Giorgio_Xo

Has anyone thought of suing VISA over the $750 'adult tax'? VISA's adult policy has flaws that could be attacked, especially with VISA's oligopolist status. PayPal's decision to drop adult contant is directly related to this tax. Any thoughts?

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chupacabra

yep, just use ccBill... they refund the entire $750 amount back to you, making it a moot point for us..

Tanker

its not a tax everyone that has a merchant account has to pay a fee


the adult industry has always avoided getting a merchant account by going through a third party processor now we have to apply just as they do


Tanker

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Rand

Well said Tanker.

And let's not forget... you don't bite the hand that feeds you.

It's a ~$2.06 a day cost-of-doing-business.

You gotta pay to play.

Giorgio_Xo

I'm sorry. From what I understand, this fee is only charged to adult related merchant accounts. So any retail or service business that has a merchant account must pay this? My sister has a store and -I believe- doesn't have to pay this fee. I'm confused.

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Kimmykim

Yep, you are confused, unless your sister is running a store selling some sort of product that falls into the high risk category.


It's not a tax, it's a simple fee they require in order to do business with them in the high risk category... if you don't want to pay it, then don't take Visa is the way they look at it... and given the number of Visa cards in the world, I'd say they have a point.

HairToStay

Visa only gets $500 of that fee; the bank/third-party processor gets $250 for the privilege of having to report to Visa each month.

Only 'high-risk' businesses have to pay the Visa registration fees, and that isn't limited to just adult sites.

It's extortion and it's not fair in any sense of the word. Neither Visa nor the banks lose ANY money on chargebacks, yet they claim they need these fees to make up for their losses.

In the event of a chargeback, the originating charge is eaten by us, the merchants. The chargeback fees -- ranging from $25-$100 - are eaten by the merchant. How does Visa or the bank lose money?

Why is it some credit card processors make merchants pay $1,000 to Mastercard when Mastercard has not levied those fees yet? Not only that, one processor tried to make me pay $750 to Visa, $1,000 to Mastercard PLUS $250 to them for processing fees.

Yes, I've changed credit card processors, even after an 8-year relationship with them.

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Giorgio_Xo

Then I wasn't wrong... you mentioned 'high risk', So there is a difference. The fee constitutes 'mandatory insurance'. I just quickly checked with Wells Fargo Online. No mention of the $750 fee.

Not accepting VISA isn't that simple. VISA holds over 45% of the card marketplace. VISA is currently being sued by retailers for 'monopolistic/oligopolistic practises' (forced debit card acceptance).

From what I remember from my college days, VISA, MasterCard, et al. cannot by law - as banking institutions- refuse transactions based on product or service (unless that product or service is illegal).

Oh well. Just dreaming.

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stocktrader23

Well said.

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psyko514

Wrong.

Quote:

Originally posted by HairToStay In the event of a chargeback, the originating charge is eaten by us, the merchants. The chargeback fees -- ranging from $25-$100 - are eaten by the merchant. How does Visa or the bank lose money?

When a chargeback occurs, there are two banks involved. The issuing bank (the cardholder's bank) and the acquiring bank (the bank that processes the transaction).

In both cases, there are associated fess for a chargeback. Including, but not limited to, paperwork and employees' salaries.

The average cost of a chargeback on each side is $25 US. The issuer eats up those fees and only charges an average of $2 to the customer in case the chargeback is NOT resolved in the customer's favour.

The acquirer passes the fee on to the merchant being chargedback, ie: your processor. Your processor passes the fee on to you.

In most cases, the transaction will be written off by the issuer if it's less than $15-$25 US. That amount can vary based on the customer's standing with the bank and the type of transaction.

So yes, the issuer loses money. Since the definition of a high-risk merchant is someone who is at a high-risk of a chargeback, there are fees associated for said merchants. Completely fair and not extortion.

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Giorgio_Xo

I would agree if the high risk chargeback was done by a per transaction basis, but in this case it is a blanket assumption.

On another note, I remember reading a post of a lady that owned an escort service. She would religiously have carbons and ID information of each client. (I may have the numbers slightly off) She continued to post that alot would hire an escort using a credit card and then chargeback the service. Each time she would fight the chargeback with the personal information and the signature and in a period of several years she only lost a handful of times.

Why not have a better service that made chargebacks nearly impossible? (I know that sounded dumb) Is there a way to harvest personal information that would prove the client bought the product? It sounds like there is a need of a merchant processor that is willing to fight each and every chargeback. Obviously a merchant doesn't since they make big bucks charging the client a fee. Another reason for adult webmasters to pool together their resources and fund a nationally chartered bank.

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psyko514

http://www.verifiedbyvisa.com/

it's in the works. the short version is this: you'll choose a password for online transactions. if the merchant supports VBV, they'll ask for your password.
your issuer won't allow you to chargeback a purchase done at a VBV merchant for "do not recognize" because it was done with your personal password. same idea as cash advances... your issuer won't let you charge them back because you used your PIN.

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AmeliaG

I think a suit with a good enough and large enough legal team would beat Visa on this. I just don't think it would necessarily be worth anyone's while to foot the legal bill and most lawyers are unlikely to bring a class action suit to protect the interests of webmasters working within the adult marketplace.

I don't think that having better proof that the person made the sale would make a lick of difference. I've been pretty fortunate on the chargeback front, but even one makes blood come out of my ears. I had a case where the person repeatedly emailed me telling me they had maliciously chargedback on purpose and that they most certainly had made the charge. Visa was uninterested. Of course, I know that person has had some trouble buying anything on line since then they have been blacklisted . . . so that is certainly consolation.

--Amelia G

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HairToStay

[QUOTE]Originally posted by psyko514
[B]

When a chargeback occurs, there are two banks involved. The issuing bank (the cardholder's bank) and the acquiring bank (the bank that processes the transaction).

In both cases, there are associated fess for a chargeback. Including, but not limited to, paperwork and employees' salaries.


************************************************

Yes, this is called a normal business day. Even if they didn't process the chargeback, you'd still be paying that employee's salary. They are handling paperwork which is a normal part of a bank business. Is someone working overtime to process this? Nope.

They are allowing legal fraud. They allow customers to say "hey, this wasn't my charge" even when there are 30 charges that month for porn sites and the card never left their possession. A merchant can not prove the transaction was real unless it's for tangible goods. Rather, we can prove it; the banks won't accept it. Logs of the IP of the original order, logs of that person going into your site and stealing, then logs of their real IP from email -- WE know it was them, the banks won't believe it. At least in the case of Visa/Mastercard. American Express will side with the merchant if you have enough proof and push hard enough.

On the Verified By Visa front, I doubt many third-party processors will use it as you can't rebill. For merchants like myself who DON'T rebill, an option to use it would be welcomed, but I can't see any of the big ones offering it to us.

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psyko514

It's not a normal business day. There is a department staffed with employees to deal specifically with chargebacks. Therefore, there are costs associated with chargebacks. Therefore, the bank loses money.

Legally, you cannot come up with enough proof that the cardholder did the charge in question. Proving that the IP address used to access the site is the same used at sign-up is worth dick all. If I steal someone's card, sign up from home and access from home, does that mean that the transaction is valid because both IPs are the same?

The only way to prove it is to access the customer's ISP logs to see that the IP in question was assigned to the customer... good luck doing that. Until then, Visa has to continue to allow customers to do chargebacks, because we can't turn around to our customers and say "I'm sorry, I think you're lying... you did download that porn".

You're in the porn business. This is one of the risks of the business. Kinda like when you open a store, you risk having things shoplifted. If you don't like the risks associated with the business, get out of the business.

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HairToStay

I don't have to "get out of the business" but I also don't have to pay the extortion fees, either.

So we eliminate chargebacks and we eliminate the chargeback departments of all banks? So, let's put people out of work EVERY business has chargebacks associated with it, the adult industry has more.

Why should I allow this to continue? It's theft. People who legitimately sign up for a website, download all the content, then claim a chargeback are stealing plain and simple.

By all rights, I should be able to file a complaint with the police department or attorney general each time someone steals from me.

Right now all I do is put them on several fraud databases, email them with threats, have my attorney send a letter, etc.

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Kimmykim

I am not sure what Wells Fargo has to do with this? The last I heard they were not a third party processor NOR would they issue merchant accounts for high risk transactions like gambling or porn, so perhaps I am missing something here.

Visa is well within their rights to do this folks. Not something that I like, you like, or that either of us can change. As long as they apply the fees EQUALLY to the processing companies there is not much you can do about it.

After all, what are you going to do? Sue them into deciding they won't process for it at all?

That would be wise.

HairToStay

I think they should have given adult sites -- or high risk accounts -- the option of using Verified By Visa OR paying the $750.00 fee.

Surprised Discover hasn't levied any fees yet. I know Amex claims they won't process adult, and JCB definitely won't (they never told me that until I left my old processor and was going to use them as a stand-along processor) touch adult.

I've never accepted Diner's Club only because I was afraid to tell them what my customers really wanted to eat

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Kimmykim

The problem with that Hair, is that Verified by Visa was not operational when all this came to pass.

Verified by Visa does not stop rebilling by the way...

and the banks are being very cagey in explaining just what VbV means to the consumers. Bank of America is trying to get people to register their cards now but there is no wording regarding chargebacks anywhere you'd prominently notice it.

A bit of a disclosure trick they've learned from adult perhaps.

rowan

Hmmm... PSW billing accepts JCB. Can't say I've ever seen a signup from a JCB card, but it's there as an option on my join forms.

HairToStay

JCB will accept adult if you go through another processor. I used to process through CSI and they accepted JCB through me with no problem. My current processor does not have a relationship with JCB so I had to ask for my account number to process through my own merchant account, and was turned down flat.

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chupacabra

huh... reading that rang a bell for me; ccBill accepts JCB as well, and i haven't ever had a signup using JCB either. what is oddest of all, is that a remember getting a few emails from a potential customer in Tokyo who was trying to sign up via his JCB card, but was getting an error generated that told him "Sorry, Diners Club is not accepted here". he ended up using a VISA card to sign up, but it was strange nonetheless... i hadn't ever heard that JCB did not allow adult processing however..

HairToStay

It doesn't stop it, but it doesn't allow it.

The 9-digit PIN code assigned to the customer is never given to the merchant. The number is seen by the bank only. Therefore, a merchant can not do rebills through Verified By Visa. Without that PIN code, you can't use their service.

I specifically asked Visa what it meant to a merchant like myself, and they told me I would not receive chargebacks with the reason of "I did not place this charge" IF I used Verified By Visa; however, that only applies to password and "Internet Entertainment" as they call it.

For my video/DVD and other tangible good sales, even with Verified By Visa, I am subject to chargebacks for non-receipt of merchandise. Fortunately I use UPS and require a signature on each package which has saved me on the only 2 chargebacks I ever received for non-receipt of merchandise.

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Toker

On the lighter side Visa lost between 12 and 14 percent of their adult bizzzzzz and it cost their stockholders a pretty penny...

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