Huge Credit Cuts to Consumer Credit Cards = Bad News for Porn Industry?

[pocketkangaroo]

Meredith Whitney is one of the few analysts I respect in the financial field. She has basically been right about everything so far. She came out the other day and said that credit lines by banks will decrease by 45%.

http://www.reuters.com/article/marke... andChannel=0

Now that's a huge amount. You are essentially cutting half the available credit out of the consumer market. This would seem to be a bigger blow to porn (and any online sales industry) than unemployment, inflation, etc. If people don't have the credit to buy stuff, they can't put on those porn memberships.

How big of an impact do you think this will have?

[seeric]

well, i don't know how everyone else feels, but i'm in the credit card transaction business, not the porn business. so................for what its worth...............there's no way thats not gonna trickle.

[Robbie]

I have a feeling that 99% of the Visa "Credit Cards" used on the web are really just bank debit cards. Not everybody out there wants or needs a "real" credit card. I never had one until early this year when I decided to get some AMEX cards and grabbed two business platinum ones. Up until then...I just used my debit card as a credit card online. I'll bet that's what we mostly see and that won't have any effect at all.

[IllTestYourGirls]

Originally Posted by Robbie

I have a feeling that 99% of the Visa "Credit Cards" used on the web are really just bank debit cards. Not everybody out there wants or needs a "real" credit card. I never had one until early this year when I decided to get some AMEX cards and grabbed two business platinum ones. Up until then...I just used my debit card as a credit card online. I'll bet that's what we mostly see and that won't have any effect at all.

I tend to agree. I doubt that most transactions are debt transactions more debit. The problem is the over all economy sucking. Everyone pinching pennies even if they dont have to in fear that they might not have a job in 3 months.

[pocketkangaroo]

Originally Posted by Robbie

I have a feeling that 99% of the Visa "Credit Cards" used on the web are really just bank debit cards. Not everybody out there wants or needs a "real" credit card. I never had one until early this year when I decided to get some AMEX cards and grabbed two business platinum ones. Up until then...I just used my debit card as a credit card online. I'll bet that's what we mostly see and that won't have any effect at all.

Good point, although I doubt it's 99%. I'd be curious to know the real numbers though. Wonder if someone in the industry could provide us with estimates.

I still think it hurts as people with less credit available may be more weery of using their available cash. It's a lot easier to spend some of your money when you know you have a $10k cushion to fall back on. If that cushion gets cut in half, maybe you become a little more careful.

[Robbie]

I'm not sure that they can tell a visa debit from a "real" visa.

But the overall economic news will definitely scare some people from spending money. So the result may be the same.

[tony286]

Its like they make their own mess. Cutting back peoples open lines of credit also kills their fico scores. So forget those people buying houses ,cars , etc.I thought we were giving all this money to the banks so credit would flow?

[Rui]

Originally Posted by Robbie

I'm not sure that they can tell a visa debit from a "real" visa.

But the overall economic news will definitely scare some people from spending money. So the result may be the same.

"they" Do. It even has a different name - Visa Electron



And your are right at least around these parts (Europe), debit cards are quite common.

[IllTestYourGirls]

Originally Posted by tony404

Its like they make their own mess. Cutting back peoples open lines of credit also kills their fico scores. So forget those people buying houses ,cars , etc.I thought we were giving all this money to the banks so credit would flow?

Well that is what McCain and Obama said. Not the people telling you the truth Paul Schiff Rogers and the like. The banks or hoarding the money so they can start to buy shit super cheap. While they are claiming to need more money. Guess what is going to happen once they start releasing the money (buying the cheap shit) into the economy? Inflation.

[Robbie]

Originally Posted by Rui

"they" Do. It even has a different name - Visa Electron

Hang on...that looks like the epass visa card. Not even close to being the same thing. What I said was that I don't know how a merchant account would be able to tell my bank debit card visa from a "regular" visa. Neither of those have an electron symbol on them.

[Sly]

Originally Posted by pocketkangaroo

Meredith Whitney is one of the few analysts I respect in the financial field. She has basically been right about everything so far. She came out the other day and said that credit lines by banks will decrease by 45%.

http://www.reuters.com/article/marke... andChannel=0

Now that's a huge amount. You are essentially cutting half the available credit out of the consumer market. This would seem to be a bigger blow to porn (and any online sales industry) than unemployment, inflation, etc. If people don't have the credit to buy stuff, they can't put on those porn memberships.

How big of an impact do you think this will have?

I would think that it would be dependent on how high they ride their credit card. I never use my credit cards past probably 25%... now I know that a lot of people max them out and use them to their fullest, but a lot of people don't. If my limit was dropped by 50%, it would not affect my monthly spending on said credit card one bit.

In fact, I just had a credit card drop my limit by about 60% two weeks ago. It won't change my spending at all, I barely use the card as is. From the various people that I have been talking to, I think more people are willing to cut back on spending that they don't necessarily need... for example, gym memberships they don't use. They still buy the things that they want though. People will learn to be more frugal.

[HorseShit]

well, seems like the industry has been fucked for a while anyway

[crockett]

I've been saying this would be a problem for a while. The housing crunch is going to affect porn because people whom lose their houses likely also have mega credit card debit, so if they lose their house they are just gonna say fuck it to their CC's.

Their credit is ruined from a foreclosure so they aren't going to give a shit about paying off their CC's. Less people that have CC's equals less people to sign up to porn sites with them.

[Rui]

Originally Posted by Robbie

Hang on...that looks like the epass visa card. Not even close to being the same thing. What I said was that I don't know how a merchant account would be able to tell my bank debit card visa from a "regular" visa. Neither of those have an electron symbol on them.

Not really. Here, all VISA debit cards cary the VISA ELECTRON logo as default and its dead easy to get one, if you want a VISA as credit card you get the "standard" logo and need file for an application,blablabla.

Visa Electron
http://en.wikipedia.org/wiki/Visa_Electron

In different regions, the card is issued with different specifications. For example, one bank may issue it as a debit card, while another may issue it as a credit card. It is most commonly issued as a debit card.

or going to the horses mouth on their Debit Cards page:

Visa Electron: Visa Electron is ideal for customers with newer banking relationships or in countries that require all transactions to be authorized. Authorization can be either PIN- or signature-based. Internet transactions can also be supported, at the issuer?s discretion. Visa Electron is accepted at any Visa merchant location with an electronic authorization terminal, throughout the Visa global ATM network and at telephone and Internet merchants accepting Visa.

http://corporate.visa.com/md/fs/consumer/visadebit.jsp

[Snake Doctor]

I think this hurts people selling big ticket items more than anything, because now you can't buy that big screen TV for $50/month.

For the $25/mo memberships I sell, I don't think this will have an impact. (Not that things are great mind you, I just don't think this will make them worse)

[mmcfadden]

the CC limits are being squezzed because we're in a fucking monsoon of an economical shit hole. Hell yeah sales on websites are going to be affected... unless your site offers the ability to make your consumer money... your gonna feel it big time

[Robbie]

Originally Posted by Rui

Not really. Here, all VISA debit cards cary the VISA ELECTRON logo as default and its dead easy to get one, if you want a VISA as credit card you get the "standard" logo and need file for an application,blablabla.

Visa Electron
http://en.wikipedia.org/wiki/Visa_Electron



or going to the horses mouth on their Debit Cards page:


http://corporate.visa.com/md/fs/consumer/visadebit.jsp

Oh, okay. Here in the U.S. it doesn't work like that. Our bank debit cards are almost the same as a credit card. They don't have the Electron logo. And I can use it as either a debit card or a credit card. That's why I was saying that I didn't see how a processor could tell one from another to give stats as to the percentage of people using a debit card vs. a "real" credit card. At least I don't think so.

Point is, that every joe blow who opens a bank account in the U.S. has a bank debit/credit card. So the credit crunch has no effect on them. Of course if nobody has any money in the bank then there is a problem...

[faxxaff]

A few people confirmed my experiences with a rising rate in charge backs over the past weeks. Consumers that file for bankruptcy will have all transactions of the past 6 months cancelled if they owe any money to their bank. You notice when you get hit with a number of charge backs on the same day. This applies to both, credit and debit cards. Banks can be mean, specially if bankruptcies are rising.

A news piece about the rising revenue of Mastercard 2 weeks ago confirmed the outlook for debit cards becoming more popular than credit cards.

[notoldschool]

Originally Posted by mmcfadden

the CC limits are being squezzed because we're in a fucking monsoon of an economical shit hole. Hell yeah sales on websites are going to be affected... unless your site offers the ability to make your consumer money... your gonna feel it big time

well said.

[seeric]

i don't see how anyone couldn't see see that trillions of dollars of rescinded credit lines, equaling 45% of the issued credit on the streets now, will not affect an industry that relies on credit. of course i understand the amount of people who debit via card systems, but come on folks. not the end of the world, but compounded with other issues facing the industry, it is absolutely not going to help, we can count on that.

[Snake Doctor]

Originally Posted by A1R3K

i don't see how anyone couldn't see see that trillions of dollars of rescinded credit lines, equaling 45% of the issued credit on the streets now, will not affect an industry that relies on credit. of course i understand the amount of people who debit via card systems, but come on folks. not the end of the world, but compounded with other issues facing the industry, it is absolutely not going to help, we can count on that.

It seems like a big deal, but this is money that isn't being spent anyways, it's just available credit.
Banks aren't going to reduce credit lines below what you already owe them, so this is just "theoretical money" anyways.

[mmcfadden]

Originally Posted by Snake Doctor

It seems like a big deal, but this is money that isn't being spent anyways, it's just available credit.
Banks aren't going to reduce credit lines below what you already owe them, so this is just "theoretical money" anyways.

pay your monthly CC bill and they will lower your limit by whatever principal you paid... it's happening and will keep going

[pocketkangaroo]

Originally Posted by Snake Doctor

It seems like a big deal, but this is money that isn't being spent anyways, it's just available credit.
Banks aren't going to reduce credit lines below what you already owe them, so this is just "theoretical money" anyways.

That theoretical money can have a profound effect on someone's psychology toward their finances. If you have less of a safety cushion, you're probably going to be safer with your money.

And banks will reduce credit lines below what you owe them. It happens all the time, even before this credit crisis. You simply can't use available credit until your card is paid down. It would be silly for them to cut the credit lines of those who can pay their cards while leaving those who can't unscathed.

[Profits of Doom]

If more people are forced to use their debit cards because they don't have available credit to charge their memberships I wonder if that will end up lowering the charge back rate. It is infinitely harder to do a charge back for anything on a debit card than it is on a credit card...

[mmcfadden]

Originally Posted by Profits of Doom

If more people are forced to use their debit cards because they don't have available credit to charge their memberships I wonder if that will end up lowering the charge back rate. It is infinitely harder to do a charge back for anything on a debit card than it is on a credit card...

likely... chargebacks are a piss in the wind though... nothing compared to slower sales

[Robbie]

Originally Posted by mmcfadden

likely... chargebacks are a piss in the wind though... nothing compared to slower sales

Unless you have a paysite and end up paying chargeback fees. That's always a joy to not only lose your money but then pay an extra $55 fee for the chargeback.

[mmcfadden]

Originally Posted by Robbie

Unless you have a paysite and end up paying chargeback fees. That's always a joy to not only lose your money but then pay an extra $55 fee for the chargeback.

yeah it sucks... .75% chargeback rate compared to 20% drop in sales though.

i do own my own sites... love when i get the chargeback from dickhead (immediately returned because of...) the the bank calls for a refund (immediately returned because of...) and end up eating CC fee plus the 2nd join fee. So dickhead comes to my site and I just payed him 20 bucks plus the fees

It still does not hold a candle to loss of sales due to the shit our economy is in.

[Iron Fist]

You mean those unauthorized prechecked crosssales won't be authorized anymore because the surfer will already be over his limit? Aww too bad.

[Robbie]

Originally Posted by sharphead

You mean those unauthorized prechecked crosssales won't be authorized anymore because the surfer will already be over his limit? Aww too bad.

Hah-hah...you really don't know about cascading price points do you? I'm not smart enough to figure out how to do it. But I've been in a room at one of those "useless" conventions, late at night around 2 a.m. with a handful of guys who have more money than God. And the conversation is always business...drunk, but business. And those guys have techs and programmers who are so fucking smart it's sick. And they can hit your card for $30 and if it says "No" they hit it for $25 and they will work all the way down until they find a number your card will take.

And it doesn't really matter what that number is. Because even if it's a dollar...they just made money. But if you get declined...guess what? It costs a site owner a decline fee.

There's a whole other level of thinking that most of the guys on GFY don't even see or seem to be aware of. It's about making money. And NEVER losing money.

[Ron Bennett]

Originally Posted by Robbie

I'm not sure that they can tell a visa debit from a "real" visa.

The first 4 digits of the card number typically identifies the card issuer.

With that said, many merchants don't care whether it's debit or credit, since they work basically the same from their end.

Ron

[Robbie]

Originally Posted by Ron Bennett

The first 4 digits of the card number typically identifies the card issuer.

With that said, many merchants don't care whether it's debit or credit, since they work basically the same from their end.

Ron

So the first 4 digits would tell the bank that issued the visa card. But would that determing if it was a debit or credit card? And if so...does anybody keep stats on that?

[aico]

Originally Posted by Rui

"they" Do. It even has a different name - Visa Electron



And your are right at least around these parts (Europe), debit cards are quite common.

My Debit card has Visa on it, and it is not Visa Electron.

[Iron Fist]

Originally Posted by Robbie

There's a whole other level of thinking that most of the guys on GFY don't even see or seem to be aware of. It's about making money. And NEVER losing money.

Sure, good points of course... which is why I don't run a paysite (and doubt that I will, considering my current lifestyle), and mostly promote CCBILL sponsors, which make up for at least 70% of my income..

And this is a public board... i'm sure 90% of what really goes on in the biz, is never ever discussed here... this is pure entertainment and should be viewed as such. At least that's what I do..

[seeric]

Originally Posted by Snake Doctor

It seems like a big deal, but this is money that isn't being spent anyways, it's just available credit.
Banks aren't going to reduce credit lines below what you already owe them, so this is just "theoretical money" anyways.

good point, i can accept that.

[spunkmaster]

I'm in the credit business and debit cards are now right around 50% of all transactions. Corporate and business cards are another 25%-30% and the rest is consumer credit cards. In the US the merchant doesn't know what type of card it is and most of the processors are hiding the type on the merchant statements as rewards cards now.

About 80% of online sales are made from the upper level card holders who have higher credit scores and don't carry large balances on their cards.

One of the industry reports I've heard about is online credit card usage is expected to drop about 10%-20% over the next year with debit picking up much of the slack but how much is unknown. Visa is expecting Banks to issue 15% more debit cards in 2009 as checks are phased out and Mastercard is issuing 7%-8% more debit cards. Check rewards cards are a huge money maker for the issuers and they will push these even harder in the next few years. The big question they can't answer is how much will debit cards replace credit cards and will the overall number of transactions go up as much as they are hoping?

The are still predicting an increase in debit/credit transactions over the next 5 years but not as much volume being processed because of the lower limits.

The Treasury has also announced a $200 Billion purchase of credit card debt from the Banks.

Another interesting fact is that credit union issued cards are no where near the default rates that the Banks are seeing because they don't give cards to credit derogs. I've even read that credit unions will pick up much of the credit card slack from the Banks.

[Robbie]

Originally Posted by spunkmaster

About 80% of online sales are made from the upper level card holders who have higher credit scores and don't carry large balances on their cards.

Whew! Then I'm safe! Here at Claudia-Marie.Com we have a huge following of poor people who live in trailer parks. They all have debit cards only baby and keep just enough in the bank to buy beer, cigs, and porn! That's right...by carefully targeting a demographic of 90% trailer park trash I have become recession proof!

[Ron Bennett]

Originally Posted by faxxaff

A few people confirmed my experiences with a rising rate in charge backs over the past weeks. Consumers that file for bankruptcy will have all transactions of the past 6 months cancelled if they owe any money to their bank. You notice when you get hit with a number of charge backs on the same day. This applies to both, credit and debit cards. Banks can be mean, specially if bankruptcies are rising.

Firstly, does anyone here have links to more information about this?...

Furthermore, chargebacks going back months due to bankruptcy isn't just an "adult" industry issue.

I regularly read the eBay message boards, and in recent months, there have been numerous complaints about past bank / credit card funded sales transactions, in which both buyer and seller were mutually satisfied, suddenly being canceled due to the buyer declaring bankruptcy.

Bankruptcy and chargebacks is a growing problem, but can't find much info on the subject.

Ron

[spunkmaster]

We haven't seen any big increases in chargebacks but we are seeing more cards declined.

[emjay]

As millions of people worldwide turn to their credit cards to help pay for essentials, suddenly paying a $29.90 per month for porn suddenly seems like an outright extravagance, as opposed to a mere occasional treat.

I believe we will witness a shift away drom the $29.90/month business model to more of a "pay as you go" one.

For despite all that free porn out there, surfers are still prepared to pay for the convienience of not having to search for exactly what they are looking elsewhere.

So, intead of charging surfers per month, more and more webmasters will start charging surfers per MINUTE to access their member's area. Credit card billing is not suitable for this kind of micro-billing anyway, whereas phone billing is ideal.

The downside is that the phone companies, who effectively collect the money from their subscribers on your behalf, keep a relatively high % and it's not recurring.

The upside, however, is that the world literally is your oyster since the phone is so ubiquitous - hell, the cellphone penetration levels in some developing countries is beginning to rival those in the developed ones!

As for chargebacks, these are neglible in most countries since people tend to pay their phone bills in full - failure to do so results in losing an essential utility which just so happens to double as the internet's backbone.

However, as with mobile, the USA is slightly different - 1-900 only works with one network, MCI, and Americans are not legally obliged to pay that element of their phone bill.

Unfortunately Joe Plummer & Co are maxed out, and the credit card crunch has truly begun so if you have compelling content, you should consider adapting your business model accordinging in these recessionary times.

Good news is that the world is a big place, the internet is global and growing, and thankfully a pics and vids we peddle really do say more than a thousand words.