In the 24 hours since announcing they had acquired the Jettis credit card processing portfolio, Paycom has had positive responses to the deal and queries about the transitions from prior Jettis clients looking to integrate Epoch features, Paycom director of corporate communications Rand Pate said July 30.
“As we had hoped, the response to acquiring the IPSP portfolio has been very positive,” Pate told AVNOnline.com. “We have received several e-mails about the transition from previous Jettis clients who are anxious to proceed with the integration of Epoch's premium features. Clients of Epoch have been overwhelmingly supportive and this move has strengthened our position as a leader in the IPSP arena.”
Pate said that changing join form links to Epoch is “the one largest area of transition” for previous Jettis clients. “Epoch offers a more sophisticated integration method as well called FlexPost which is an API that may be obtained from tech support,” he said. “New passwords and company identification codes may also be obtained by contacting tech support.”
Pate said that there would be “a few issues to revolve,” as is so often the case in any similar transition. Jettis is still responsible for all aspects of any credit card transactions processed by Jettis prior to the date of sale to Paycom. Paycom and Jettis will continue to compete in the ACH check processing and credit card gateway markets, but under the terms of the acquisition deal Jettis will no longer function as an IPSP.
Both Epoch and Jettis systems are robust enough that “so far the migration has been virtually unnoticeable,” Pate said. “Everything is running smoothly, and everyone’s conversions and new joins look normal to both companies.”
But he also said that the Visa/MasterCard tightening-up on the IPSP business and the requirement to one percent chargeback minimums had no role in the decision to acquire Jettis. He said the new rules and tighter regulations affected all IPSPs “in similar and unique ways,” but that the industry had shown “a lot of changes in [its] space” in recent months.
“Several operations lost their ability to continue and at least one was bought out by a public company only to be sold months later after sharply declining stock values forced the public company to reevaluate their decision,” Pate said. “It is difficult to predict wether other mergers are on the horizon. I do believe that if an IPSP can forecast their inability to maintain their business into the foreseeable future, they should explore options which would protect both them and their clients from catastrophic problems.”
He said Jettis wasn’t forced to sell because of regulation problems or compliance failures. “This transaction,” he said, “was purely a business decision.” But he also said he was “not privileged to disclose” the actual reasons for the deal at this time.
Pate did say that acquiring Jettis means a meaningful addition, based “in no small part on the excellent and professional way that Jettis had managed their third-party transactions,” he said. “Jettis has always represented themselves carefully and within all card association rules. We are very happy to have Kjell Petridis and Ken Lawson on board with Epoch / Paycom as our exclusive IPSP consultants. They will help insure a smooth migration to our platform.”
Some early reaction in the online adult Webmaster community pondered whether the Paycom/Jettis move equaled less actual competition and choice for IPSP-seeking Webmasters. Pate said that while the move does equal one less numeric choice, consolidation is natural evolution for any growing industry – and presents challenges including that of other IPSPs getting down to better services and products.
“Those who offer the best services will thrive as other entities struggle to compete,” Pate said. “However, fewer choices is not necessarily a bad thing in this space. The way some of the high-risk card association policies are structured, having an account at an IPSP which has difficulty managing your chargeback ratios could, indeed, cause you to lose your entire business with other IPSPs you may be working with, even if the other IPSP has your ratios under control. Although it is wise to have a back-up processor to protect yourself, it is not necessarily wise to have your business too spread out, or with an service that you can not trust to maintain your ratios within acceptable limits.”
What, Pate was asked, were the biggest risks to continuing to do business in conformity to the new, tighter Visa/MC chargeback regulations? He said that a “universally accepted” fact is that high commissions and competition between various pay-per-signup programs have put the industry into the space it is now.
“In the past seven years,” he continued, “acceptable chargeback ratios have gone from 5 percent to 1 percent. While PPS programs may attract more affiliate fraud, scrubbing and risk management systems have also become more sophisticated about identifying that fraud. The proof of this is that the vast majority of large programs out there are extremely happy with their business models now.”
Pate wondered aloud which business has lower chargeback levels than the adult Internet. “We feel that we have done an excellent job, along with our clients, to meet the card association rules and maintain excellent throughput and continuing profits,” he said. “Although the biggest risks to our business are still affiliate fraud, fewer IPSP choices also mean fewer places where known fraudsters can send their transactions.”
He said systems and experience are the two things most required from the IPSP point of view when it comes to watching overall risk management. “From a Webmaster’s standpoint, it is necessary to determining what invites fraud and find ways to stop those practices,” he said. “We continue to be advocates of a registration process of affiliates to find ways to blacklist bad resellers.”
