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Ok - back in the office. Billing has long been a hot topic because of the regulatory changes we've experienced in the past few years and how they've not only affected the ability of processors to continue doing business, but also how it's affected the ability of web businesses to continue in light of losing months worth of revenues when payment processors go up in smoke.
It's glaringly evident now that business owners need to be intimately familiar with their payment processing system and what risks are involved with different methodologies.
There are a lot of misconceptions out there regarding telephone billing. How does it really work? How do you follow the trail of payments? What are reasonable expectations for the length of time to get paid on those transactions? How much does it cost me to use that payment option? Am I profitable at that cost structure? How do I set pricing for telephone payment options?
These are questions that you may not know the answers to without either having experienced them first hand, calculated yourself, or done some investigatory work to get straight answers to them. I believe most newbies do implement this payment option without understanding the inherent risks associated with this payment method.
First off, the settlement on those transactions isn't even in the same ballpark as it is with credit cards or check payments. The consumer may not get a bill for their telephone service for days or weeks after the initial subscription or transaction. Then they have a period of time to pay their bill. Once their provider gets payment, and "wait" for the check to clear - they in turn, will pay out to the provider of this service. That provider then has to reconcile the transactional data - not all of which is easy to ascertain from the reporting that is given from the telecoms. They will then, in turn, take their piece of the pie and remit payment to a CCBill, or Ibill. Then we have to try and reconcile THEIR data to our transaction reports and add in those revenues to webmasters weekly billing cycle. That process can take months.
The cost of processing telephone payments is substantially higher as well. In the range of 6-14% higher than the cost for credit cards and check payments. That's only the processing fee's. That does not take into account the "uncollectables" that are a part of the game with telephone payments. When you couple the fact that you will not be paid out nearly as soon, you won't collect funds from all transactions, and that it's a much more expensive option - you're well suited to raise the price of admission if you choose to accept telephone payments.
For well established programs with healthy revenues, they may be more in a position to be able to wait longer for payouts and absorb additional cost.
Checks are another issue. How do seemingly so many consumers get away with not paying? Well, the system has gotten substantially better in recent years with settlement times being shortened significantly - but still a higher risk payment option than credit cards. Chargebacks/refunds from cc's may account for a few percentage points put together, but with checks - you may experience a 10-20% non payment or uncollectible rate.
The important thing is to be aware of what is going on - know the risks/benefits of the options available for your business. Weigh out those options to make decisions on what to use, what not to, and whom to entrust your business to.
Andy
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