Love your branded program Ron
my name is Ron also
Maybe I am reading these posts and stuff wrong, and I am sure this is shady, but sometimes rules seem weird to me.

If I understand this correctly.
As the chargebacks get too high over 1%

A chargeback will result in:

$100 fee to the paysite program owner
$25 awarded to the bank that charged back

paysite program owner obviously doesn't want to pay $100
Bank loves there $25 chargebacks

Why wouldn't the paysite owner pay off a bank $50, the bank
makes twice the bling bling, and the paysite program
owner saves 1/2 the money from a chargeback
only costing them $50.

I look at it like this, if a bank says we have to charge $25 cause we have paperwork, and employees blah blah, just say tell you what, charge me $50 and no one ever canceled with me, do we understand each other?

I'm sure that's a lot of banks and a dream, but you can see how money can talk.

The issuing bank gets 80% of the chargeback fee - so a $100 chargeback would yield $80 to the bank issuing the chargeback.

If you know a way to bribe all the banks in the USA, you definitely know more that I :)

btw, great name!! LOL

Maybe I am slow, but I am still having trouble with the concept of reducing transaction volume to limit your chargeback exposure. :helpme :glugglug

Then Ron you need to bribe visa
tell visa hey $100 charge
you know the bank gets 80% of that so visa why let the bank hog it all, let's say these chargebacks get re-reversed, and I'll give you $50

How many months into the membership do most chargebacks occur?

I know I have heard mention of a master visa account
and also mention of the 1% affecting 1000 chargebacks or more

why not just have like 5 different visa merchant accounts
and when 1 account in the month gets around 900 chargebacks, then change to a different merchant account.
that way you never go over the 1000 quota on any of the accounts

I'm sure this would not work as they all go together into a master account

It's not to reduce transactions, it's to start out with fewer transactions to begin with.

If a free trial cancels, no processing is done with the bank for a free trial, hence no exposure. This way you only deal with monthly memberships of folks who already have seen the site and want to have a monthly membership.

If a paid trial cancels, each and every paid trial is processed with the bank, that's exposure and then you have the monthly tranactions as well.

If you ever tried to get a high risk merchant account you would understand why 5 merchant accounts would be difficult to get.

You need to submit full financials and sign personal guarantees. They would never issue a large volume of high risk merchant accounts to one individual.

I figure I have a good shot in this industry.

The name Ron can go far in this biz.

ok, I am dense then.

That sounds completely bass-ackwards to me.

:2 cents:

If you do the math

$40 per month
100 signups

$4000 per month
1 chargeback extra $100

That's $100/$4000=2.5%
so on average everyone would agree
before they had to stay around 2% chargeback
and now they have to be at 1%.
On average then we have to pay
for 1 chargeback per 100 if we
were around 2% pace before, so
$100 per $4000 means 2.5% loss of
income over previous months, so
doesn't this almost seem insignificant
if you look at it this way? I mean
couldn't you just then take
$40/mo. multiply by 2.5% and
get $41. Charge the surfer $41 per month instead
and you will make up that first $100 per surfer you didn't
plan on. Basically adding $1 to the monthly dues
wipes away the chargebacks. Another way
to look at this is Banks have overdraft fees
let's say of $25 and if fraud is high and they have
to pay on stolen cards and they are higher than expected
then overdrafts to the customers goes up to $26 or $27
whatever they have to do.

I guess the way I see it is if people had to stay around 2.5%
and they remained at 2% and after this ruling with no program changes
they still are at 2% then they are 1% over what Visa allows, meaning
they paid for 1 chargeback fee $100 they didn't pay before, that's
that's 2.5% of the $4000 generated. Actually many go over 1 month for recurring
so that would make it less than 2.5% much less. The only reason I can see
it hurting someone is if they have just a ton of chargebacks.
Percentage wise though, unless I did the math wrong just seems like you add
$1 onto the monthly dues.

lol

But none of this BS applies to those with under 100 chargebacks per month right?

Congrats CECASH!

I thought that lowering the prices and the free trials were being enforced by visa...

The fact that a lot of sponsors are lowering their prices all of a sudden by $10/mth goes to show how they themselves KNEW the were overcharging surfers all along.

Lowering the price is a decision made by the paysite owners.

Lowering the Webmaster payout is a decision made by paysite owners.

Doing away with Free Trials is the processor's decision.

All Visa did was lower the acceptable amount of chargebacks before chargeback fees and fines are issued.

Hope this helps - I'm going to sleep now -we'll pick this up tomorrow :)

nite all and peace out!

what a load of crap

I thought people were getting rid of free trials and lowering prices just hoping that they would get less chargebacks.
I am curious what the chargeback % is for most companies out there. I think if this is the case lowering your monthly dues from $40 down to $30, you are losing 25% in profits, you will lower webmasters payout, meaning they will go to another program like cecash that still pays well, so you lose a lot of your webmaster business. All of this just cause of a few chargebacks, unless I am wrong, are chargebacks % really big?

It sounds like the sudden panic and change in payouts, and lowered costs would cost more to the company, than a few $100 charge back fees.


$100 charge per 100 members =2 month average stay

$100 charge extra per 1% extra chargeback per 200 months of charges.

Just seems like a small % again unless your chargeback % is high like way over 2% there has to be a happy medium of the max you can charge a surfer and still get a lower chargeback %.

put the crack pipe down.

quiet, do you agree with FM?

sorry don't know what your comment means
it makes perfect sense.

you don't hope when you do business,you do research

Apart from other flaws you have a very basic problem with the math. Read Epochs post on how CB ratios are (currently - bound to change as it's far too open to abuse) calculated.

oh and 100 (mostly well written posts too - rare but nice) :)

cool tupac is alive

Tipsy please explain I don't understand your post
are you saying people are way over 3% chargebacks right now?

by the way the tupac comment was off a signature, didn't see it on tv or anything.

Unless lack of sleep has made me fuddled CB ratios are not done on dollar amount (or at least not from Oct) but on transaction so price does not come into play when working out CB %.

dude, you're only talking about cb fines. but the main issue is that you will risk losing your visa processing permanently, if you are simply unable stay either under 1% or 100 cbs a month.

that would include all new signups, and all your rebills. period. ie: end of your business.

I guess all I am saying is this
Take the average money you make per month now
then when the ruling takes affect add up all of your charge back fees.

Take the extra fees divide it by what you make for the month.

What would that % be of lost income
is it 3% maybe 5%?

You can just up the monthly price 3% or 5% to offset the new losses your company didn't deal with before.

All I am saying is just add up what you are really losing in chargebacks every month from this $100 fee. Add up all of the $100 fees and see how big of a piece of the pie of your total gross earnings it is, I am just guessing it won't change your life or be the end of the world, just find another twist or way to get another 3% back somehow. So many angles to the paysite business, find a way to increase 3% through other angles.

Ok I missed the part about losing your business forever
if that is the case then it's important to stay below the 1%

I'm sorry fm but i still disagree with you.

100 $1 trials
40 converted members
140 transactions

then suppose that one of those members charges back. *if* he charges back both of them (which is not always the case) then you have a 1.42% cb ratio

if he charges back only the recurring transaction you have a .7% cb ratio

if you do free trials you have:
40 converted members
40 transactions

then supposed that one of those members charges back. you have 1 transaction chargeback. which leaves you with a 2.5% chargeback rate.

Now amplify those numbers times hundreds or thousands... bottom line is that you cant argue with math. free trials result in a higher chargeback % regardless of the fines involved.

a) Have we done this in past history? No
b) Would we consider creating a small site that previews our paysites and do a $1.95 non recurring 2 day membership on this teaser site to keep an insurance policy on our program and protect our affiliates recurring? Yes I believe we would. I think if we do it a certain way the affiliates in our program will side with our decisions.

Hooper, your math is a little biased. You need to factor in the fact that in your example 60 more people have a charge on their cc statement on the paid trial as opposed to the free trial. Some how you assume that non of those people will chargeback that is simply not a valid assumption. Also, the other 40 people on the paid trials have 2 charges on their statment.

Well, I took the afternoon off yesterday... and I got to this post in this thread, and decided to stop and make a comment.

Of anything that's been said here so far in my reading, this is the most true statement and what concerns me the most. For many reasons.

Hooper is right.

medhat.

chargebacks on the trials themselves are virtually nonexistant.

you could charge people $1.00 every single month for the rest of their life even if you didnt get their permission to bill them at all and your cb ratio would likely still be compliant.

Thank you KK - I have been forward numerous emails from Webmasters that display that this is going on and I have forwarded these emails to many large programs that pay by this model.

Hooper are you aware that Medhat is the CECash tech that handles most of CE's credit card activity and lives and breathes statisitics?

kush2 I'm sure you have handled more than the tens of miilions of dollars that CECash's tech, Medhat has and have so much more practical experience than him :)

FM what great advertising exposure.

That big banner, 150 posts Free Trials in your title

Gotta be worth $5000 at least wouldnt you say...

:Graucho

You, along with every other program owner, are aware of the situation that resellers bring to the table. Yes, they mean more signups and more volume, but they tremendously lower the profit margin -- not simply because of the payouts but due to the enormous costs incurred by every per click or per signup program and how they choose to implement and run their fraud screening procedures.

The bottom line as I see it (and perhaps this will piss off some people) is that resellers need to be held accountable for their actions just like sponsor programs are.

Every day on a board, and sometimes many boards, you see claims of sponsors stealing from resellers. Do sponsors steal? Of course. A small percentage of sponsors steal, there is no doubt about it. However that same small percentage applies to resellers and consumers.

Let's say for instance that the percentage of theft is 3%... that would mean that 3% of sponsors steal, 3% of webmasters cheat, and 3% of surfers fraudulently charge back. Of course that figure isn't a true one, I'm using it for an example before anyone asks me how I arrived at that figure.

Now let's look at how many sponsors there are... what 500? 1000? that actually do any significant volume... that makes a finite number of somewhere between 15 and 30 cheating sponsors. How many resellers are there? 20000? 50000? That would mean between 600 and 1200 cheating resellers. Not great numbers when we look at them now are they?

What do these cheaters cost this industry?

They hurt everyone in it. They drive up the costs that programs and processors incur in order to attempt to prevent their cheating. They are the equivalent of shoplifters in a department store -- EVERYONE who shops there pays the price for shrinkage.

My personal thoughts on this situation are very very simple. Finding a solution isn't rocket science, not by any means. Numbers will tell the true story and I think that every sponsor program out there should be looking at their numbers, very closely, on a case by case basis.

Good resellers should be rewarded, and bad ones should be terminated.

Every program will need to decide what their definition of a bad reseller is, there may not be a way to make a standard... but the bottom line is easy to figure out. If the chaff isn't culled from the wheat, there sure as shit won't be any bread when Visa and MC are done with us.

This is the smartest fucking thing I've heard all week. Alot of the other sponsors are willing to fuck webmasters out of the $10 that they are shaving off the join price. They aren't taking any hit whatsoever, we are, do the math. Instead they should be reviewing these very things that fanstasyman outlined.