Category Archive: 'Card Processing'

Why You Should Never Say Your Subscription Site Is ‘Safe & Secure’

Date: May 17, 2012 Topic: Card Processing, Technology for Subscription Sites Tags: , , ,

This week, Attorney Lisa Dubrow spoke to members of our sister site, Subscription Site Insider, about recent government crackdowns on companies collecting customer data online. One of her best tips was that no subscription or membership site — no website at all, in fact — should claim their site is “safe and secure.”

Of course, we should all be using encryption technology and SSL certificates on our e-commerce and subscription payment pages (or s-commerce pages, as I like to call them). As Dubrow explained, you should definitely state whatever safety measures you take, like “using encryption technology.” But stating outright that your site is “safe and secure” can get you into a lot of legal hot water, especially since no site is that secure. We’re all vulnerable to hackers and identity thieves, and any security breech can open you up to a lawsuit if you claimed to be “safe and secure.”

You’ll also want to use those secure icons from vendors like Verisign and TrustE only if you have a licensing agreement with the vendor. And you should definitely test your wording and icon placement — different audiences respond differently to such assurances.

For more information on data collection crackdowns, privacy policies, and how to best notify your customers to any changes in your terms of service, check out the instant replay of Dubrow’s presentation.

Posted by MinalB21
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1% Anxiety: When Chargeback Rates Can Be Higher for Subscription Sites

Date: May 3, 2012 Topic: Card Processing Tags: , , ,

For a while, paid content sites have been told to keep their chargeback rates below 1%. (Chargebacks, for those of you who don’t know, occur when a customer calls their credit card company to say a charge was unauthorized–they are not cancellations or refunds.)

It’s a good-enough rubric, since high chargeback rates can get you flagged for merchant malfeasance by credit card companies. However, it may not be as applicable for niche publications.

I recently spoke with leading payment processing expert Paul Larsen, who informed me that the 1% rate is really for high-volume businesses — sites with more than 10,000 transactions a month. That’s because credit card companies take volume into account when flagging merchants. For example, Visa only flags a merchant with 100 individual chargebacks in a month when those 100+ chargebacks make up at least 1% of the merchant’s total transactions. If you have fewer transactions — say a subscription base of 3,000 — and 100 chargebacks, you’re probably not going to get flagged (although you may want to read how to minimize your chargebacks on our sister site, Subscription Site Insider).

Of course, rates vary by credit card company, and some, like American Express, have a complex algorithm that’s impossible to predict. And any chargeback is bad news, since you’re not only refunding money, but also paying a transactional fee and steep fine. Better to issue a cancellation and/or refund and ensure customer goodwill than wait for a chargeback. But a few here and there shouldn’t put you out of business.

Posted by MinalB21
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Increase Retention & Revenues With This Lesson From Consumer Reports Online

Date: February 23, 2012 Topic: Card Processing Tags: , , , ,

Our sister site, Subscription Site Insider, just came out with an exclusive case study on Consumer Reports Online this week, jam-packed with 18 tactics and lessons that can help any subscription marketer, and I wanted to share one of the best ones with you.

Consumer Reports Online, which has been able to increase their subscription revenues by charging separately for print and online subscriptions, employs one of the most lucrative best practices by using an account updater service for their payment processing. For those of you unfamiliar with account updater services, it’s a simple software service that runs all your subscribers’ credit card numbers once a month against a list of everybody in the United States whose Visa/MC number has changed that month for whatever reason. The software then updates the customer’s credit card number without bothering the customer.

This practice has been known to significantly increase retention and revenues for subscription and membership sites with minimal effort.

For more tips on dealing with chargebacks and credit card declines in order to increase retention and revenues, check out the on-demand video talk by Paul Larsen on Subscription Site Insider. For more killer marketing tips, read the full case study on Consumer Reports Online now!

Posted by MinalB21
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New EMV Credit Card Technology May Increase Online Fraud

Date: February 2, 2012 Topic: Card Processing Tags: , , , , ,

MasterCard and Visa recently announced their plans to start EMV technology adoption in credit cards, 15 years after the technology was developed (it’s already been adopted in many countries, particularly in Europe).

EMV (which actually stands for Europay, Mastercard and Visa) uses a digital chip to encrypt card data, much more secure than the current magnetic strips. The push will mainly be for bricks-and-mortar stores to update their technology to read the cards by 2015. However, bricks-and-mortar updates have very serious ramifications for online merchants.

Randy Vaderhoof, Executive Director of the independent nonprofit Smart Card Alliance, spoke with me by phone today to explain how fraudsters migrate to online fraud when offline security is increased. Thus, financial institutions abroad, particularly in the U.K., have issued hand-held readers the size of a calculator to customers with EMV cards. Customers then scan their card, which issues a one-time password they have to enter to verify any online transactions. Some banks have also issued a “display” card, which are battery-powered cards with a display and button the cardholder can press to generate a one-time password.

There’s no news yet on what card manufacturers or financial institutions will be offering cardholders for online transactions, but subscription sites should start thinking now of how they can increase their security and decrease card-not-present fraud, which is likely to increase in the near future.

Posted by MinalB21
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FTC Case Could Affect How Payment Processors Address Chargebacks

Date: January 12, 2012 Topic: Card Processing, The Law & Paid Content Tags: , , , ,

In these economically-strapped times, the Federal Trade Commission(FTC) is cracking down not only on merchants who swindle consumers, but all parties involved in fraud, including payment processors.

Recently, a U.S. District Court for the Eastern District of Texas banned the use of “remotely created payment orders” by Landmark Clearing, Inc. “Remotely created payment orders” allow merchants to enter a client’s name and bank number into a form and are cleared like a paper check, except that in lieu of a signature, the words “Authorized by Account Holder” or “Signature on File” appear. Federal banking regulations require the creator of a remotely created payment order to have the express authorization of a consumer to process the debit, but they are not subject to a lot of oversight, which makes them susceptible to fraud.

The FTC seems to have been tipped off by the exceptionally high chargeback rates Landmark’s clients were producing, sometimes higher than 80%. But the FTC didn’t just go after the merchants — they went after Landmark as well for promoting a service for merchants “with a high percentage of overall returns”.

Landmark is now banned from processing remotely created payment orders. Which means that sites that rely on recurring billing should be 1) seeking to reduce their chargeback rates as much as possible and 2) keeping an eye on their payment processor to make sure they’re on the up-and-up.

For tips on how you can reduce credit card declines and chargebacks, take a look at this on-demand video on our sister site, Subscription Site Insider.

Posted by MinalB21
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