Submerchant Verification... WHAT IS IT?
 

A lot of webmasters would like to know. A lot of billing companies troll this board so I know there's a ton of knowledgeable people on this subject. Please enlighten us!

Mitch (Netbilling)?
Clay (Epoch)?
Eric H., Maximus or Rick Rod (Websitebilling)?
&
Kimmy Kim (CCBill Alumni/SIC)?

I know all of these people are reading this and all of them have been more than willing to share information about billing in most cases and have been extremely helpful. Why not now?

Anyone else who feels like telling us this 'closely guarded' secret is welcome here as well.

i'm definitely interested. i've been talking to several paysite owners, and no one seems to exactly what it is. and more importantly - what it will mean for users of third party billing.

there is absolutely no mention of the term on any of the major billing sites.

i tried talking to ibill, and found out jack. i talked to someone else that tried calling (a different billing company) and got the same result.

there is almost no mention of it seaching google. look at one of the very few utterings of the term:

gee, that helps.

LOL! I just got finished doing a search on all the major portals about this before I saw your post. I am guessing whatever this is it is not going to be good for the payment processing companies. How else can we explain the ducking and dodging that we are seeing from everyone. I don't understand why KK is holding out on us?!?!

Calm the f*** down everyone?.

And leave KK alone. She?s out of processing and in the money end of the business now and probably damn glad too!

Clay is too busy to post, so he asked me to reply and answer serious questions.

The question seems to be: What is sub-merchant registration?

The short answer is: A new Visa International rule (that means worldwide, all Visa regions) effective November 2002, requiring Payment Service Providers (PSP?s) like Epoch, iBill, CCBill, Jettis, WebSiteBilling, etc to provide to their acquiring bank and to Visa the names of all the url?s we process transactions for - through our Merchant Account. The list will also contain company names and the names of the owners of the company?s.

Yes, Big Brother is watching, even closer now. But this is not bad news, all around. Epoch, for example, has been doing this for over a year. If you are with us, you are cool. I don?t know about the other processors, but presumably the same will apply.

If, however, you are on the Death Penalty List or the chargebacks and credits of your business are partly responsible for putting a PSP over the chargeback and credit ratios of Visa, then you may be toast. If you have been TMF?d in your own Merchant Account, depending on your PSP, you may or may not be able to process credit card transactions in the future. Some, not all, PSP?s may have the ability to rehab problem sub-merchants.

All the talk earlier on this thread about how chargebacks are going to skyrocket, etc because of our ?X? minute trials? is just funny. Think people? We have to maintain the ratios. If we don?t we are toast. So why would we do anything to jeopardize our Merchant Account? Trust me Mitch? high volume accounts are not laying around. Low volume accounts will be all but gone in November if the other rules are enforced, like the $100 million in Tier 1 Capital requirement. That rule alone knocks out 97% of all banks on the planet. The obvious ?players? in accepting Merchant?s in the high-risk categories are not up for this reporting either. So, in my humble opinion, folks better get with a processor, stay there and hope that the processor can run a smooth technical operation and report accurately, every time to Visa ? from this day forward.

No, the sky is not falling ? for everyone - but it is for some.

I will stay around to answer other questions, if I can, for a while this afternoon.

Chris Mallick
EPOCH

Oh, ok. Welcome to the board Chris! I don't know if I was ready for that news but I'm glad someone thought enough of us to tell us.

When you say

"If, however, you are on the Death Penalty List or the chargebacks and credits of your business are partly responsible for putting a PSP over the chargeback and credit ratios of Visa, then you may be toast."

What exactly does that mean? Are they going to be monitering our chargeback ratio or will they only check ours if you, the processing company, are in danger of going over your limit?

and once you get the rules and regulations, when do you anticipate it going into effect?

Pornwolf:

We report chargeback and credit ratios for US and non-US transactions, by url and company, monthly. Our ratios are in line, portfolio-wide. The way we understand it is that if the overall portfolio is out of compliance, then, Visa will look inside the portfolio down to the url and enforce accordingly. We may also be required, from time to time, to run our client list through the TMF. Visa can then require us to turn off sub-merchants that have been problem merchants in the past or who they perceive to be potential problem merchants.

Nocostporn:

November 2002

Chris
CEO
EPOCH

:Oh crap :eek7 :eek2

That's good. I suppose all these strange billing companies that process CP sites they'll have to deal with it. Am I right?

thanks for the info. so basically, if your CB ratio is very low you probably have nothing to worry about...

What does this mean exactly?:

"run our client list through the TMF"\

Yes, they will, if they are still hanging around. Most of them last for about a month, but those days are just about over.

Chris
CEO
EPOCH

Quiet.. you are right. Low cbcs and you are good to go unless your PSP screws up.

MC and Visa share a "list" called the Combined Terminated Merchant File, commonly called the "TMF". This lists every individual and company that has ever had a merchant account and has lost that account, for whatever reason. Banks, as the Members of Visa and MC add names to protect other Member Banks from accepting Merchants that have lost their accounts. We will be required to run our db of clients against that db and determin who, if any of our sub-Merchants are on the list. Just being on the list does NOT mean you can NEVER process again, it just means that your chances of getting your own Merchant Account are slim to none.

Chris
CEO
EPOCH

Here comes the harder questions...

The #1 reason for using a processor (and swallow the 9-15% fees you guys give us) is the cushion you have provided us from having to get a merchant account for adult and risking having our merchant account stripped... forever (in most cases).

Now that this isn't the case and you won't be able to offer that protection since everyone will be accountable for their chargebacks, what's the advantage to using a third party payment processor outside of scrubbing and check cutting-affiliate services which can be done by some companies like Netbilling for 2-3%?

Pornwolf:

The number one reason you want and NEED to be in a 3rd party Merchant Account is that you are able to use our relationships with Visa / MC, the value of our extensive infrastructure, know-how and experience in processing these transactions. Moreover, we provide you with a 24x7x365 state-of-the-art Call Center that handles your billing issues with your Members. Using a company like EPOCH allows you to focus on your core competency ? marketing, while we work for you in the background. True, we get a chunk of your income, but the risk we take versus the percentage is very fair. You would be surprised at how thin our margins are given the number of employees, office space, security requirements and the like.

We also think that if you look at how much money you keep and how much more money you make by not having to deal with Visa, MC, banks and cardholders bitching about their credit card statement, the deal is actually a no brainer. I refer you to one of Kimmie Kim?s latest posts. She is on ?your side? now and has been on ?our side? in the not so distant past. We are partners and we are perfectly aligned to make and keep, as much money as possible in this business.

Chris
CEO
EPOCH

thanks again for the info. is it true that all transactions will be appearing as 'billing company + url of paysite' starting November? i like the idea... maybe. but if the site is called 'takeituptheass.com' that might not go over well with the surfer?

Urban Legend, so far anyway. There was talk of that. Now they want us to id the sub merchant by a 3 digit code or the sub's company name in the descriptor field. Nothing on this rule seems to indicate that the url should be on the statement.


Chris
CEO
EPOCH

bump

Bottom line is that you need to keep your eggs spread among many baskets, as a paysite operator or as an affiliate.

Take every possible type of transaction you can the best possible way.

As a paysite owner, you should have at least two processing solutions for credit cards -- I've said this since I was at CCBill, so it's nothing new.

Take checks.

Take foreign currency through the best solution for it -- dialer, foreign processing company, etc.

If you can find a way to take firstborns or magic beans and get your money back out in the currency where you live, take that too lol

If you do not do these things you only hurt yourself and your business in the long run.

As an affiliate, spread your traffic out between sponsors, using some that pay per join, some partnerships, some per click, etc.

Do not put yourself in the position of one company being able to fuck your income up to the point you'd be hurting.

Once again: good post.

However i do think that for a paysite operator it's a bit harder to 'spread eggs among many baskets'.

Just finding one good primary processor and a decent secondary
and taking care of the _basic_ billing needs and hoping
everything fits in your infrastructure is enough overhead already.

I agree that as an affiliate you have the luxery to spread
your eggs over as many baskets you like and you SHOULD take
advantage of that. Period.

As an operator (with affiliates) these options/baskets
are limited: not much to spread in the first place.

Chris (Epoch),

Just so you know, we run our own merchant accounts and our processor takes care of all of our customer service 24/7 and fraud scrubbing too. They basically do exactly what you do for your clients but using our merchant account.

Marky

Not really mr. thumbs -- if you think about it what's worth more to you -- 1-2% better processing rates or knowing that if one processor didn't pay you then another one would?

The difficulty is with having resellers, since you'd have to spend the money to get software that would manage the stats in a combined form so they could use one link code and get paid on all joins.

You'd also have the ability to test processors against one another that you were using, and if one processor had a problem -- downtime, routing issues, whatever, you could change to your other processor for all sales during this time.

As I say you are giving up some points on the fees, unless you do enough volume to qualify for the lowest rates on multiple processors - but you are assured that you'll never wake up to a DMR situation one day...

This is what I was talking about when I mentioned Netbilling. They take care of that end when you have your own merchant account. I think either CCbill or IBill offers that as a service as well.

Great information Chris. Another reason why Epoch is a class act, they really communicate with their clients.

well just in case, it won't hurt you to get a merchant account

So if someone is on the TMF list are they forever fucked, even if their current sites are performing well?

Brad