SOPA: Pot Meet Kettle [2023 Update]

The Official Merchant Services Blog has late breaking news to report today. Once again we take on the topic of the Stop Online Piracy Act (SOPA). In perhaps the strangest twist to date for the ongoing saga that is the battle between the entertainment industry to curb piracy and the internet industry to keep their business free of government interference on a micromanaged level — Alex Fitzpatrick from mashable.com reports that SOPA has some SOPA issues.

Lamar Smith Copyright Violation

In Fitzpatrick’s article, found here, it is noted that the sponsor of the Stop Online Piracy Act (H.R. 3261) Lamar Smith has a copyright violation on his own website texansforlamarsmith.com.

The article follows a report from Jamie Lee Curtis Taete over at www.vice.com. Taete investigated Lamar Smith’s website for any potential copyright issues. You can see Taete’s investigation here. Taete describes describes the impetus for the investigation: “US Congressman and poor-toupee-colour-chooser Lamar Smith is the guy who authored the Stop Online Piracy Act. SOPA, as I’m sure you know, is the shady bill that will introduce way harsher penalties for companies and individuals caught violating copyright online (including making the unauthorised streaming of copyrighted content a crime which you could actually go to jail for). If the bill passes, it will destroy the internet and, ultimately, turn the world into Mad Max (for more info, go here).

I decided to check that everything on Lamar’s official campaign website was copyright-cleared and above board. Lamar is using several stock images on his site, two of which I tracked back to the same photographic agency. I contacted the agency to make sure he was paying to use them, but was told that it’s very difficult for them to actually check to see if someone has permission to use their images. (Great news, copyright violators!) However, seeing as they’re both from the same agency and are unwatermarked, it seems fairly likely that he is the only person on the entire internet who is actually paying to use a stock image (and he’d be an idiot not to).

So I took a look back at an archived, pre-SOPA version of his site.”

Caught Red Handed

The violation stems from Lamar Smith using this image:

On his site it appeared like this:

Taete fills in the full details of this violation: “I managed to track that picture back to DJ Schulte, the photographer who took it.

And whaddya know? Looks like someone forgot to credit him.

I contacted DJ, to find out if Lamar had asked permission to use the image and he told me that he had no record of Lamar, or anyone from his organization, requesting permission to use it: ‘I switched my images from traditional copyright protection to be protected under the Creative Commons license a few years ago, which simply states that they can use my images as long as they attribute the image to me and do not use it for commercial purposes.

‘I do not see anywhere on the screen capture that you have provided that the image was attributed to the source (me). So my conclusion would be that Lamar Smith’s organisation did improperly use my image. So according to the SOPA bill, should it pass, maybe I could petition the court to take action against www.texansforlamarsmith.com.’

Oh dear. Luckily for DJ, there are people out there like Lamar making new laws to protect the little guy against online copyright theft. Keep fighting that good fight, Lamar!”

No Response Yet

No spokespeople from Lamar Smith have been available for comment on this issue. Maybe when the egg on their faces is removed there’ll be time to address the silliness that stems from the SOPA sponsor not taking enough time to make sure his own site didn’t fall under the extremely broad language that would allow the Department of Justice to shut down his own site.

Luckily for Smith, the bill hasn’t been signed into law just yet, so Google doesn’t have to remove his site from their search engine, and his payment network provider doesn’t have to suspend transactions from the donation portion of his site.

For More Information

To find out more about the Stop Online Piracy Act, you can read the in-depth Host Merchant Services Analysis here.

To read the proposed legislation itself, you can download it here.

Stop Online Piracy Act Coming Back [2023 Update]

Today The Official Merchant Services Blog brings you all an update on the Stop Online Piracy Act. This legislation has been picking up traction in the news the past couple of days because it’s become a talking point in the GOP Presidential Nomination race, and because Congress is set to resume discussion of the bill. The bill is up for a vote at the end of the month and will be getting a lot more media heat in the coming weeks.

What is SOPA?

We initially posted about the controversy of SOPA with our November 20, 2011 blog.

Host Merchant Services provides an in-depth analysis of SOPA here. It explains the bill: “The Stop Online Piracy Act (SOPA) is also known as H.R. 3261. It was introduced in the House of Representatives on October 26, 2011 by Lamar Smith [R-TX] and a bipartisan group of 12 initial co-sponsors. The bill is currently creating a lot of controversy in both the tech sector as well as the credit card processing industry because it expands the ability of U.S. law enforcement as well as copyright holders to fight online trafficking of copyrighted intellectual property and counterfeit goods. ”

You can download a PDF of the bill here.

The Root of Controversy

The bill has been polarizing as the sides that support and the sides that rally against the bill get oversimplified into the entertainment industry and those interests it successfully lobbies for support the bill; the tech and internet industries and those interests they successfully lobby for are against the bill.

The relevant twist for The Official Merchant Services Blog is that the bill includes payment processors. It defines them as Payment Network Providers and includes them in the scope of the bill. The bill holds Payment Network Providers responsible for the content on the websites of its customers and words it so that the Department of Justice can prompt payment processors to suspend processing for sites that get investigated by the DOJ.

At a basic level, this appears fine. A company that is selling pirated material on its site and violating copyrights can get shutdown by this bill. Their transactions can get suspended, Google can be forced to remove it from the search engine, and its page ranking can be destroyed. For the sites out there trafficking in online piracy these measures are extreme and effective. Which would speak to the proposed law’s effectiveness.

Unfortunately, the bill is extremely open-ended. And this is where the anti-SOPA sentiment gets its fuel. Creating a hypothetical that focuses on a merchant processing and small business perspective, here’s what can go wrong with SOPA the way it is currently worded:

A small business launches its website.
The site, in an attempt to reach out to its customers has a forum or social media section where its customers can post discussions. The intention of this tool is to create links between the business and the customers.
A poster on that site’s forum/discussion area posts a funny, home-made YouTube video. That video contains copyright infringement.
The YouTube video gets reported for its infringement.
Suddenly the site is under investigation under the purview of SOPA, and now this legitimate business gets its site shut down and its processing suspended. The business can’t make money anymore because of reports related to ancillary content on its site — not actual piracy.

This may seem a bit extreme. But the way most “arguments” or “discussions” can go on the internet, it’s pretty standard fare that stuff like this will happen. And if the DOJ takes a broad stance on this kind of interaction, sites will face interruption based on reports that do not involve full fledged piracy.

What it boils down to is the bill leaves a lot of loopholes available for websites to be griefed by random internet users who may have an agenda against a particular site. And the DOJ may or may not be tech savvy enough to navigate this type of abuse.

Recent News on SOPA

Here’s a roundup of the most recent news items that focus on SOPA:

cPanel Writes a Letter

cPanel publishes a general letter to hosting providers speaking out against SOPA. In the letter they state: “While created with the good intentions of combating widespread copyright and trademark infringement, cPanel opposes these bills for a number of reasons due to their impending negative impact on hosting providers around the world.” The company then pledges $5,000 to the Electronic Frontier Foundation, which has been fighting to preserve individuals’ digital rights since 1990. In addition, for every tweet our hosting providers post with the hash tag #cpanel4antisopa, cPanel will donate an additional $2.50 (up to a total donation to the EFF of $10,000).

WordPress Says No to SOPA

WordPress, the open source giant that powers blogs throughout the internet, took an official stand against SOPA. You can read the article about WordPress and SOPA here. It’s written by Jane Wells and posted on WordPress News. WordPress is another of a number of companies which now officially oppose SOPA; already Facebook, Google, Yahoo!, Mozilla, LinkedIn, Twitter, eBay, AOL, and Zyngahave said that they don’t support the bill. The WordPress article is a call to activism among bloggers to organize and take a stand against the bill.

GreenHostIt Joins the Anti-SOPA Side

Hosting firm GreenHostIt released this press release officially announcing their opposition to SOPA. The release quotes company CEO S. Rosendahl as saying: “SOPA, if passed, will infringe on business owners’ rights and diminish that spirit. I really dread getting the court orders that will probably come to us if this proposal passes.” Mirroring much of the analysis Host Merchant Services has given the proposed deal, Rosendahl also comments: “People who operate websites that will be ordered shut down by uncontested applications will be very frustrated and angry, and for good reason.”

Teen Makes SOPA Plea to Santorum

The Washington Post reports that SOPA has become part of the GOP Presidential Nomination race going on right now. Presidential candidate Rick Santorum was approached by a teen in New Hampshire, and as the article states: “A teenage boy implored Santorum to look into the Stop Online Piracy Act, saying a friend of his might go to prison for five years for posting a cover version of a song on the Internet.” The Washington Post determines that due to instances like this the biggest threats to America — or at least the hot topics for American voters — appear to be online piracy, an insidious United Nations and “crony capitalism.”

Host Merchant Services Partnerships [2023 Update]

Today The Official Merchant Services Blog gives the floor exclusively to Host Merchant Services. The topic being Partnerships and what the company offers with its partnership programs.

What are Partnership Programs?

The bulk of the payment processing providers out there offer individual services directly to merchants and their specific businesses. Host Merchant Services, the premier provider of payment processing and e-commerce services for small businesses and medium businesses, goes beyond just the vanilla suite of services –– providing custom partnership packages for niche market clients.

What this means is that Host Merchant Services will partner with a business to help that business provide payment processing services to the customers of that business. That’s the basics of the partnership, but the power of the partnership is expressed in how the focus of the partnership can shift for the business in question.

Host Merchant Services can customize a partnership package in three different tiers of online shopping and e-commerce services:

A package made directly for a web hosting company so that they can in turn offer services for their customers who all have online shopping sites in some shape or form.
A package made for a web site designer that can combine with their design business so they can offer their customers a seamless site with strong design and payment processing options right from the day its ready to launch.
A package made for the end-user specifically set up for a customer that has an online shopping experience set up and is ready to integrate payment processing.

Host Merchant Services Expertise

This customizable and flexible series of partnership packages are based on the experience that Host Merchant Services has in both industries –– company CEO Lou Honick launched HostMySite.com in 1997 which grew to be a successful web hosting company, and company CFO Dan Honick has decades of experience working in the payment processing industry. Combining that much experience in both aspects of the industry has given Host Merchant Services its unique partnership program’s foundation.

Web Hosting Partnerships

Host Merchant Services began an initiative to provide web hosting companies a fast and transparent third party solution for processing credit cards. This initiative is the core of their partnership program offering. And to date, the company has partnered with these various hosting companies:

Singlehop
imSMB
Gearhost
Edge Web Hosting
HostMySite.com

You can find out more information for each individual partnership here. And you can find out about the details of the Web Hosting partnership package here.

A Bit of a Homecoming

The most recent addition to the list was HostMySite.com. It’s a bit of a homecoming for Host Merchant Services CEO Lou Honick, who originally founded the company in 1997. You can read a full press release about the partnership here.

The Other Customized Packages

Beyond just the partnerships custom built for web hosting companies, Host Merchant Services offers solutions for web designers and web site owners. You can find information on those options at these links:

The thrust of these partnerships is to create the payment processing package that makes it easiest for the partner’s customers. Host Merchant Services plan is to do the heavy lifting for the company making payment processing a seamless, worry-free addition to the services they already offer their customer. They also contain value added features, such as additional telemarketing services provided by Host Merchant Services for their partner company to their customers, to give each partner extra insight into what their customers need.

What the Partnerships Offer

Each partnership has a set of basic services that Host Merchant Services can provide:

A fully designed portal site customized to your specific company.
Increased revenue as your customers can now utilize HMS processing services through your portal site.
Savings for your own company through our processing services.
Access to the gateways and technologies we support for e-commerce, including HMSExpress, Transaction Central, and authorize.net.
Assistance integrating the gateway into your website, your customers’ websites, or your shopping cart.

Building off of that base of services, Host Merchant Services tweaks and customizes each package to suit the individual partner. The company adds extra marketing services, SEO analysis and integrated telemarketing for partners that are interested.

Merchant Services: Chargeback Tips

The Official Merchant Services Blog focuses today on an aspect of payment processing important to both merchants and processors: Chargebacks.

Chargebacks occur when the amount of the original charge that was credited to a business’ checking account is reversed. The chargeback is forcibly initiated by the consumer’s issuing bank. Realizing that chargebacks can gum up the steady flow of cash for your business from day to day, Host Merchant Services gives you some tips that you can take to help understand chargebacks and help you prevent them from happening.

Common Reasons for Chargebacks

Here’s a roundup of the most common reasons a chargeback is filed:

The card was fraudulent.
The cardholder disputes the quality or receipt of merchandise.
The amount charged to the card was incorrect.
Processing errors were made during the transaction.
Proper authorization was not obtained.
The merchant did not fulfill a retrieval request.

Although chargebacks cannot be 100% gotten rid of, there are some steps that merchants can take to drastically reduce their occurrence. The more a merchant knows about processing procedures, the less likely it is a merchant will do something — or not do something — to prompt a chargeback.

Image for Host Merchant Services article on credit card processing

Procedures for All Businesses

The first tip is pretty basic. Make sure that the business name you provide to your processor is a name your customers will recognize. This is the name that shows up on their statement. So if you happen to be Bob’s Widget Store, but the business name you provide is Really Cool Stuff LLC, you will run into increased chargebacks because your customers will not recognize the name when they get their credit card statement the next month.

Respond to retrieval requests. Both customers and card issuing banks may request copies of sales and credit drafts. Once a request is initiated a merchant needs to respond within 12 business days. Make sure your business is structured to be able to provide this paperwork quickly and easily. Wells Fargo recommends sales drafts should be accessible to authorized employees for 180 days after the initial chargeback notification after which they should be stored long-term in a safe and secure location.

Always get an authorization. This very basic but does need to be said.

An image for a Host Merchant Services Article on processing

Procedures for Retail Businesses

Retail merchants should make sure they fully comply with the transaction requirements issued annually by Visa, MasterCard and Discover Network.

Have proof the card was present by making sure you swipe all cards through your terminal.

Get a signature from the cardholder and compare that signature to the back of the card. Check additional identification if needed. If the card is unsigned, request a photo ID that has a signature and have the cardholder sign the card. Otherwise, do not accept the card.

Get an imprint whenever a card has to be manually keyed into a terminal. Make sure all of the transaction information appears on the imprinted copy –– including the amount, business name, business location, and cardholder’s signature.

If a card is declined when swiped through the terminal, do not continue to try and get authorization. Instead request a new form of payment from the cardholder.

Verify that the number on the screen matches the embossed number on the card.

Pay attention to Partial Authorization, as that can create instances where a payment gets broken into smaller amounts. For full information on Partial Authorization, you can visit Host Merchant Services article on Partial Authorization here.

You can also download Partial Authorization Guides from Host Merchant Services here.

postal1

Procedures for Internet and Mail Order/Telephone Order Businesses

Use the Address Verification System (AVS) to ensure that your customer is providing you with the correct billing address. Discover Network requires AVS on all card-not-present transactions.

Provide your processor with a local or 800- number that they can include on your billing statement. Supplying this number for your customer will often help prevent a chargeback from occurring. Your customer can contact you directly with questions and you will have a chance to correct any misunderstandings quickly and efficiently.

When sending merchandise to a customer, use a shipping service that will be able to provide proof of delivery to the full billing address. For very expensive items, request a signature for the merchandise to be released to the buyer.

For more information please contact Host Merchant Services. Our quality assurance team can help you understand chargebacks and reduce the number of disputes you have to deal with.

Florida’s Proposed E-Commerce Bill

Today The Official Merchant Services Blog is taking a look at a new bill proposed in Florida that attacks the growing E-Commerce industry. The bill — HB 861 — was filed by state Rep. Mike Horner, R-Kissimmee. The bill would require online-only sellers to collect and remit Florida sales taxes, just like other Florida retailers.

Bricks vs. Clicks

This legislation is drawn on the battle that has been brewing for the past decade between brick-and-mortar retailers and online entrepreneurs. Online shopping has become commonplace for the U.S. consumer, and this year’s holiday shopping season saw record business run through E-Commerce.

The Official Merchant Services Blog did a series of posts based on the strength of the E-Commerce industry. In it we reported that in recent years, the boom in online shopping created a shift in shopping trends. Holiday shoppers no longer adhered to Black Friday as the start date for their holiday shopping needs. A 2010 survey conducted by Google and OTX found that 35% of internet users start their holiday shopping prior to the end of summer, months ahead of Black Friday.This shift continued to grow in 2011 as consumers found online shopping extremely convenient.

According to a Star Tribune article from January 16, 2011, Cyber Monday sales rose 16 percent from 2009, and topped $1 billion overall –– marking the first time Cyber Monday hit the billion dollar mark. The record setting didn’t stop on Monday, according to comScore, a company that tracked the sales figures between November and December for the e-commerce industry. Sales on Thanksgiving Day were up 28 percent from the previous year, and overall e-commerce sales topped $32 billion in the holiday shopping period, a 12 percent rise from 2009. Even Black Friday, brick and mortar stores’ biggest holiday shopping day of the year, saw a 9 percent rise in e-commerce to $648 million.

2011 saw those numbers rise even higher. Statistics released from an IBM research unit called Coremetrics found that 20% more consumers shopped online this Black Friday 2011 than did in 2010. The data collected also states that 39% more online shopping happened on Thanksgiving Day itself in 2011 than in 2010.

Trying to Level the Playing Field

The boom in online shopping is what has prompted this bill to be suggested in Florida. In Florida, online retailers are escaping the burden of sales tax for their transactions. And so the bill was created to attempt to level that playing field a bit. According to this bizjournals.com article by Susan R. Miller, “Currently, Florida retailers with a brick-and-mortar location are required to collect and remit sales taxes on purchases made online, while their online-only competitors are not. The bill would require online-only sellers to collect and remit Florida sales taxes, just like other Florida retailers.”

Miller’s article says that the bill has support of the Florida Alliance for Main Street Fairness, a coalition of small businesses, trade associations and civic groups, including the Florida Retail Federation, Florida Chamber of Commerce and Associated Industries of Florida. The legislation could be part of a larger initiative this year by states nationwide that would require online retailers such as Amazon.com or Overstock.com to collect taxes for online transactions.

The article does note that the bill faces one large obstacle in the local legislature: “However, Senate President Mike Haridopolos has said that such a plan would violate the Florida Legislature’s “no new taxes” pledge and would not pass if it resulted in a net increase in taxes collected by the state.”

Is This the Future?

The suggestion that this is part of a large initiative to attack E-Commerce giants like Amazon and Overstock is certainly of interest. Especially since a large scale move such as that would have a deeper impact on all of the smaller Online Shopping sites that small business people run around the U.S. But there’s some key facts to keep in mind before getting too worried that this is the next big thing like the Durbin Amendment was in 2011:

This is a state bill, not a federal proposal. That means that this is still a very small scale approach.
Florida law isn’t exactly cutting edge. Not to be flippant, but there’s a reason why snarky internet commentary site Fark.com gives Florida its own subject tag.
The bill itself does, as the story states, face some opposition in its own state legislature because of the tax issues.

You can review the exact language of the bill by downloading the PDF here.

Finding Quality Merchant Services [2023 Update]

Today The Official Merchant Services Blog is playing a bit of catch up. The story we’re going to highlight and discuss is almost three weeks old. It was intended to run earlier, but technical difficulties with the blog’s production kept it from appearing until now. However, we feel the story is still worth some attention due to the issue it highlights about the payment processing industry.

The story comes to us from a Chicago, IL section of the Better Business Bureau (BBB). This article from the BBB says that the organization has seen a 42% rise in complaints against credit card processing services. The article, which originally was posted by the BBB on December 15 found that complaints were up for the 12 month period in 2011 compared to the previous 12 months. The breakdown was specifically 110 complaints in the recent 12 month period versus 77 complaints in the period prior.

Not Just In Chicago

The complaints aren’t just lodged in Chicago. This article from Fox40.com details similar complaints in Sacramento, CA. The article states: “The Better Business Bureau is warning businesses to beware of sales pitches by credit card processors that don’t reveal key details that could end up costing business owners more than they bargained for.”

And it quotes Caitlin Peterson of the Better Business Bureau of Northern California as saying “We’ve had over 1,700 complaints this year against the merchant processing business.”

What the Problem Is ?

From reading through the two articles — as well as an older BBB article about issues in the St. Louis, MO area — the problems that merchants are encountering are really straightforward. Business owners are being approached by salespeople offering big savings on their payment processing. And then once the merchant signs a contract with that person, they are saddled with hidden fees for services they were not told about. In short, the business owner is led to believe they are getting a great deal but end up having to pay out more because of all the things not mentioned in the deal. So complaints against payment processors rise in select areas.

Pricing and Transparency

This type of behavior is the exact reason Host Merchant Services utilizes its philosophy of Interchange Plus pricing and no hidden fees. These types of issues are why CEO Lou Honick says “Host Merchant Services is about bringing trust to the payment industry.”

“Payment processing is confusing,” says Honick, noting the ease in which merchants can get saddled with the types of issues that have cropped up with the BBB complaints. “The big guys make it difficult to understand exactly what your rate is and what fees are associated with accepting credit cards. We deliver personal service and clarity. Our people care about customer service and will take the time to explain how everything works.”

Honick also cites the process that Host Merchant Services uses to directly counter the problems that business owners encounter with other processors: “We believe that when you get your statement every month, you should understand every item, and it should match what you were promised in the sales process. If you have a question, there is a live person at Host Merchant Services ready to assist you.”

The Details

One of the primary ways Host Merchant Services combats the practices that lead to these complaints is with their pricing structure. Host Merchant Services uses Interchange Plus pricing instead of the more standard tiered pricing format. Interchange Plus makes statements easier to read, customer service easier to provide to merchants, and savings much easier to guarantee. Here’s a small graphic explaining the basics of how Interchange Plus works:

You can review a comparison between Host Merchant Services Interchange Plus pricing — which is simple and transparent — and the tiered pricing plans that other processors use in a two-part blog series that The Official Merchant Services Blog ran in October, 2023.

Part One
Part Two
Follow Up

What the BBB Advises ?

The BBB advises merchants take these steps to avoid getting stuck with the issues that their complainants have encountered:

Ask around.

The BBB suggests getting at least three estimates from different Payment Network Providers and to checkout he BBB Business Review of the merchant processing service. They also suggest asking fellow business leaders for referrals.

Know where to turn.

The BBB advises you check up on the support team that a potential Merchant Services Provider offers you. Can you contact them 24 hours a day? What is their response like outside of typical business hours? And the BBB advises you make sure their technical support can handle your needs as that kind of support is vital to your business’ success.

Try them out.

The BBB says that you should not settle without a trial period. You should make sure that the payment processor you choose has a 100 percent money-back guarantee before selecting them. Make sure their service works for you, and make sure they keep their promises to you.

Don’t get locked in to a long term contract.

The BBB is very clear on this. Never commit to a long term agreement that locks you in. Make the merchant services provider earn your business each and every month.

Get references.

The BBB advises that you get the payment processor to provide you with references. And then suggests you spend some time checking up on those references.

Make sure you know what you’re being charged for.

The BBB says that if you have a question regarding a fee that you were charged, ask the merchant services provider. Don’t let them hide fees on you. Make sure you understand your statement.

How Host Merchant Services Stacks Up

Host Merchant Services falls in line with what the BBB advises merchants to do. The company places a big emphasis on transparency. Their salespeople will explain a merchant’s statement in detail. One of strengths of the offering from Host Merchant Service is their guarantee to save a merchant money. They achieve this by a statement analysis. Not only will Host Merchant Services explain the details of what your statement and fees are, completely transparent, while you process with them, they’ll also explain where the hidden fees are with your current statement.

Host Merchant Services will provide references. They do not lock you in to a contract. They do not charge you a termination fee. They provide free equipment and free paper for your terminals. And they offer 24-7-365 customer service where they guarantee you will talk to a real person that will help you out with your issues. You can even initiate a live chat with HMS Support right from any page on their web site.

As Host Merchant Services COO Dan Honick says, “You stay with us because you’re happy.”

E-Commerce: Review and Preview

The Official Merchant Services Blog begins our second year of blogging with a look at one of our favorite topics: E-Commerce.

2011 saw huge gains for online shopping. As reported in The Official Merchant Services Blog on Cyber Monday, online shopping was strong on Black Friday. IBM research unit Coremetrics stated that 20% more consumers shopped online Black Friday 2011 than did in 2010. The data collected also states that 39% more online shopping happened on Thanksgiving Day 2011. The ease of online shopping is infiltrating the traditional brick-and-mortar retail event and Host Merchant Services‘ analysis of it held true –– sales numbers across the board rose from 2010, so overall Black Friday had a boost for retail, but clicks from e-commerce continue to grow and cut into the sales from bricks.

Also, mobile payments saw a huge increase during the holiday shopping season. According to this article from Seeking Alpha, mobile payments business increased 500% from 2010 on Black Friday. According to the article, PayPal mobile reported the huge increase, coming in at 511% to be exact. PayPal Mobile also noted that there was a 350% increase in mobile shopping on Thanksgiving 2011 when compared to 2010.

The Numbers Keep Coming In

This article by Internet Retailer demonstrates that Black Friday was just the beginning. There were more than 3,000 transactions totaling $141.6 billion in 2011 in the marketing, media, technology and service industries according to data collected by investment banking firm Petsky Prunier LLC. Of those transactions the E-Commerce and digital media segment was the most active, with 1,159 deals valued at more than $44 billion.

All of this activity demonstrates strength in the E-Commerce industry, and suggests that 2012 is a year primed for continued growth and success — which combines with the already rampant predictions of success for Mobile Payments within the E-Commerce industry.

Host Merchant Services Online Shopping E-Commerce Credit Card Payment Processing Image.

Is There A Bubble?

This article from moneycontrol.com asks the question, “Will the E-Commerce Bubble Burst?”

Comparing the recent success to the success of internet companies in 2000 and 2001, the article tries to figure out if the bubble will burst like it did back then for tech companies. The author’s opinion is that the similarities are only on the surface, and that the two situations are vastly different — suggesting that in the end, it’s not a bubble that is going to burst but rather an industry that is going to grow and evolve. The article looks specifically at the E-Commerce sector in India, but does spend time detailing the big picture globally.

Online Shopping is Now Commonplace

To really underscore the potential growth that E-Commerce has in 2012, this article from Daily Deal Media talks about how popular online shopping is becoming with moms. The article cites a BabyCenter survey which suggests that: “71% of moms regularly turn to websites such as shopping engines and review sites to compare prices. Another 56% admit to searching for coupons or digital discount opportunities on a regular basis.”

This is a compelling point in regards to the overall picture of E-Commerce. It has become more and more commonplace in everyday life for shoppers around the world. Mothers are turning to it for the convenience of being able to get shopping done quickly and efficiently, according to the article. And it is just become an ingrained part of our economy, fueling the potential for further growth.

Mobile Payments Big Problem

The potential growth for Mobile Payments is huge. But the one thing holding it back in the U.S. is security. Just as online shopping has become more and more commonplace, people have gotten comfortable with making payments online. That brings risk, as phishing scams and credit card fraud has increased. But security standards like the PCI DSS have helped to make the mainstream comfortable with clicking the pay button and giving out their payment information.

Mobile Payments, however, are not quite there yet in terms of acceptance. This article from the Chicago Tribune discusses the looming security issues that the mobile payments market faces. As the article states: “While the first mobile virus dates back to June 2004, risks from hackers remained limited because of the relatively small size of the market. But this has changed with the surge in the smartphone segment, which this year outgrew the PC market, and the new dominance of Google’s Android software. The emergence of mobile payments, which allows shoppers to swipe their phones at a cash register, is whetting the interest of hackers and data thieves.”

The article states that fewer than 5% of smartphone users have security software installed on their device, according to Juniper Research — the same Juniper Research that predicts Mobile Payments will increase to a $670 billion industry by 2015. And a study by Deloitte cited in the article suggests that for companies in the technology, media and telecom sector expect data stored on staff mobile devices to be their biggest security headache in 2012.

Essentially that’s the biggest obstacle holding back the Mobile Payments industry. The sheer convenience the technology brings to the payment industry is extremely powerful and so despite security concerns it continues to be developed and pushed. 2012 will see growth in the industry, despite the security issues. And as consumers get more and more familiar and comfortable with the phone swipe style of payment, the industry will boom.

A List for 2011

And just for fun, here’s a list from Mashable.com detailing who they think were the biggest winners and losers from 2011 in E-Commerce.

Their winners include: Amazon, Apple, Wal-Mart and Gilt Groupe.
Their losers include: Barnes and Noble, HP, Netflix and Sony.

Click the link to read why each company made the list.

Customer Service: A Cautionary Tale [2023 Update]

In what will likely be the last blog of 2011, The Official Merchant Services Blog is going right back to the basics. We’re going to give our readers a recap of a story that’s been the buzz of the internet for the past couple of days and which illustrates why customer service is so very very important for a business — good old fashioned and extremely basic customer service.

The Story, So Far

Penny Arcade, an extremely popular webcomic focused on video games and video game culture, written by Jerry Holkins and illustrated by Mike Krahulik, also has a regular blog. On that blog artist Krahulik posted the entire transcript of a dialog between a customer– named only as “Dave” in the coverage of the event — and the marketing/customer service person representing the Avenger Controller. This device was originally designed by David Kotkin, an art teacher, to help one of his pupils, who suffered from epidermolysis bullosa, to play games for prolonged periods without irritation.

You can read the entire transcript of the dialog at Penny Arcade here.

The recap is pretty simple. Dave went through the contact information given on the web for the product, and asked their customer service department when the product would arrive because it was late. The controller was advertised as being available in early December, and by December 16, Dave had not received the item that he had paid for in advance.

As seen in the transcript, the initial responses from Paul Christoforo of Ocean Marketing, the PR contact for iControl (the manufacturers and distributors of Kotkin’s design), were short and still vague. But then tempers flared, and Christoforo stepped over the line, attacking his own customer: “put on your big boy hat and wait it out like everyone else. The benefit is a token of our appreaciation for everyone no one is special including you or any first time buyer . Feel free to cancel we need the units were back ordered 11,000 units so your 2 will be gone fast. Maybe I’ll put them on eBay for 150.00 myself. Have a good day Dan.”

That sparked the entire fiasco. Christoforo continued to be rude and flippant in correspondence with Dave, as well as others, including Krahulik.

The Internet Intervenes

Christoforo was nonplussed by Dave’s contacts in the e-mails. Even when Krahulik himself got involved, Christoforo did not believe Krahulik was who he said he was, and laughed at the idea that this negative publicity was going to impact his marketing. The conversation sort of soars from that point as Christoforo has it out with Krahulik. Christoforo threatens to initiate a smear campaign against the comic strip and Krahulik just posts the entirety of the e-mails, along with Christoforo’s information. With battle lines drawn, and sides chosen, the internet steps in — since Penny Arcade is indeed a very widely read web comic, it gets a lot of attention, especially from gamers who would all be potential customers for the product Christoforo is marketing.

First Round Knockout

The results of the smear campaign vs. Krahulik’s blog post and eventual comic strip?

This investigation, originally posted on Reddit, and later preserved as a .jpg
Christoforo shuts down his twitter account
Christoforo apologizes and asks for the spam to stop
Controller-N drops Ocean Marketing

So in essence, the internet retorted against the terrible customer service offered by Ocean Marketing and Paul Christoforo. The smear campaign he threatened against Penny Arcade never got off the ground. Ocean Marketing got slammed by a legion of video game players and Penny Arcade fans. Bad PR ruined Christoforo’s marketing business in mere days.

Captain Obvious to the Rescue

Without going too deep into the details of this internet battle between the forces of good gamers and misguided or misanthropic marketers — you can follow the fascinating set of links as this story is still picking up steam — Host Merchant Services is just going to cut to the chase.

Customer Service is a vital component of a business. Any business. That includes those doing marketing for video game controllers.

Host Merchant Services has provided some tips in the past on how to get into good customer service habits. You can read the blog post here. Customer Service is part of the core philosophy of Host Merchant Services. You can read CEO Lou Honick’s blog about customer service at the Web Host Industry Review here. It’s just The Official Merchant Services Blog didn’t think it would ever have to post a series of tips that included: “Do not curse at your customers, and do not call them stupid — especially in writing.”

Every customer is important. And as the person handling customer service, it’s definitely in your best interest to treat those customers with respect. Lashing out or trying to bully a customer is going to, at the very least, lose you that business. In this case, it lost the person more than just one customer. The whole entire exchange blew up in their face.

All of this could have been avoided with some very basic customer service strategies:

Do not argue with your customers.
Do not talk down to or insult your customers.
Listen to them and give their feedback or complaints your time and understanding.
Be honest with your customers. No one likes to hear that their product is late, but they’ll be much more willing to deal with you and your company if you’re honest with them and do not try to lie your way around the issue.

Honey, not Vinegar

After seeing the entirety of the mess Christoforo made, don’t you think the entire thing could have been avoided if Christoforo had been honest and polite? And if he had offered some form of compensation for the obvious mistake in shipping the company he represented had made? A discount? A rebate? A gift card? If Christoforo had spent just half the time performing actual customer service instead of writing insults and snark back to his customer, none of this would have happened.

That’s the lesson here. Customer Service needs to embrace the goal of long-term customer relationship building. As cathartic as the initial insults may have been for Christoforo, giving in to his frustration ultimately backfired for him and his business. Taking a hit on one customer due to having to be polite, and maybe even offer compensation for the mistake in shipping, would have saved Christoforo a lot of trouble.

This is a cautionary tale. Customer Service is important. Especially in the world of e-commerce where if things line up just right — you tick off a customer who has an open channel to one of the most widely read web comics — you could face the full force wrath of the internet.

Stop Online Piracy Act Sparks Unity?

The Official Merchant Services Blog is back from its brief holiday. Thank you for keeping up with us. We have a couple of treats to share with our readers today, though the posting is going to be brief. Host Merchant Services is gearing up its site and its services for the coming of 2012, including The Official Merchant Services Blog. Expect a return to the fast break pace and full industry coverage next week.

Stop Online Piracy Act

Up first for us is coverage of the Stop Online Piracy Act. You’ll hopefully recall that Host Merchant Services gave an in-depth analysis of the Stop Online Piracy Act a few weeks ago, getting out in front of the coverage of this controversial piece of legislation. What prompted this coverage was that the bill included payment processors in its extremely broad scope of oversight, letting the Department of Justice take action against merchant service providers — or Payment Network Providers as they are described in the bill’s wording — for the reported piracy of that processor’s merchants. This struck a chord with Host Merchant Services and other providers and brought the whole topic of online piracy into the arena of merchant services news.

GoDaddy Reverses Position

Outside of the entertainment industry support for the bill has been minimal. The bill has been soundly thrashed by most tech industry companies, ranging from Adobe to Google — you can read Google Executive Chairman Eric Schmidt’s comments on the bill here. Apple and Microsoft initially were part of a group that supported the bill, then changed their position quickly when the details of the bill were hashed out in a congressional hearing.

The latest company to do a full 180 on SOPA support is GoDaddy. Unfortunately, it may have been a bit too late. GoDaddy initially came out in favor of the bill, stating that the company opposed Online Piracy and supported the effort to stop this crime through the legislation. That prompted a harsh critical reaction from its customers, many gathering online to organize a boycott of GoDaddy.

GoDaddy relented and changed its position. As this politico.com article reports: “Go Daddy CEO Warren Adelman said in a statement that lawmakers can ‘clearly do better,’ even though the company stands by its original position that ‘fighting online piracy is of the utmost importance. It’s very important that all Internet stakeholders work together on this. Getting it right is worth the wait. Go Daddy will support it when and if the Internet community supports it,’ he continued.”

But the damage has already been done. Much like Bank of America taking a huge PR hit for its reaction to the Durbin Amendment, GoDaddy is now in the spotlight over the Stop Online Piracy Act. The article explains that GoDaddy was in a precarious position on this issue, as they had a vested interest in fighting piracy being a domain registrar: “The fight over Internet piracy has recently put Go Daddy in a precarious position: As a domain registrar with a vested interest in fighting illegal content, it sat opposite of other Internet companies that felt SOPA and the Protect IP Act threatened the Internet’s backbone.”

‘Unlikely Allies’

In one of the stranger developments linked to SOPA, it appears that the bill is acting as a unifying force for liberals and conservatives. According to this ology.com article Republicans and Democrats are banding together in their criticism of SOPA and becoming “unlikely allies.”

The bill, which was authored by Republican Lamar Smith does have some strong proponents besides just the Hollywood and the Recording Industry. The Better Business Bureau and various Chambers of Commerce back the bill on the very simple premise that online piracy is a serious issue and the crime is hurting businesses in the U.S. But as the article points out, the issue is deeper than that and has created allies among Republicans and Democrats: “The ‘netroots’ conservatives opposed to SOPA have some unlikely allies in liberal and libertarian bloggers. In the end, the battle over SOPA is as clear a case of big industry versus the little guy as there has been in recent years. As politics makes a turn toward the populist ahead of the “great recession” it is highly unlikely that the big studios will achieve a legislative victory here.”

Stay Up To Date on SOPA

The bill itself is currently tabled by Congress and likely won’t be dealt with until 2012. But you can keep up with the latest developments by continuing to follow the coverage Host Merchant Services. Also this google+ feed can be quite informative too: #SOPA

Discover’s Strong Fourth Quarter

The Official Merchant Services Blog shines its spotlight today on Discover –– notably Discover Financial’s strong fourth quarter earnings predictions that are making news.

On December 13, Business Week reported that a strong holiday shopping season would spark a boost in Discover Financial’s fourth quarter earnings. As the article portended: “The Riverwoods, Ill.-based credit card company is expected to benefit from a strong start to the holiday season for its quarter, which ended Nov. 30. Strong Black Friday and Cyber Monday sales should help boost the number of transactions it processed and the amount spent on cards. In its fiscal third quarter, Discover reported 10 percent growth in revenue from transaction processing, along with higher spending on gas as prices rose.”

These predictions played out, as the Washington Post reported that Black Friday and Cyber Monday sales helped lift Discover fourth quarter profits by 46 percent. The Washington Post also reported that sales volume on Discover cards rose 8 percent to $25.03 billion in the quarter and the total number of transactions Discover’s networks processed rose 5 percent.

Why the Boost in Discover Use?

Discover told the Washington Post that it thinks one reason for the fourth quarter boost is that consumers are using Discover cards as their primary card this holiday shopping season: “Discover executives said during a conference call to discuss the results that the increased use shows that its customers are reaching for their cards more often compared with other cards they carry — Discover is becoming their “primary card.” The trend is partially because more merchants accept Discover now, and also because consumers are seeking benefits like Discover’s cash-back rewards when they make purchases.”

Host Merchant Services image about Discover Card and payment processing.

Add Discover on Discover

We covered this in a previous blog, but with this good news coming in from Discover it seems like a good time to make a final push for the Add Discover on Discover program that Host Merchant Services is offering until December 31, 2011. Host Merchant Services is able to offer this exclusive deal to its merchants with the new Add Discover on Discover plan. With such a brisk holiday shopping season in full swing, adding this program can help keep a merchant’s traffic and sales rising in the final weeks of December –– and then help the merchant obtain big savings for the next 12 months.

This offer from Discover, through payment network provider Host Merchant Services is a bold move for the credit card company, and can help become part of that trend where Discover cards become the primary use card for consumers. The program essentially gives qualifying merchants a year of being able to process Discover payments at no cost. Add Discover on Discover gives the merchants no fees when their customers swipe a Discover card. Free payment processing for an entire year is a serious incentive for merchants to consider. One that might prompt last minute change or switches to their merchant account even in the midst of the holiday shopping season.

How To Get Hooked Up

To qualify for the Add Discover on Discover program from payment network provider Host Merchant Services, you must have not processed any Discover cards in the past six months. Discover card processing goes beyond just Discover itself and also includes Diners Club International, BCcard, China Union Pay, JCB and DinaCard. Here are the steps you need to take to get the program started:

Enroll in the program by December 31, 2011.
Confirm your enrollment with a required test transaction.
Update signage at your place of business (or on your website if you are an e-commerce only merchant).
Inform your employees and actively promote Discover to your customers to start reaping the savings.

Once verified you will receive written notice from Discover. Within 10 business days of your acceptance you’ll receive a welcome letter with free Discover signage and tips for increasing your sales with Discover. This exclusive offer only lasts until December 31, 2011. If you are interested in finding out more about it, please Contact Host Merchant Services.

You can also read more about the offer by downloading one of the two PDFs Host Merchant Services provides on its resource page:

Discover on Discover For Merchants

Discover on Discover Sales Aid