Web hosting and credit card processing
After a long break, it is good to be back on theWHIR. As some might already know, my new venture, Host Merchant Services, specializes in partnering with web hosting companies to offer merchant services to their customers. Before insanity workout you groan and ask why we need another company like that, I extend an offer to explain, offline, exactly why there is a huge need for someone to do this right. In my blog here, I discuss a number of topics, mostly related to electronic transaction processing as it relates to the hosting industry, as well as my personal favorite topic, customer service. In my first post, I like to start by talking about web hosts, their own processing, and protecting against chargebacks. As I work with more and more web hosting companies every day, I have seen that many can benefit from some helpful tips on working within the system setup by Visa, Mastercard, Discover, and American Express. What you may or may not know is that hosting companies are by default considered high risk businesses to credit card processing companies that don know any better. The reason is that if you default on a debt, fee, fine, or chargeback, the company doing your processing is left holding the bag. Most web hosting companies have some deferred revenue (take payment before services are provided), attract some fraudulent transactions, and generate some modest to significant chargeback activity depending on the operation. Being proactive and taking control of fraud and chargeback issues, can reduce your risk profile, prevent some hefty fines (or worse) from Visa and Mastercard, and lower your cost of processing over the long haul. First, let start by what NOT to do. Many web hosts take a very hard line stance in trying to prevent chargebacks. I recently had a customer draw scrutiny from our sponsor bank for charging what was interpreted as a penalty fee for the customer initiating a chargeback. In discussion with the web host, they informed me that the fee was for contacting us first in the event of a dispute not for actually charging back. Clever, but the bank was unmoved by the nuance of the situation. Since you are dealing with card association rules, as opposed to laws, the people making the rules are also judge, jury, and executioner. Your only practical option to fight them is to stop taking credit cards, which really isn much of an option. You are much better off playing it safe, treading lightly, and staying as far un insanity workout der the radar as possible. Being in a higher rich merchant class will draw some insanity workout additional scrutiny no matter what, so you want things to look as copacetic as possible when it happens. And really, penalty fees aren an effective deterrent from chargebacks, any more so than collection fees or other penalties you insanity workout can lever on an unpaid debt. Since briefly retiring and spending some time in real estate investing, Lou returned to the industry in late 2009 with a vision for revolutionizing customer service and partnerships in the payment processing industry. His new company, Host Merchant Services, focuses on creating value for web hosting companies through their own cost savings, as well as a partnership program designed to deliver significant ancillary revenue and increased customer loyalty. Their unique proactive partnership model has been shown to yield 10x 100x the results of the typical payment processing partnerships being promoted in the hosting industry today.
Through his theWHIR blog, Lou will discuss a wide array of topics including the electronic payment processing industry, e commerce, mobile commerce, and of course, his favorite topic customer service.
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