3 ms·

Can we get some more information? What are they doing better? What kind of fee structure are they selling? Also, one big concern in my startup is chargebacks.

by tansey 16y ago

Can we get some more information? What are they doing better? What kind of fee structure are they selling? Also, one big concern in my startup is chargebacks. Does this service help me with chargeback protection at all? More generally: how will they make my life better?

boucher 16y ago
Have you actually gotten a lot of chargebacks? I've heard that the industry significantly exaggerates the amount of chargebacks that actually occur.
- tansey 16y ago
  We haven't launched yet, but we're a digital goods marketplace and my intuition is that our niche audience may have a high chargeback rate. We're looking for any additional protection so we don't stumble out of the gate.
  - bprater 16y ago
    Use Clickbank then. Everything you mention is what they've been doing for a decade.
    - tansey 16y ago
      Thanks. I had never heard of Clickbank before now. However, a quick look at their terms is a non-starter. They want 8.5% + $1 + 50% to the affiliate. On top of what we would charge, our sellers would be getting something like 30% of their sales. It's also not exactly the type of product we're selling. There are some subtle (but important) differences between Clickbank's target product and our product.
- SwellJoe 16y ago
  Chargebacks are such a pain in the ass that any number of chargebacks is a lot, in my book. One of the reasons I chose PayPal when we were switching providers a while back was to get better, and finer-grained, anti-fraud capabilities. It's still an issue, but it's manageable now. Interestingly, adding a really expensive product (about $1000) to our store provided a nice mechanism for catching fraud. Nearly 100% of our fraudulent orders purchase the really expensive product right off the bat, while most of our legitimate purchasers of that product buy a less expensive one first, and then upgrade to the more expensive version later. So, I automatically flag orders for the most expensive product, and interact with the customer personally before letting the order go through. This is also a pain in the ass, but it does reduce the number of chargebacks.
  - tansey 16y ago
    We were thinking of doing a similar approach, basically verifying people's ID upon first purchase. However, we thought it might significantly decrease the number of customers. I suppose there's no free lunch here... verification will sacrifice volume.
    - matasar 16y ago
      You may run afoul of the credit card companies if you try to verify ID on purchase.
      - tansey 16y ago
        How so?
        matasar 16y ago
        In some states in the US, it's illegal to ask for id for a credit card purchase. In all states, the credit card companies don't like it. Here's a good set of google answers about the issue: http://answers.google.com/answers/threadview?id=71792 http://answers.google.com/answers/threadview?id=71792 This is all to say, credit card processing is incredibly complicated. Here's another quote, directly from the federal government [1]: "MasterCard wants to hear about merchants who break their rules. Send the name and address and an account of what happened to MasterCard International, c/o Radio City Station, P. O. Box 1288, New York, NY 10101. The merchant's bank will get a stiff letter, ordering it to investigate and bring the offending store into line - or pay a $2,000 fine. Visa enforces the same rules as MasterCard. "When we hear about a violation, we ask the bank that signed the merchant to get together with the merchant and see that the practice is stopped," Visa representative states. To report a merchant, send a letter to the bank that issued your Visa card. American Express also prohibits merchants from asking for IDs. "All a merchant is supposed to do is take an imprint, make sure the signature matches and swipe the card through the terminal, to get authorization." [1] http://www.in.gov/dfi/2554.htm http://www.in.gov/dfi/2554.htm

by tansey 16y ago

boucher 16y ago

Have you actually gotten a lot of chargebacks? I've heard that the industry significantly exaggerates the amount of chargebacks that actually occur.

tansey 16y ago
We haven't launched yet, but we're a digital goods marketplace and my intuition is that our niche audience may have a high chargeback rate. We're looking for any additional protection so we don't stumble out of the gate.
- bprater 16y ago
  Use Clickbank then. Everything you mention is what they've been doing for a decade.
  - tansey 16y ago
    Thanks. I had never heard of Clickbank before now. However, a quick look at their terms is a non-starter. They want 8.5% + $1 + 50% to the affiliate. On top of what we would charge, our sellers would be getting something like 30% of their sales. It's also not exactly the type of product we're selling. There are some subtle (but important) differences between Clickbank's target product and our product.
SwellJoe 16y ago
Chargebacks are such a pain in the ass that any number of chargebacks is a lot, in my book. One of the reasons I chose PayPal when we were switching providers a while back was to get better, and finer-grained, anti-fraud capabilities. It's still an issue, but it's manageable now. Interestingly, adding a really expensive product (about $1000) to our store provided a nice mechanism for catching fraud. Nearly 100% of our fraudulent orders purchase the really expensive product right off the bat, while most of our legitimate purchasers of that product buy a less expensive one first, and then upgrade to the more expensive version later. So, I automatically flag orders for the most expensive product, and interact with the customer personally before letting the order go through. This is also a pain in the ass, but it does reduce the number of chargebacks.
- tansey 16y ago
  We were thinking of doing a similar approach, basically verifying people's ID upon first purchase. However, we thought it might significantly decrease the number of customers. I suppose there's no free lunch here... verification will sacrifice volume.
  - matasar 16y ago
    You may run afoul of the credit card companies if you try to verify ID on purchase.
    - tansey 16y ago
      How so?
      - matasar 16y ago
        In some states in the US, it's illegal to ask for id for a credit card purchase. In all states, the credit card companies don't like it. Here's a good set of google answers about the issue: http://answers.google.com/answers/threadview?id=71792 http://answers.google.com/answers/threadview?id=71792 This is all to say, credit card processing is incredibly complicated. Here's another quote, directly from the federal government [1]: "MasterCard wants to hear about merchants who break their rules. Send the name and address and an account of what happened to MasterCard International, c/o Radio City Station, P. O. Box 1288, New York, NY 10101. The merchant's bank will get a stiff letter, ordering it to investigate and bring the offending store into line - or pay a $2,000 fine. Visa enforces the same rules as MasterCard. "When we hear about a violation, we ask the bank that signed the merchant to get together with the merchant and see that the practice is stopped," Visa representative states. To report a merchant, send a letter to the bank that issued your Visa card. American Express also prohibits merchants from asking for IDs. "All a merchant is supposed to do is take an imprint, make sure the signature matches and swipe the card through the terminal, to get authorization." [1] http://www.in.gov/dfi/2554.htm http://www.in.gov/dfi/2554.htm