when a third party processor runs into difficulty, the clients of that processor start looking for other options for running their transactions."
Adult Webmaster affiliate program SEXMoney.com said the iBill dilemma won't affect them specifically, since they do their own payment processing, but it was likely to affect "a whole lot of people," as North American marketing manager Matthew (Chimpmunk) Sclier put it. "It's a dilemma that hopefully will clear up in a positive way for everybody," he said. "And, hopefully, the outcome will be good for all parties involved. Everybody wants the best for everybody. Nobody wants to see anybody go down."
Case said DuoCash had known "for some time" that First Data was looking to shut down iBill – but he also said DuoCash knew iBill was negotiating with "some new banks," though he didn't suggest details. "So, our concern isn't that iBill is going to go out of business, or go bankrupt, or anything like that," he said. "Not that we have any inside information. But we've been working with them very closely. And we know they've been in negotiation with other banks."
Case said the First Data situation didn't mean DuoCash's new phone card alternative agreement with iBill was in jeopardy. "I think we're all systems go," he said. "I don't think iBill's customers have anything to worry about. I think this was First Data pushing an issue." That issue, he said, was a lot of merchant banks wanting to stop doing business with adult companies.
"It's one of those tough decisions that represents a lot of revenue, but it's a situation where the constituency or the board doesn’t want to do that business," Case said. "It's awfully hard for some corporate directors to go home to their families and say, yes, we're doing business with adult companies."
The First Data spokesman said the bank evaluates their lines of business "regularly… to ensure they are a good fit for the company," and determined that processing adult entertainment payments "is inconsistent with our core values."
But Case added that that was good for DuoCash and any other alternative payment processing programs that offer something different than straight credit card processing. In large part, he said, that was because there have to be new ways to represent cash in cyberspace.
"First Data happens to be the largest to say no more adult but they won't be the last," he said. "And I think we're at the point where what I will call small transactions, transactions under $500 or under $1000, are going to have to be treated differently in the economy than transactions larger than that. Credit cards are one way, but credit cards are ways to move substantial amounts of money. DuoCash and things like it are a way to move small sums of money as though it was cash. And I think it could be the wave of the future for a good long time.
Another adult Website affiliate, Montreal-based BrainCash, said it was possible for "some major sponsors" to see a drop-down because they use iBill for major portions of their business, though BrainCash did not suggest just who or how many those sponsors might prove to be.
BrainCash, in fact, processed through iBill until two years ago, when it shifted to Epoch Systems and CCBill, according to director J.F. "We're not very happy with the iBill situation," he said, "but we did the good move two years ago."
J.F. said BrainCash moved away from iBill two years ago – at a time when iBill had undergone a management crisis said to have been tied to a possible move away from adult Internet work – because they were unhappy with iBill's processing, but that didn't mean BrainCash liked what was happening to iBill now. "We still have a couple of rebills with iBill, and this is a really bad situation," he said. "But you can imagine if we were still with iBill with our actual signups, it would be another bad situation for us."
