Tag: merchant account

Reduce Chargebacks & Refunds With 3DS2 – It’s Better Than 3DS
Authentication tool 3-domain secure version two or 3DS2 aims to cut the burden of chargebacks and refunds. And, thank goodness, because version one was a conversion killer for many high-risk merchants.

The updated version of 3DS introduces a new technology that reduces fraud rates and improves online purchase experiences. Thus, increasing your profit and minimizing losses.

Many merchants complained about the unfriendly user experience. Fraud and chargebacks were increasing, and purchase experience was very clunky for clients who had to remember a password. The release of 3DS2 is a sigh of relief for both merchants and customers around the world.

Here’s some useful information on the newer version of 3DS. We’ll explain how it’s different from the first version, as well as some key benefits.

What is 3DS And Verified By Visa?

3-Domain Secure (3DS)

This tool provides an additional layer of security for online transactions made via debit and credit cards. 3-Domain secure technology was first implemented by Visa to improve online purchase experience. Think of it as two-factor authentication services like the one used by Gmail and other popular online service providers.

Here are the main advantages:
- Chargeback liability shifts from the merchant to the customer. So, if a transaction is processed using 3DS, the customer cannot claim fraud unless they have proof themselves that fraud was committed. Without 3DS, merchants had to prove that the transaction was valid and present proof to dispute the chargeback, which is difficult in an online card-not-present (CNP) environment.
- Lower payment processing fees and longer payment terms with merchants.
- Customers feel more confident that there’s an extra layer of security within the payment gateway.
What Is VbV or Verified by Visa?

Verified by Visa or VbV is an advanced anti-fraud tool by Visa that many businesses use to cut down fraud and chargeback rates to diminish revenue losses. Just like 3DS SecureCode by MasterCard, VbV adds another level of verification that requires the purchaser to enter a passcode.

Merchants have to pay a fee every time a customer files a chargeback.

(Photo by Anna Shvets from Pexels)

3D-Secure V1: Issues faced by merchants

Here’s the truth about chargebacks. They were designed for customers so they could feel protected and secure when using their Visa or Mastercard for purchases. But many consumers are using it as a weapon against the merchants.

Merchants agree to allow chargebacks by accepting credit cards for payment of their products or services. But customers abusing the right to chargebacks is causing substantial losses for payment processors and online merchants. Additionally, here are some common issues faced by merchants in the first version of 3DS within the payment gateway.
- Merchants pay a fee every time a customer files a chargeback. This varies but is usually around $25 per chargeback dispute.
- It takes a lot of resources for merchants to dispute illegitimate chargebacks. They need to look through their server for customer logs and get proof of the transaction occurring and that it was done by the customer. Thus a merchant needs to show as much personal customer information as possible.
- Having customers create and remember a password for future use causes friction and lowers the conversion rate on a checkout page.
- According to analysis from 2019, around 22% of transactions were lost because of 3DS version one.
- On average, 3DS transactions take around 37 seconds to complete. This experience is too long during the checkout process.
- Mobile browsers don’t support many 3DS implementations that result in mobile customers running away from merchants and businesses.
High-risk merchant accounts were on the edge of the cliff. Multiple issues of 3DS version one made merchants panic. But, 3DS2 came to the rescue.

How do 3DS and 3DS2 differ?

What is 3DS2

The newer version of 3-domain secure is 3DS2. This version aims to eliminate all the short comings of 3DS and provide a better online purchase experience. EMVCo is behind the update of 3DS2.

Version 2 of the authentication tool adapts the new features that are required for online payments. It’s the way forward to help customers and merchants transact securely without worrying about payment processing.

3DS vs 3DS2

There are a handful of differences between 3DS version one and 3DS2. Check out the points below to learn more.
- 3DS2 uses 10x more assessment data points than the previous such as device fingerprinting, IP address log and other specific information about the customer that is typically unique.
- The first version of 3DS was designed for only web-based browsers. 3DS2 supports all devices and allows developers to make use of the software development kit to integrate verifications natively.
- Unlike 3DS, 3DS2 supports OTP (One-Time-Password), biometric, or facial-recognition so that customers don’t have to remember a password.
Seamless integration of 3DS | Avoiding Chargebacks

Not all payment gateways are providing seamless integration of 3DS2 yet. Slowly but steadily, payment facilitators are adopting the new protocol of 3DS2 to help merchants avoid high fraud and chargeback rates. But some SaaS companies are providing seamless integration of EMV 3DS to merchants.

Paay is a SaaS company that utilizes 3DS2 for helping merchants eliminate chargebacks, increase approvals, reduce false declines, and provide frictionless transactions.

Software like Paay sits on the merchant checkout page to implement all the benefits of 3DS2. It helps merchants to make the most of the newer version of 3DS2.

3DS Implementation in the USA and Europe

USA and Europe both utilize 3DS technologies, but the implementations are different.
- 3DS in Europe
PSD2 is a European regulation for electronic payment services. PSD2 introduced Strong Customer Authentication (SCA). It’s an up-to-date security measure that regulates online payments.

SCA requires a minimum of two authentication factors out of three for a successful 3DS implementation. Those factors are:
- Something the consumer knows like a one-time password;
- SMS to their mobile phone, PIN, etc.;
- Something the consumer owns like debit card, mobile device, etc.; or
- Something the consumer is like iris scan, voice recognition, etc.
This makes sure the customer doesn’t have to rely on their memory for a cumbersome password.
- 3DS in the USA
In the USA, 3DS payment gateways only require one method to authenticate the transaction. It can be in the form of OTP/SMS/PIN, CVV number, or biometric.

Unlike 3DS implementation in Europe, USA gateway processors don’t require an authentication from the customer. Some merchants are relying upon a seamless integration that protects a majority of transactions. But it’s not a full proof integration of 3DS. That’s because not all transactions can be authenticated without customer friction.

Now let’s move forward and look at some of the top benefits offered by 3DS2 for merchants.

Benefits of 3DS2 for merchants

The 3DS2 model provides multiple benefits to the merchants. The following are some highlights:
- More Data Points
Data is everything. With 3DS2, more information is shared between the merchants and customers. It helps the merchants to analyze the customers so that they can avoid chargebacks and decrease fraud rates.
- Support for All Devices
3DS2 supports all devices mobile or desktop. It helps the merchants to set-up an app for every platform without needing to worry about how they will integrate the 3DS authentication.
- Custom Risk Models
In 3DS, chargebacks were decided upon the customers’ bank. With 3DS2, merchants can set-up risk models to identify frauds, handle chargeback disputes, and more on their own. Now the customer has to prove that the transaction is fraudulent, which is more difficult but less work for the merchant.
- Reduced Cart Abandonment
3DS2 supports seamless and frictionless transactions. It means that consumers will not see any fancy and challenging screens to authenticate transactions. Users will now be able to buy things without facing any frustrating verification processes swiftly.
- No Static Passwords
Many users abandon their cart just because they are unable to remember the static password. With 3DS2, users don’t have to enter static passwords for authenticating the transactions. 3DS2 relies on a one-time password, biometric verification, etc. which means faster transactions and less abandonment of carts.

Are you excited about the newer version of 3DS? It’s time to select a reliable 3DS partner!

Selecting a 3DS Partner

Are you looking to open to a merchant account for your high-risk business? Then select a reliable partner who can help with 3-domain secure and lowering chargebacks for your high-risk merchant account. We know choosing a payment gateway partner isn’t easy, as the risks are high.

Gateway processors have all the information about you and your customers, so select one wisely. Look for payment gateways that internally support 3DS and other chargeback prevention methods. You can add an external provider like PAAY to use 3DS2 technology. There are also several gateway providers that support this new version of 3DS.

The ball is in your court. DirectPayNet has over 10 years of experience specializing in resolving high-risk payment challenges across a wide array of verticals. Unlike some other merchant service providers, we offer experience and knowledge. Our goal is to help you build, launch and grow your online business.

Securing a high-risk merchant account isn’t easy. But we can help you set it up for your business.

Say good-bye to submitting applications and contact us to quickly set-up a high-risk merchant account. We’ll do the heavy lifting for you so that you can concentrate where it matters the most.
August 15, 2020
8 Affiliate Marketing Strategies To Keep Growing Through COVID-19 & Beyond
Media buying and affiliate marketing has not escaped unscathed during the Coronavirus pandemic.

Merchants that relied on performance marketing and paid advertising campaigns adjusted rapidly. Strategies have changed in the last three months to weather the storm.

Some marketing channels like media buying lost support from merchants as budgets dried up. Alternatively, affiliate marketing is a performance-based revenue growth generator and more affordable. But it can be ripe for refunds and chargebacks. In turn, this can endanger your merchant account and other payment processing channels.

Do you operate a high-risk business with an affiliate marketing program? If so, it’s crucial to take strategic steps now to limit exposure, and keep your payment gateway safe from fraud, other risks, and even a resurgence in COVID-19 cases.

COVID-19 and its uneven rewards

Some affiliate program owners have had to slash commissions or adjust their affiliate program terms. Media buying has seen a significant decline in business. There once were thousands of dollars allocated to online marketing without guaranteed results. Now, it’s hard for advertisers to justify allocating a budget on unproven campaigns.

Despite the increase in online traffic and internet usage, the effects of the pandemic on the affiliate marketing industry has not been uniformed.

Some affiliates have seen a jump in revenues due to the pandemic. UberEATS and Groupon, for example, have seen significant affiliate-based traffic.

And as traffic has increased, so has fraud in affiliate programs. We’ve gone extensively into affiliate fraud and chargebacks on DirectPayNet before.

These two posts will give you a solid foundation on affiliate fraud and how they impact your business and merchant account:
- Rogue partners wreaking havoc on merchant accounts
- How affiliate fraud can ruin your business and how to combat it
There are still more ways to update your affiliate marketing program. For some advertisers, their affiliates were able to increase profit during COVID and prepare to continue growing post-pandemic. They all happened to be in the right verticals such as food and beverages, health and online streaming. But this was not every e-commerce business and owner’s story.

Spell out exactly what methods of promotion affiliates can and cannot do so future sales doesn’t result in a merchant account with high chargebacks and refunds.
(Photo by fauxels from Pexels)

Strategies to help performance-based channels

We can expect fraud and chargebacks to jump as internet usage continues to increase month over month, as it has since the start of the pandemic. At least 9% of affiliate transactions are fraud-related. Your merchant account can’t endure a nine percent chargeback ratio.

But affiliate marketing, media buying, and other channels do not have to negatively impact your business. There are solutions to safeguard sales of your online products and services.

Brands that develop a loyal following from customers and partners will have a better foundation for post-COVID growth.

Here are the strategies you can adopt now that can support your brand going forward.

1. Clarify your affiliate program’s T&C

We know you’ve heard this advice before. Your affiliate program terms and conditions can make or break your business.
Already when an acquiring bank or other payment provider sees you’re using affiliates they get cautious. Most merchants don’t monitor their affiliates. This lack of supervision often results in chargebacks triggered by misrepresentation and false claims.

Do yourself a favor. Go to Google yourself right now and look at what ads and content affiliates are saying about you. Go to at least two or three index pages. Chances are if you can see any negative search results, your payment provider can too.

Now is the time to dive into and update your terms based on the current direction of your business. Spell out exactly what methods of promotion affiliates can and cannot do, the claims they can and cannot make, and the channels that they can and cannot use.

Banks and payment gateways are getting stricter about advertising practices. One false move can result in them terminating your account. So, close the gaps and make sure to remove bogus claims about your product or service from affiliate sites and ads.

2. Integrate 3DS

Fraud and chargebacks are two of the main issues affecting advertisers via their affiliate programs. So, now is the best time to upgrade your security protocols. One of the best areas to start is by implementing 3-D secure (3DS) version 2 security standard.

False transaction attempts come in all forms. This includes a foreign customer buying with a credit card number and no security code. Or, a buyer’s IP location being the complete opposite of their credit card bank identification number (BIN).

There are several anti-fraud software tools on the market. However, implementing 3DS gives you a more secure system for processing card payment transactions that reduces fraud and chargebacks. The updates to 3DS2 will also remove some of the friction that led to conversion losses in the earlier versions. You get a more secure and seamless way for customers to pay you.

3. Conserve funds

Take a page out of your payment provider’s book. Merchant banks and other payment processors require you to have a merchant reserve to secure your account against fees, chargebacks, and refunds. Why don’t you do the same with your overall business? Put a reserve system in place in the event of a barrage of fraud and chargebacks caused by rogue affiliates.

Also, having your own reserve in general is a smart move in the event something goes wrong with your payment provider.

4. Build strategic brand partnerships

Do you know stock photography? Then you know that last year big Australian brand Canva bought Pexels and Pixabay, the two biggest free stock photo sites. Somewhere in this mix are affiliates that promoted subscriptions to stock photos not only of these companies, but also of big stock photo providers like Shutterstock and iStockPhoto before acquisitions took place. That’s a ton of traffic!

These types of acquisitions are common. Affiliates saw this in the 2010 era when super coupon brands acquired smaller coupon and deal sites.

So, it’s time you look into procuring top sites to corner your vertical. If you’re not in the market to buy, that’s fine. Even exclusive partnerships with super affiliates can enhance your affiliate marketing performance if they’re getting something unique other partners are not.

Even as you adopt new contingency plans, consider how to move your lower demand products. Strategic partnerships with reputable affiliates that already have strong audience can help you get your product or service to the right market.

5. Never place all your eggs in one basket

The second wave of COVID-19 may be even more detrimental to businesses. So, now is the time to plan on how to diversify your income sources and payment processing.

For example, at DirectPayNet, we’ve helped numerous high-risk business owners build out their offshore payment processing. This has allowed them to tap into global markets while negating the pressures from hotspots affected by COVID. In doing so, they have also been able to expand their affiliate programs to established affiliates in overseas markets.

You can do the same for your business, especially if you engage in cross-border transactions. So, consider expanding your affiliate marketing program to overseas partners. Even your US payment processor can offer additional currencies to help convert international sales

To get an idea of how to do so, you can check out Affiliate Summit. They are still holding worldwide events, albeit remotely out of necessity for social distancing. This could be an opportunity to connect with partners around the world. It could also help you collaborate with more affiliates who aren’t big on going to large events in person but have a strong online presence that supports your target market.

6. Trim the fat

This can be a little difficult to do, but it’s a business decision you need to make, nonetheless. One that supports future revenues.

You need to remove low-performing, high chargeback affiliates and media buyers that are draining your budget. If your program allows, consider having a more concentrated list of medium to high-performing affiliate partners. You can then move the commissions you would normally pay to the non-performing affiliates over to the top converting ones. You’ll also be building a strong partnership to take you through the second wave and beyond.

This will also work to reduce your chargeback and fraud ratio since your network now consists of reliable partners with quality traffic.

But make sure you’re respectful with your partners when you make this transition. You want to ensure you keep the goodwill of your lower affiliates if you do decide to open back your program.

7. Pay attention to the numbers

They don’t lie. Your transaction data analysis must get even more in-depth to identify volume, risk and conversion rates.
For example, imagine using the same Facebook Ad up for more than 90 days. Let’s say you initially had a surge in impressions, click-throughs and sales. Later you notice a steady drop off in clicks and actual purchases from that same content. The issue could be ad fatigue. At this rate, it’s time to refresh your creative or content to stimulate the responses of your prospective customers.

Additionally, look at how many chargebacks are linked to specific affiliates or marketing creative. Examine how certain orders contribute to chargeback-to-sale ratios over the long term.

When you know and understand your numbers, then you can adjust, identify problematic affiliate and media partners, and streamline your program even more.

8. Eliminate affiliate marketing cannibalization

As you may note, a lot of large advertisers with affiliate programs prevent affiliates bidding on branded keywords. This is an attempt to prevent cannibalization because of their own affiliates. It increases advertising costs and hurts data integrity when running statistics.

For your high-risk business, perform an audit on all marketing channels so you can stop cannibalization.
So, for example, if your in-house marketing team and an affiliate are both promoting using the exact same content in Facebook Ads, they’re competing against one another. Distinguish who is allowed to use those ads vs. compete on keywords.

You can also consider removing last-click attribution in favor of first-click attribution to reduce predatory behaviors by affiliate partners.

Key takeaways on managing your affiliate marketing

Over the past few months, customer behavior and demands have altered. So, continuing with ‘business as usual’ cannot be the order of the day if your business is to weather the pandemic and come out stronger on the other side.

Not all high-risk businesses have been lucky in the affiliate marketing space. Some advertisers we know have grown their affiliate programs to more than 1000 members with very high conversions. Some other have not seen that success. So, it’s important to take the necessary steps now to protect your business for the future.

This is a great place to start in streamlining your business to make the most of your affiliate programs. So, expand your market and affiliate opportunities, add offshore capacity, and bump up your security protocols.

DirectPayNet helps high-risk businesses with affiliate programs access domestic and offshore payment gateways. Our team also helps implement systems to reduce fraud and chargeback ratios.

If you want to expand your business beyond American shores, email our team today.
August 12, 2020
Content Subscription Sites: Robust Payments Are Key To Your Bottom Line
Do you own a content subscription site? If so, you are probably one of the many companies raking in the revenue.

The last few months have seen entrepreneurs in your position earning big money. What if there was a way to add even more to your bottom line? Well, the solution lies in your payment gateway.

The Coronavirus pandemic gave sites like Patreon a big boost in revenue during the lockdown. That momentum continues to this day. These business models have reaped millions of streaming digital content, subscriptions, and tons of credit card payments.

But, here’s the thing. Payment processing should be top of mind when any online business scales big and fast. Particularly the diversification of your online payments. Merchant accounts need protection to avoid termination or placement on MATCH.

Considering your platform offers digital content and on a recurring basis, your business model is high risk. This label requires you to be extra compliant with your payment gateway and merchant account providers. It’s also crucial to guard against chargebacks and other forms of high-risk fraud.

It’s awesome that content subscription platforms are getting a big return. But, the payments channel for your industry requires a lot more attention. Hopefully, this blog will help you protect it as you continue to scale.

Dominance in the content subscription site market

As you probably already know, subscription-based content has been in existence for less than a decade. However, they are common among many internet users.

You may refer to your model as a paid subscription, paid member subscription, direct-to-consumer or membership-subscription site. Regardless, the principle is the same.

The market is extremely hot now, so it makes sense to look at major players like you in the industry.

Playbook

Playbook, a platform for fitness, wellness, and health content creators, is another popular membership site. With its integrated payment processing options, it has attracted usage from celebrity trainers like Boss Everline and Don Saladino. In fact, recently, Playbook has been able to raise $3m to better help content creators monetize their offers.

Patreon

Created in 2013, Patreon offers payment processing to creators whose business of choice can be referred to as high-risk.

Below are a few statistics about Patreon’s growth. All of these figures point to an increase in the market for content subscription.

Currently, Patreon has over a million subscribers entertained by over 51,000 content creators. In 2017, it was estimated that the membership site paid $150,000 to content creators.

In the three years between 2013 and 2016, creators that earned at least $100 on a monthly basis increased in number by a factor of 200. Monthly, subscribers pay an average amount of $12 each to content creators.

Content subscription sites must be vigilant about payments

Payment processing should be a big issue for entrepreneurs like yourself. A high-risk business of your size needs several extra considerations to get the perfect payment channel.

Keep your processing safe and in line with your risk level

On average, banks take as many as 24 days to completely onboard new merchants like yourself. That’s only if they agree to accept your business. Imagine how long it might take a low-risk provider to service you when you are high risk.

High-risk acquiring banks approve high-risk businesses based on several criteria including your merchant category. One thing that concerns them is the type of content produced by creators that use your platform.

So, beware of creators offering risqué content outside the scope of your business category. This could affect your current payment processing.

The proper solution is this. Secure an independent payment gateway and merchant account. It is the best choice for accepting initial credit card sales and rebills from your online users.

How to reduce risk linked with content subscription merchant accounts

There is always a level of risk involved for independent payment processing of content subscription sites. This risk ranges from chargebacks to purchase fraud and account takeovers. To prevent these from happening, the following measures should be followed:
- Ensure all users create very strong passwords.
- Using two-step verification where possible.
- Having a transparent stance on refunds, privacy, cancellations, and other terms of service.
- Europe-based merchants are advised to use 3D-secure (3DS) authentication. In fact, 3DS is recommended regardless of location, as it will soon be mandated.
- Use recognizable descriptors that will appear on credit card bills.
- Verifications on all suspicious offers.
- Strict and accurate record keeping for customer dispute, tax and legal purposes.
Follow all payment protocols recommended by card-processing networks. With the above measures, it is possible to reduce risk and enjoy the true financial rewards of providing direct-to-consumer services.

Although getting a high-risk payment gateway is the best, all of the compliance and regulations that have to be followed can make it seem complicated. However, with a partner like DirectPayNet, the process is considerably more straightforward. Contact us today to get started.

Paid subscriptions, memberships and similar models are all high risk

Content subscription platforms typically draw in more fraud and chargebacks. The reason for this is that typically there is no physical product delivered to the customer. In turn, this makes the transaction risker from a payment gateway’s perspective. This is especially true when it comes to finding a merchant account bank or other payment provider that will allow you to accept credit card payments on your website.

You’re getting the privilege of accepting Visa and Mastercard orders for a sophisticated business model that involves rebilling. Again, this makes you high risk.

There are several reasons for this which includes the following:
1. The type of content allowed on a paid membership site is varied. Content creators operate in a variety of niches. Categories like fitness, health and wellness, lifestyle, music, gaming, and more exist on these sites. However, as the pandemic has shown us adult content is obviously more popular.
2. You have no immediate control over content published by your users. If 10% of content involving profanity, nudity and sexual situations is published, then it’s definitely considered high risk. Certainly not all content subscription sites contain adult content, but many of them do. This is why you need to be PCI and web compliant.
3. A paid subscription model is involved. When online business owners allow recurring transactions, it’s seen as a risk to the institution allowing you to accept credit card payments. Users can cancel abruptly and ask for refunds within days of buying. They can also try to recoup more of their paid subscriptions back from you by calling their bank for a chargeback. Even, if the number of days for a refund has passed.
Compliance is mandatory to accept Visa and Mastercard rebilling

Imagine trying to secure payment processing for your content subscription sites with a mainstream bank. Don’t expect to get the same type of payment platform and support like they offer a benign e-commerce clothing store. Your e-commerce business is much more technologically sophisticated.

With this in mind, it’s important to ensure that upon entering your site, you have an age verification pop-up or page. It’s standard for websites to confirm new visitors are 18 years of age and older.

If you don’t want to get a flat-out NO on your next application for a subscription payment gateway? Think strategically about how you present your business.
It could be something as simple as removing explicit content from the home page. Don’t splatter nude photos or video content upon entry. Reserve this for pages accessible only to registered users confirmed to be of age.

In addition, Visa and Mastercard require that your business name and location be published in your footer. You also need to ensure your descriptor and customer support phone numbers are visible on your order page.

No boxes should be pre-filled, as this violates the terms for credit card processing. So, if there’s a box asking if your user agrees to the subscription price or the terms of service, they still need to voluntarily check that.

Do everything you can to be a compliant merchant

Compliance and due diligence plays a powerful role in the survival of your merchant account.

For example, you must respect know-your-customer (KYC) requests, as well as anti-money laundering (AML) requirements from your payment provider. Acquiring banks set rules based on local and federal laws, and government regulations at all levels. As you know, they will ask for supporting documents to prove your citizenship and your role in a business. We know this is a hassle, but they don’t care. Your best bet is to play ball to get a subscription payment gateway. The alternative is suffering from a declined merchant account application.

On another note, your website should have complete transparency. This applies specifically to cancelation and privacy policies, data protection laws, and other regulations.

Also, all subscription pricing details, extra fees, schedules, and tax obligations for the creators themselves must be made clear. There should be transparency on refund policies, opt-out policies, shipping procedures, and dispute measures.

These measures give credibility to your site. Users will be much more comfortable with signing up to your platform. And, chargeback rates slow down if everything you advertised is delivered.

These are just a couple examples of how to keep your entire payment processing system from shutting down.

But there’s something else.

Diversify payment channels for your content subscription sites

When approaching payment processing options, owners must widen their channels. The way to do that is diversify. In other words, operating more than one merchant account.

Multiple merchant accounts allow for content subscription sites to accept different types of payments, especially those made with credit cards. In fact, diversifying your merchant accounts and payment gateways will prevent bottlenecks when running your business should any policies change with one of your payment processors.

Content subscription merchants can enjoy the following advantages when payment channels are set up correctly.
- Bigger capacity to process more sales (Having two MIDs capped at $50,000 may be safer than owning only one MID at $100,000.)
- Risk is no longer all in one single account
- Greater control over chargeback and refund ratios
- Accepting payment in different currencies (An offshore MID increases cross-border sale conversions.)
As we mentioned earlier, low-risk payment providers and content subscription merchants don’t mix. Third-party processor like PayPal may seem great for independent payment processing. However, they are low risk. This or a similar kind of third-party platform could be a ticking time bomb.

The risk of refunds and chargebacks are too high with these providers. Your accounts risk suspension if chargeback rates are too high. Frozen revenue of say $50,000, is frustrating. When your account is terminated due to high fraud, it’s even worse. So, remember once again, low risk and high risk don’t mix.

You need unique expertise to help secure subscription payment solutions

It can be a challenge to operate a seamless content subscription platform. Preventing payment processing termination requires a lot of work.

It’s hard to know the best course of action for your business if you are unfamiliar with payments solutions and strategies. You may have applied for processing but were denied.

That’s exactly what DirectPayNet is here for. We answer your questions and guide you through the process of finding the right solution for your subscription payments. Email us today to get in touch.
August 7, 2020
Facebook Boycott: Big Opportunity For High-Risk Merchants? – Pt. 2

We’re looking at how the current Facebook boycott is affecting high-risk merchants. If you haven’t read part one, click this link to read it now.

In part two, we are going to look more closely at how you can get the most out of your Facebook ads. We’ll also explore whether now is the time to move away from the platform. Diversifying your marketing strategies to ensure your sales don’t suffer if there is a policy change at Facebook.

Facebook has strict compliance rules surrounding advertising. But many high-risk merchants are still attracted to advertising on the platform. It’s not hard to see the attraction. Facebook is the most popular social network in terms of users. It also has the best demographic targeting on the planet.

So let’s look at this in a little more detail.

How high-risk merchants can get the most out of advertising on Facebook

As mentioned, the best place to start is with revisiting your target audiences. Have you gone into enough detail when describing your target market? Remember, the platform knows how much we earn. How we like to spend our money. The last website we visited. Where we like to eat. What our hobbies are. You name it, they probably know it. This is the data gathering that has many individuals concerned about privacy. But it also provides marketers with the best advertising targeting there is.

Once your target audiences are revisited, look at split testing your ads. Perhaps set up multiple ads, and monitor their respective performances. Facebook allows merchants to split test across five parameters. This includes audiences, the ad text, ad placements, and the method in which they’re delivered to audiences. Examine your results. If you find a winning combination, focus your resources that particular advert to drive up your revenues.

The Facebook boycott will help to lower competition based on their auction format and also the compliance department may give you a break and allow more aggressive ads to make the cut. But moves made during the pandemic could help your business even more. As mentioned in part one, Facebook understands that their main customers are small businesses. Not household brand names. That’s why they’ve launched a small business grants program. As part of the scheme they’re offering eligible businesses ad credits. If you’re unsure about experimenting with Facebook ads during the boycott. Why not apply to the free ad credits scheme take a risk-free shot?

Why the Facebook boycott may spark a rethink of your marketing strategy

Many high-risk merchants we’ve spoken to feel a little in between a rock and a hard place. On one hand, the boycott presents an opportunity to advertise with reduced competition and perhaps scrutiny. On the other, changes may come as a result of pressure from the boycott. Those alterations to policies may act as the final nail in the coffin for restricted categories trying advertise on the platform.

So what can you do if you rely on Facebook advertising to drive your sales? Even if you manage to stay on the right side of ad compliance policies, Facebook can shut down a profitable campaign without warning. The platform realizes that they need to move away from their reliance on advertising income. That means investment into their advertising capabilities may decrease. Lower investment could lead to worse-performing ads. You may need to rethink your marketing strategy sooner than desired.

As is the case for your merchant account or payment gateway, relying on one method is a recipe for disaster. If you’re entirely dependent on your Facebook ads for revenue, your income is at risk. The best method to mitigate this is always diversification. The boycott may give you the nudge you need to explore other online advertising avenues. By decreasing your reliance on Facebook ads, as profitable as they may be, you can lower the risk to your business.

Are you a supplements or nootropics merchant reliant on just one payment gateway? Learn more about why advertising isn’t the only aspect of your business that requires diversification.

Best-performing online advertising channels for high-risk merchants

It’s vital to remember there’s a world outside of Facebook when it comes to online marketing. In fact, several competitors have emulated Facebook’s targeting advantage. Giving merchants a similar experience. First on the list of competitors is Google. If you thought Facebook’s $69.65 billion in ad revenue last year was impressive, Google’s came in at more than double that figure. During 2019, advertisers spent a collective $134.81 billion on the Google Ads platform.

Putting YouTube aside for a moment, Google is revolutionizing the way in which consumers search and buy products online. Herein lies Google’s biggest advantage for advertisers over Facebook. By investing advertising budgets into Google placements, merchants can target users with commercial intent. That is to say, they can present the products that the user is already searching for.

Get creative and never leave display ads dormant

Ad fatigue is a big problem with Facebook ads. You have to show your ad multiple times to cold prospects and convince them to buy your products or services. That could be as many as seven times, “fatiguing” the customer and putting them off. Whereas with Google, you can advertise to customers already looking to buy products and services you sell. With the advent of Google Display ads, merchants can now display beautiful visual imagery of their products. Within a few clicks, the customer can graduate from a search for a product to your checkout page.

For instance, if you’re selling libido or weight loss supplements, you don’t have to resort to sensationalist language. Nor do you need the cliché before and after photos. There’s no need to try and persuade prospective clients in this way. They’re already convinced because they are searching for your specific type of product or service.

All you have to do is list the specific benefits alongside a picture (or video) of your product in action. If you target the right keywords, the customer already knows what they’re looking for when they arrive at the Google search page. So all you have to do is tell them why they should buy your product or service over a competitor. Targeting ‘warm’ or ‘hot’ leads in this way will drive up your conversions and revenues.

What about other social media platforms?

As touched upon above, YouTube represents another great social platform for advertisers. After all it benefits from all the same advantages Google search ads have. But to secure excellent conversion rates, you need to produce a video ad. While the similar in nature to Facebook, YouTube’s advertising guidelines are less stringent. For instance, let’s go back to an example used in part one. Prepper and survival kit merchants could shoot a video showing camping and hunting knives in action. Something that would not be permitted on Facebook.

It might also be time to target fast-growing video-based social media platforms such as TikTok. Which allow you to show off your personality and capture consumer interest. Their advertising guidelines are very similar to Facebook’s regarding making exaggerated or unfounded claims about your products and services.

Thus, if you sell info products for example, consider not speaking about your product on your ads. By making an engaging or funny video with a musical background, you could go viral. Attracting both attention and sales for your brand that way instead. The number of daily active TikTok users exploded in 2020. So now could be the best time for high-risk merchants to capitalize on lower competition for ad spaces. Particularly for those aiming at younger demographics.

But moving away from text and advertising copy isn’t something trending on social media. It’s right across the internet.

The rise of visual and mobile search

Two huge trends are underway in the advertising space. One is visual search, the other is the increasing prevalence of smartphone usage. Combined, they are set to reshape the e-commerce landscape.

Mobile search

Let’s tackle mobile marketing first. Almost three quarters of the world will use only use their smartphones to access the internet by 2025. That’s 3.7 billion people. Which means if you’re not targeting mobile search marketing, you’ll get left behind by those that are.

But it’s not only search. Apps (including social media) will account for many of those individuals accessing the internet via their smartphone. Customer spending within apps has already reached $101 billion globally. So it’s something you can no longer ignore as a high-risk merchant. To grow and scale in the 2020s, you’re going to need to heavily focus your advertising on handheld devices. Also, you have to ensure that you make your mobile checkout page easy and quick to navigate for users. Here are some tips to help you.

Visual search

Pioneered by Google, Pinterest, Amazon, and Bing, visual search is another key advertising trend to get acquainted with. As highlighted above, the way people search is moving away from keywords, and towards visuals, including videos. In fact, 70% of millennials and Gen Z consumers have admitted that if all visual content was shopable, their rate of online purchasing would increase. The stats appear to back that up. As much as 10% of all visual searches convert to sales for products less than $200. High-risk merchants that appreciate the power of visual search first, will benefit the most. So get out that camera and start filming and photographing your products!

An interesting platform to look into for advertising is native. Native ad platforms such as Taboola and RevContent allow you to target users at the bottom of a website they are visiting, thus resulting in more targeted traffic. Say your customer is browsing an article about male pattern baldness, this might be a good opportunity to offer supplements geared toward male enhancement or other male targeted products. Native ads allow you to select your customers interests and then place your ads strategically on articles and websites that your target audience visit.

The Facebook boycott presents an opportunity for experimentation and diversification

The Facebook boycott means different things to different high-risk merchants. Some of you should use this as an opportunity to try and push boundaries in a less competitive space. Others may look at the bigger picture and start to look at where advertising strategies will be focused ten years from now.

Obviously, no one knows the final outcome of the Facebook boycott. The best line of defence right now is to protect your business. It’s always wise to diversify your marketing, regardless of whether you increase or decrease Facebook ad budgets. Having all eggs in one basket is never a successful long-term business strategy. Even if it’s payment processing or advertising.

Worried about your over-dependency on one type of advertising or payment solution? Then don’t hesitate to contact the DirectPayNet team.

We’ve remained open throughout the challenges of 2020. We continue to help businesses in high-risk categories to grow and scale through diversification. Email our team now to find out how.

August 1, 2020
Facebook Boycott: Big Opportunity For High-Risk Merchants? – Pt. 1

Unless you’ve been living under a rock, you know that there is a Facebook boycott. No, not from individual users. From big brands and corporations that advertise on the platform.

The global pandemic has forced the number of Facebook users into record territory. Today the platform has over 2.6 billion monthly active users. Thus, you would think that advertisers would be licking their lips at the chance to target such a vast audience. However, many prominent companies have staged a Facebook ad boycott; holding back their advertising dollars. This is due to recent events and reemerging concerns over Facebook’s performance in policing its own platform.

Some of the biggest brand names in the world such as Starbucks, Coca-Cola, and Unilever have joined the initiative. But with so many of the world’s biggest Facebook advertisers pressing pause on their ad budgets, what does it mean for high-risk merchants?

This two-part series will walk you through what the Facebook boycott is about. As well as how the role Facebook plays in your high-risk vertical may change. It’ll also cover what the current status of Facebook advertising is for high-risk online merchants. Before moving on to the importance of diversifying your advertising strategy.

What is the Facebook boycott?

Facebook has struggled in the past with events such as the Cambridge Analytica privacy scandal. But this boycott centers on new issues. More specifically, the issue of Facebook failing to tackle the spread of hate and misinformation on its platform.

Other platforms such as Twitter, have recently started tackling the spread of false information. Including from sources such as Donald Trump. They’ve also committed to a complete political advertising ban. However, Facebook has taken a different approach. They have steered clear of interfering with posts and some adverts made on their platforms. For instance, many adverts from extremist right-wing groups are still circulating to this day. This is despite the fact they are banned according to their own guidelines.

This approach to so-called “hate speech” and misinformation spawned the The “Stop Profit for Hate campaign”. It was first launched on June 17. It’s backed by civil rights groups, and so far over 1,000 prominent brands have taken part. They have all agreed to pause their ad spend until real changes happen. Their action is a response to the “repeated failure to meaningfully address the vast proliferation of hate on its platforms.”

Why does it matter to Facebook?

The idea of the campaign is to put pressure on Facebook to make significant changes to the way it operates its platform. They know holding back advertising dollars is the way to achieve that change. In 2007, advertising accounted for $764 million in revenue for Facebook. Last year that figure was $69.65 billion. Worse, despite recent efforts to diversify, 98.5% of Facebook’s revenue is derived from advertising. If the movement gains serious momentum, Facebook could see the bottom line impacts as soon as Q3 2020.

Facebook knows it has a problem. They’re aware they shouldn’t have 98.5% of their eggs in one basket. This is why they’ve been recently expanding their business operations to diversify their income. They’ve acquired WhatsApp, Instagram, and now they have entered the payments space with WhatsApp Pay in India and Brazil. That’s not to mention their attempts to launch a new cryptocurrency named Libra. But it has stalled after many major backers pulled out shortly after its announcement.

As Facebook operations continue to proliferate, what does it mean for high-risk merchants? For instance, what if you’re in the dating niche? How much longer before Facebook bans your adverts for clashing with their new Facebook Dating service?

But this is pressure from high-spending partners to get even stricter with their advertising polices. Also, couple that with their desire to lessen their dependency on ad revenue. It could be a ticking time bomb for high-risk merchants reliant on Facebook ads to drive revenues. On the other hand, it could present an opportunity.

How is the Facebook boycott affecting high-risk merchants?

Facebook advertising is already a tough environment. Even tougher if you’re in a high-risk vertical such as dating, online education, supplements, or digital info products. Any kind of adult content (symbolic or otherwise) in ads is a big no-no. The advertising of dietary supplements is very tricky, with before and after pictures banned, for example. Merchants selling info products (particularly online business coaches or biz-ops) have a hard time getting Facebook ads approved. Since, many operators in the same making money online niche have caused problems for Facebook.

Prescription drugs, supplements, alcohol, tobacco, cryptocurrency, weapons, gambling, and credit and loans. These are a few examples of tightly-restricted verticals on the Facebook advertising platform.

But the boycott may help to relax those policies. You see, it’s not actually the big household name brands that provide the bulk of the advertising revenue for Facebook. It’s small and medium-sized businesses. Given that the movement has spread far beyond the headline names. The boycott may make Facebook a little more lenient with their policies so as not to feel the pinch on revenues. Ads that were not compliant a few months ago may make it through the gate now that Facebook’s ad dollars are drying up from big companies.

Therefore, if you’ve had a tough time trying to advertise on Facebook, now might be the moment to try again. By being strategic with your advertising, you can beat competitors who gave up on Facebook ads years ago.

Are you aware of the compliance rules governing Facebook ads? If you get you ads wrong, you could be banned from advertising on Facebook altogether. Make sure to read our two-part guide to staying on the right side of their guidelines!

Now could be the time to restart those old Facebook ad campaigns

For instance, let you say you operate a survivalist or prepper website. Advertising your camping knifes are out of the question. However, can you get creative with your products or advertising? What about selling an e-book that informs the reader about the best camping gear, boots, or tents? Or what about if you’re a credit-repair merchant? Could you write an ad that omits inflammatory and sensational keywords?

Collecting email addresses from customers of these types of products might help sell other products to them at a later date. An email list of customers for a particular product niche is a very valuable asset!

There’s no time like the present to revisit Facebook ads, if you’re a high-risk merchant. Facebook hasn’t yet publicly stated any changes to its strict advertising guidelines. But with less ad spend across the board, there may be less competition for your placements.

Don’t forget Facebook’s ads system is based on an auction system. The less bidders there are, the cheaper you can acquire new customers. Also, with Facebook compliance typically being very restrictive, they may let out given there are less advertisers.

Some in high-risk verticals will see the boycott movement as the beginning of the end for their industry on Facebook. In some instances, they may even be right. But while they are focusing their efforts elsewhere, you can gain a competitive edge by taking their spot at the table.

For that reason, it may be worth increasing ad budgets during this boycott period. To see what effect it has on your bottom line. You may begin to notice you receive higher returns on your investment.

Don’t forget the importance of the landing page

Where many Facebook marketers for high-risk merchants have gone wrong is at the landing page. Facebook no longer scans the content of the ad, but where you’re sending their users too. In fact, 50% of the ad review process is dedicated to your landing page, rather than the advert itself. Your landing page is also subject to the same rules and stipulations.

Therefore, just because you’re not on the platform itself, it doesn’t mean you can revert to more sensational marketing language. Avoid any language that could be construed as misleading. By the same token, avoid providing false information or overselling your products and services.

Not only is this a bad practice from a Facebook standpoint, but it will also result in high refund rates. And a slew of damaging chargebacks. You don’t want your little experiment in beefing up your Facebook ad spend to result in damaging to your ability to process payments. But by staying on brand throughout your ads and landing pages you may be able to increase revenues. All without running into ad compliance issues associated with Facebook advertising. At a time when even local and small online outfits are pausing their Facebook ad spend, you could reap some hefty rewards by experimenting.

The Facebook boycott may signal the time to start experimenting with your ads

The dust is yet to settle on what the Facebook boycott means for high-risk merchants. But it certainly presents a potential opportunity. Many household brands and local businesses are shunning Facebook. You could use the reduced competition to your advantage. Facebook haven’t changed their strict compliance policies. But you could get smarter and experiment with the way you craft your adverts. Benefitting from lower customer acquisition costs in the process.

In the second part of this two-part series, we will delve into how to get the most out of your Facebook ads. We’ll also look at how to future-proof your marketing, given how turbulent Facebook is as an advertising channel at the moment. So stick around!

In the interim, get a head start on your payment processing as well as your online advertising strategy. Speak to us at DirectPayNet. We work will all types of high-risk industries. Including adult entrainment, supplements, and online coaches to name a few.

Email the DirectPayNet team today to establish a better payment processing strategy during these increasingly uncertain times.

July 29, 2020