Thoughts on Micropayments

So, I'm evaluating phone billing (Lee posted a thread that made me wonder what y'all thought about it as a processing option).

Here's the thing.

The micro billers/phone billers seem to want to take between 40 and 50% of your retail price, which seems incredibly steep. So one question is whether or not people in this forum think that it attracts enough new buyers (that you couldn't get via another system) to your program.

My other question is, even if you are filming and selling your own content, how much profit can you possible make per sale to make those kind of fees worthwhile?

I'd love to hear some feedback from anyone actively processing in micropayments, and how you might be determining a successful or unsuccessful ROI?

Mary

Phone billing is the easiest extra 10% you will ever make. Honestly, get in touch with Sam from GX Bill and tell him I sent you, he will get you setup with almost no effort.

Yes, phone billing takes more % but you are getting members who would not normally have joined by cc (I can tell you from experience that there is no decrease in your cc billing when you add phone billing since cc billing usually works out cheaper for consumers). You also get some members who want to phone up and spend only a few dollars checking out your website before actually joining via cc.

The only "gotcha" is how you are going to pay your affiliates for phone billing referrals, but thats not an issue if you use a system like NATS or MPA.

Because Maleflixxx is a reseller... it's not just the affiliates that we need to pay, it's the studio royalties as well. That's 50% right there. If we pay 40% to the phone billers we will actually run at a loss.

So - are there enough markets (geographic or otherwise) to make this a worthwhile step?

M.

I can certainly understand the question. There are many instances where it just doesn't make sense to offer additional billing options. We have been asked over and over to offer cascading billing and while it would work very well for some folks, our decline rate is so low (perhaps it is our market niche) that even if they were approved by a secondary processor, it would take a 50 affiliate driven memberships to cover the cost of the Visa fee each year. We just don't get that many declines.

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Originally Posted by mgillis

Because Maleflixxx is a reseller... it's not just the affiliates that we need to pay, it's the studio royalties as well. That's 50% right there. If we pay 40% to the phone billers we will actually run at a loss.

So - are there enough markets (geographic or otherwise) to make this a worthwhile step?

M.

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You have to pay 50% of actual surfer payments, before processing fees? Yikes! Perhaps you could ask your studios if they would like to earn an additional 10% for almost no work, and then calculate their rates based on the amount you actually collect?

The other issue, with every phone billing service I've heard of, is collectability.

A credit card purchase is guaranteed to go through once an authorization is received. Telephone billing is only paid when funds are actually received from the person whose phone is being billed. If the phone bill isn't paid, the phone billing money is never collected and the merchant doesn't get paid. Patti probably knows more -- she used to run phone sex lines -- but my understanding is that the lag between billing and payout is 12-16 weeks or longer, and the collection rate is, on average, something like 50%. That's for 900 numbers, it may be different for other types of telephone billing.

Of course a credit card can be charged back, so the net collectability is less than 100%, but chargebacks are historically pretty low.

We offer phone billing, but it's never been a big part of our revenue stream, and we intentionally price it substantially higher than credit card and check just because of the lack of speed with which it's paid and the collectability.

I would say probably focus more on euro debit and other payment alternatives. Seems like it would be complicated to offer phone billing only to some customers where studios approved, and I'm not sure a lot of studios would want to take a 30 or 40% cut in money received on those customers to get an additional 10% more business... though I could certainly be wrong.