Visa: Changing the Face of an Industry

Almost every Webmaster in our industry has felt the prick from a little thorn in their side that goes by the name of Visa. Over the past nine months, Visa has decided to play hardball with adult webmasters by throwing all sorts of rules, regulations, and fees at them. It was not enough that just Visa was bombarding webmasters, so other companies decided to join in the lynching. Both PayPal, Visa and MasterCard Credit Card Processors have proceeded to place restrictions on the online adult world, with PayPal going as far as declaring that it would no longer accept payment transactions for adult material. So, while Visa has enjoyed being a huge pain in the ass for this industry, it has also inspired other companies to follow suit and become pains as well.

Visa knows they run the show and that they can pretty much set any guidelines they want and webmasters will have to follow or risk losing valuable revenue. Their latest regulation, which has become a huge topic of debate for webmasters, is that adult websites cannot have a chargeback ratio greater than 1%, a large drop from the ratio up until now of 2.5%. Webmasters have only until October 1st to ensure that they are in compliance with this 1% rule or they can say good-bye to using Visa. 

This means that many companies in this industry will have to scramble to restructure their programs, sites, and payouts in order to reduce their chargeback ratio, while at the same time maintaining a level of profitability. Companies are already beginning to take the necessary steps to ensure that they are in compliance. The first step is examining the reasons that make people charge back their site memberships. Then they need to address these reasons, if possible, and try to alleviate the causes of chargebacks. 

Already, we have heard from a number of major sponsors that feel membership price is a main reason that people charge back, and so they feel that by lowering this price, they will in turn reduce chargebacks. However, by lowering membership rates, many companies will lose a significant amount of revenue. In addition to lowering prices, they claim that they must also lower payouts to affiliate webmasters to offset their losses. SilverCash was one of the first programs to announce that they would be lowering their monthly membership fee from $39.28 to $29.28, but that they would also be lowering their payouts to webmasters. After their announcement, many other large programs came forth to say that they would also be lowering their membership fees as well as their payouts.

There has also been much speculation that if free trials were cut out, then chargebacks would decrease, with the notion that free trials are misleading for the surfer. This theory was put into practice when some of the larger programs announced that in conjunction with lowering membership fees and payouts to webmasters, they would also eliminate their free trials. Adult Revenue Service (ARS) turned their free trials into $1.00 trials and also restructured their membership fees in order to be in compliance with the new Visa regulations. 

Adult Friendly High Risk Merchant Services

There are some credit card processors who will consider and take adult merchants, but they will still need to pay the annual adult merchant fees to visa & mastercard. Adult webmasters basically have 2 options for adult websites/adult oriented businesses and visa & mastercard they can either use a 3rd party billing service/aggragator or they can setup a direct merchant account with an adult oriented credit card processor. Some of the more well known adult merchant service providers include companies like: IBI Merchants, HighRiskMerchants, and MerchantProcessor.

So, how do webmasters feel about these changes? I would say that there is definitely a 50/50 split in opinions, where half think these changes have been needed for a long time, and the other half feel that there are other ways that companies can reduce chargebacks without having to resort to cutting membership rates and affiliate payouts or eliminating free trials. I usually do not like to sit on the fence in these kinds of arguments, because I typically have very strong opinions, but I really can understand both sides.

The sponsors need to take responsible steps to reduce their chargeback ratios and I do agree that lowering fees and taking away free trials is a step in the right direction. However, I also feel that there are other reasons for chargebacks that these sponsors need to address as well. Many surfers charge back their memberships because they pay for what they think is going to be an amazing site jam-packed with loads of video and picture porn content. They end up getting inside the site and feel mislead when the quality or quantity isnt what they expected, or seemingly promised on the sites tour. I feel that if sponsors re-examined their sites and upgraded their content, that they could reduce their chargeback ratios even more.

This has most definitely been a year of changes for the online adult industry and I feel that when its all said and done, it will have been for the best. By becoming more responsible in our business practices, our industry as a whole will gain further acceptance and credibility.


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