Visa/MC is a monopoly

Actually Visa/MC only take .095 basis points on a transaction and the issuing bank gets the rest.

All video transactions are automatically "unqualified" which adds more to the fee. Not sure if Visa gets extra over the .095 on unqualified transactions.

My main point is that as a monopoly Visa restricts banks ability to sign up adult video companies and the also sets rules to fix high prices. Thus someone is unfairly making extra money due to illegal monopoly actions.

This is a good point however, to figure out exactly who is making the $$.
I believe that Visa is federation of banks that do its processing. Thus even if the banks rather than visa get the extra profits, somehow, that may be further distributed to visa? Not sure, but I am going to research this. . . . thanks!

No, they're not unqualified just because they are videos. All adult products, toys and Video that are shipped are just nornal ecommerce transactions and the banks wholesale cost is the same as if you're selling gift baskets.

Visa/MC doesn't restrict the Banks to sign up adult videos or products but they do have a different classification on adult memberships, pay per minute and pay per call etc.. The reporting and chargeback monitoring can be extensive on these merchants as well as the fines for violations and that's the reason banks don't want to process adult.

I am not talking about shipped videos. I am talking about online video.
The idea that online video is riskier is absurd. Shipping a physical item is more expensive than bandwidth!

Great point as far as the shipping costs are concerned.

At least with physical goods you actually have a shipping address though, it's pretty hard to scam that way.

The fact that they are controlling this based on their own interests IS crazy. They do it with buying of all sorts of intangibles in adult.

Btw Dave, we should get together some time and have lunch or something.

The fact is they can't legally ban adult sites unless there was a law against viewing adult sites so they've tightened the screws.

I belong to a few associations for credit card merchants and am constantly amazed at the games Visa/MC play.

Fraud happens with tangible goods as well, as that's a huge portion of my income. I remember one customer who ordered 3 videos and they were shipped to him via UPS, weight of the package was 3 lbs. When he got them, he didn't like 2 of them and sent them back. I explained my "no return unless defective" policy that he CLEARLY checked off and agreed to, and I refused to issue a refund since he watched all videos.

He issued a chargeback for the full amount.

I showed proof of delivery by his signature, proof of weight of the package that was sent to him, yet he told his credit card company he returned all 3 videos. I had proof that his package, shipped to me by the USPS, weighed exactly 2 videos-worth and that was it.

In order to fight the chargeback, I would have had to pay a fee of $400 whether I won or lost.

In another situation, I noticed a higher discount rate on several transactions and asked why. They were debit cards, and they process those at a higher rate. The problem? Somone giving me a credit card number online or over the phone doesn't differentiate to me if it's a debit card or not and there is no way to know by the number. So I lose another 1.25% of each sale if it's a debit card.

You said Visa/MC can shut you down at any time. What's worse is they can put you on the TMF (terminated merchant file) and after that, basically, you can never, ever get another account.

Visa and MC make money no matter what. They make money on fraud, they make money on legit orders, they make money from merchants and they make money from customers. They cant lose.

The fact of the matter is this situation will NEVER change until merchants stop accepting credit cards or until government regulation prohibits these practices. Neither well happen, as ceasing to accept cards is certain death for any online business.

When someone makes a better system, this bullshit will end. Until then, everyone is crying about a system that cannot be changed or fixed.

Didn't even notice it was u

Lunch is for wimps!

unfair as it may seem, a Monopoly is needed in this case of Visa/Mastercard. Reason being that if there wasnt a monopoly then you wouldn't have access to billions and billions of card members. Would you really want to take all the time and effort to go out and collect a million different banks issuing gateways and connect them up to your system. You would spend years.

Visa/Mastercard is one of those monopolies that allows everyone to make more in the end. Yeah sure they take some money, but everyone needs to profit. Think if there was no Visa, where would the adult industry be? Alot further behind.

Jim

Are you kidding? Visa and Mastercard are US-based companies. In the United States, private companies can choose whom they want to and do not want to do business with. And equal lending laws dont apply, either. The customer is the lender, not you.

Sounds to me like your processor just sucks. I have never heard of a $400 CB fee.

I am not saying monopolies are bad. Microsoft is allowed to operate and there are many other monopolies out there. But there are laws against monopolies abusing their power.

Monopoly laws seem to be less and less enforced these days than ever before. We see it in the gas prices (except they call it collusion - but deny it to our faces).

Cable companies are the same - monopolies.

This is a huge complex issue that has a great effect on the profitability
and value of adult companies; yet, as far as I know, no one is working on
solving this problem!

Monopoly laws seem to be less and less enforced these days than ever before. We see it in the gas prices (except they call it collusion - but deny it to our faces).

Cable companies are the same - monopolies.

I belong to a few associations for credit card merchants and am constantly amazed at the games Visa/MC play.

Fraud happens with tangible goods as well, as that's a huge portion of my income. I remember one customer who ordered 3 videos and they were shipped to him via UPS, weight of the package was 3 lbs. When he got them, he didn't like 2 of them and sent them back. I explained my "no return unless defective" policy that he CLEARLY checked off and agreed to, and I refused to issue a refund since he watched all videos.
He issued a chargeback for the full amount.
I showed proof of delivery by his signature, proof of weight of the package that was sent to him, yet he told his credit card company he returned all 3 videos. I had proof that his package, shipped to me by the USPS, weighed exactly 2 videos-worth and that was it.

In order to fight the chargeback, I would have had to pay a fee of $400 whether I won or lost.

In another situation, I noticed a higher discount rate on several transactions and asked why. They were debit cards, and they process those at a higher rate. The problem? Somone giving me a credit card number online or over the phone doesn't differentiate to me if it's a debit card or not and there is no way to know by the number. So I lose another 1.25% of each sale if it's a debit card.

You said Visa/MC can shut you down at any time. What's worse is they can put you on the TMF (terminated merchant file) and after that, basically, you can never, ever get another account.

Cable companies used to have monopolies for their local areas. but now there is competition in most markets against cable companies.

Depends which "most markets" you mean. Around here...there's one cable provider - that's all. Sure, there's other high-speed options for the web - but only one cable service.

.. trust me when I say someone is working on a solution though!

Not just adult but many "high-risk" genres. Interchange is the base cost that all acquiring banks start at, then risk is alotted via card present transactions, card not present trans, MOTO, vendor type etc etc

.. trust me when I say someone is working on a solution though!

Our economy goes through monopoly periods, then to oligopoly periods every so often

SexToyDave, Dave here are the solution's.

** put together a group who pay for attorneys and court fees. maybe win. agianst visa/mastercard maybe not...lol

or

** create a company 'XZY' get a merchant account at 2% (adult) then open up sub accounts under company 'XZY' merchant account for other companies.

example:
sextoy processing 2%
xondemand processing 7%

have sextoy process all orders for xondemand on a sub-account to sextoy merchant processing...

I have in my main stream biz set up processing with a bank for one company a. then I had company a. do processing for company b. same merchant account with several sub-accounts.


we don't need to do buisness with everyone, everyone needs to do buisness with us. <-- visa

visa and master card 4-sure control a % of online processing and set pricing.

You people have obviously never heard the phrase... "the road to hell is paved with good intentions"...

You may claim that the card associations are a monopoly.

***Courts including the supreme court have ruled that Visa/MC is a monopoly.

They may in some instances be breaking laws like Sherman Anti-trust or other collusion type laws. In the case of coding and segregating their merchants based on historic data -- of which they have tons that would stand up in court if they decided to pull the plug, not to mention the fact that by the time anyone ever actually managed to get them into court over doing such it would be so long after the fact that it wouldnt matter -- they have every right to segregate merchants based on risk factors.

***They do not segregate according to risk. And also, visa should not make broad decisions without allowing banks to determine risk.

***These violations are causing damages into the hundreds of millions. I don't care how long it takes, that is real $$!

Visa and Mastercard are associations. Their member banks are the ones that sit on the association boards and make up the rules. Visa and Mastercard are brands. Very well funded, highly marketed brands. The associations create rules based on what is best for the member banks. There is no man behind the curtain in this case.

***In this case, restricting supply and inflating prices is determined to be best for the banks. I don't disagree with that. My point however, is that this a violation of their monopoly power.
A monopoly is not allowed to restrict supply or inflate prices to bully customers to pay it more money.

Rates are determined and merchants coded in the same way that insurance rates are arrived at -- based on historical risk and loss analysis.

***Insurance companies determine risk and then compete for customers by adjusting payouts and payments.
***Visa does not allow banks to determine risk and banks are not allowed to compete freely.

Shipping a physical product is not more of a risk than a downloaded product is to the association. With a physical shipment there is proof of delivery which negates the majority of chargeback claims arising from consumers saying they didn't receive a product. Most of the chargebacks on physical goods come from consumers saying the product wasn't what they expected, was damaged, was not what they ordered, etc -- and those chargebacks are supported when the consumer returns the goods to the distributor. Consumers failing to return goods don't generally get a chargeback to stick.


***Most chargebacks are from fraud/theft. the example of customer ordering and saying they didn't get it is VERY rare.
***The levels of theft and fraud are no different on physical products, online products, services, in adult or non-adult.
***The main difference is the quality of scrubbing the company performs before processing orders.

Portable media, especially involving recurring billing models, is an entirely different animal. There is no way to prove that the consumer was able to utilize the materials in the manner that they expected. Compatibility issues with software or older computers, installer software failing to work, etc, these are not things that can be disproven that easily by the merchant.

***These companies have figured out how to keep chargebacks under 1%. You can continue to believe that theft and fraud are a huge problem and big risk, but you are being fooled by the banks making all the money.

When MC or Visa terminate accounts for failing to stay in compliance (and their compliance terms are pretty well published) they have every right to do so. We don't have to like their rules but they are the ones that make the rules.

***If their rules break the law, then we should not have to obey and they should not be allowed to enforce them.

When you have industries where fraud is rampant and out of control -- which it still is today, ask any PPS program owner -- combined with materials being sold that are borderline legal -- finding a judge that will side against the associations is nearly impossible.

***Their is nothing illegal about porn online.
***I know many companies selling memberships, videos sales, dating sites, etc. No one has a fraud problem.
***I am disappointed to see someone from our industry with such a negative view of our industry.

The amount of money that such a campaign would take, coupled with the fact that by the time it was over it would probably be a moot point anyway, simply isn't worth it.

***I think visa could be found to inflating processing by 5-8%. 5% of 1 billion a year in transactions is 50 million. This has been going on for at least five year. Thus we are looking at damages of 200 million or more. I don't care how long that takes!!!

No one forces merchants to take Visa or Mastercard. That's their biggest trump card and one that isn't going to be overcome any time soon. This isn't a case of the associations telling their member banks they can't issue Amex cards, this is a process and a set of guidelines based on historical data that those in this industry directly are responsible for.

***Companies need Visa/MC to compete. This why the courts have ruled several times in support of the idea that Visa/MC is a monopoly.

Depends which "most markets" you mean. Around here...there's one cable provider - that's all. Sure, there's other high-speed options for the web - but only one cable service.

more than interesting . . . its a lot of money.

No reason for video processing to be over 2% per transaction.

If you run a good biz and are paying 10% or have the offshore 6-7% deals, you are being ripped off!

The chargeback fee is $35. This $400 fee is very standard. What does YOUR processor charge??