In this first installment of my new interview series, I wanted to profile one of the better known personalities and companies in the business; and where better to start than with Rand from Epoch Systems. A familiar face at the leading industry events, and a helpful member of the community, he was kind enough to lend his thoughts to XBiz readers on a variety of subjects:
First of all, on a ‘personal’ note - How long have you worked for Epoch, and what are your duties?
I came on board with Epoch in 1998 when we were still small and just beginning to explode onto the scene. My first duties were getting new contracts/accounts set up in our database. There were so many coming in that I could barely keep up. Soon I moved into more of a client services position answering a lot of emails and phone calls and overseeing client tech support. As we grew, I began to work more closely with accounting, legal, compliance, billing support, etc... as I came from a position of being with the company during their phenomenal growth. I moved into an executive position and 3 years ago became the Director of Corporate Communications. I continue to work closely with various aspects of our business including compliance, marketing, and sales as well as with clients and, yes, public relations and promotions as well.
Epoch recently announced their new epassporte system. Could you briefly explain the differences and / or benefits to using this new payment option over more traditional debit cards?
Probably the most obvious advantage is that anyone can obtain an epassporte Virtual Visa online within seconds and begin using it anywhere on the net that accepts Visa. This new Virtual Visa product is an actual Visa account. It offers anonymity to the surfer by reporting purchases with epassporte only to the online statement on the epassporte website. No online purchases with epassporte are ever listed on the customers credit card billing statement. By adding the Visa Electron Card (the physical counterpart to epassporte) you can now use your account to buy groceries, gas, or use it at any PIN based POS merchant who accepts Visa (or PLUS).
I find the peer-to-peer processing possibilities (say THAT three times fast!) to be intriguing, but with already established transaction systems such as PayPal, what advantages can epassporte offer?
Peer-to-Peer is a huge and quickly developing market for epassporte. An epassporte cardholder can send funds to any other epassport card holder instantly with the click of a mouse. Funds are available immediately to the recipient and can be withdrawn at any Visa or Plus ATM in the world. The advantage of epassporte as compared to some of the existing P2P solutions is that it's much cheaper to use. Funds in any amount from .01 cent to one million dollars can be sent for less than the price of postage stamp. It costs only .25 cents per transfer for up to five P2P transactions per day. You can send money to relatives, kids in college, the baby sitter, your hosting provider... whomever, wherever. From the U.S. to the former USSR, international use is the real difference.
I understand that Epoch has seamlessly integrated the entire epassporte process into its systems.
Sites which utilize Epoch for their payment processing can be set up in several ways. The easiest way is to use Epoch's standard join forms. In this case, a credit card that is denied due to a fraud scrub or because it is from a country we do not accept high risk transactions from may have a couple of options. First, domestic orders are asked if they would like to make their purchase using an online check or an epassporte Visa. Foreign accounts are directly offered the opportunity to obtain an epassporte Visa to make their purchase. If approved, the surfer is returned to the join form with their information (including epassporte Virtual Visa number) pre-populated. The customer just hits submit to continue the sale.
Sites using FlexPost and handling their own denied responses can pitch the surfer on epasporte and send them to a sign-up form. If approved, the website needs only to return the session ID to Epoch and the payment form can be pre-populated with the new epassporte Virtual Visa number.
Either way, the integration is simple and streamlined and can turn otherwise denied transactions into an opportunity for a purchase at the same rates you pay now. Much better payouts than a dialer.
Adult Webmasters were shocked last year by the sweeping changes surrounding VISA / MasterCard processing regulations. How have these changes affected the 3d party processing businesses, and do you foresee further restrictions coming down the pike?
Internet Service Providers (IPSP's) were put in a position of working quickly to insure that the clients within their portfolio's were able to properly register and comply with the new Visa regulations which went into affect November 1. This was no easy task and required a lot of attention. It was, as our CEO Chris Mallick put it, like "herding cats". Epoch was very successful in registering our client base. Some accounts moved away from us, more moved to us. Overall, our business is markedly improved since October of last year.
It is hard to predict what sort of changes will be coming in the future. Knowing that this is pure speculation, I would not be surprised to see MasterCard follow suit and impose similar regulations upon webmasters using third party services for high risk transactions. The required fees would also be imposed on sites using their own merchant accounts for processing. Generally speaking, the new regulations are announced in the 4th quarter of the year.
Talk has circulated that rising chargeback rates and the other publicly cited reasons were not the true motivation for these new ‘restrictions’ but rather they stem from “The War On Terror” and its reach into all areas of the global banking system, as well as being a precursor to an upcoming DOJ campaign to begin a new round of prosecutions. “Following the money” being a necessary ingredient to both crusades. Any comment?
Only to say it's an interesting theory. If any of this were true, we certainly would not have any knowledge of it. Big brother gets bigger every day. If reporting transaction data helps with the war on terror that's a good thing. If reporting is being used to seek out those in the industry that are abusing the system and surfers, that is a good thing too. But the true motivations may never be known. Visa want's to protect it's brand. That is what they have stated publicly. The online transaction world is a dynamic place. I would never want to commit to saying that we've perfected the process and nothing can be improved upon or invented. There are lessons in history about that.
Epoch has long been an innovator in the payment processing arena, with programs like ‘e-z click’ helping Webmasters to increase profits without requiring any additional traffic or bandwidth expenses. With all of the options available today, is there still room for new billing services?
The online transaction world is a dynamic place. I would never want to commit to saying that we've perfected the process and nothing can be improved upon or invented. There are lessons in history about that. Although we have done what we can to offer webmasters every possible tool, those tools may need to change within a short period of time to keep up with new billing models, new technology, or new regulations. What we can promise is to continue to innovate and never be satisfied with the status quo. I believe the changes we will see in the next five years will be even more exciting than those we've seen over the past 5 years. The one continuous message that has come from Epoch since the beginning is to keep looking toward the long-term. We have built our business around this philosophy and we will continue to do so.
With the continuing growth and globalization of the Internet, the challenges for Webmasters seeking to process foreign currencies and preferred methods of payment are ever increasing. What solutions can Epoch provide to those seeking to market to a global audience?
Many of the obstacles facing international businesses online are technological and cultural. There isn't much that any one entity can do to overcome them. Banking institutions need to become more standardized, currency conversion needs to be addressed in a way that makes sense to the purchaser, language barriers need to be addressed, and cultural stigmas or institutions need to be considered. That being said, the inevitable direction of a tool as powerful as the Internet would be to join the world into a community where all of these issues become secondary and commerce, education, entertainment, and communication are the forefront. Epoch will have a multi-currency solution to announce in March or April.
Epoch has recently joined ASACP as a Founding Sponsor. What role do you see companies affiliated with the online adult industry playing in the fight to eliminate child pornography?
ASACP is the result of years of work from the guys at Helmy. The fact that it grew to the proportions that it did is evidence of the need to address the issue of child abuse and the manifestation of it on the Internet. I have spoken with Joan Irvine about the role of ASACP and Epoch fully supports the need of an organization whose sole purpose is to protect children and punish those who abuse them. It is the responsibility of everyone with a social consciousness to be a part of this effort. Epoch has worked with various law enforcement agencies including the Federal Bureau of Investigation to help track down those guilty of creating and/or distributing child pornography and will continue to do so as long as the problem exists. There is always a money trail and that is why billing companies are often called upon to help in this fight. But webmasters must also share in the effort to thwart those involved as it is in the best interests of all to protect children from harm.
Finally, What do you see as the greatest opportunities and challenges facing the adult industry?
The greatest challenge will be to maintain continued growth in an arena where the rules keep changing in such a way that seems to attempt to stifle that growth. I believe that the problems we face are a direct result of programs who do not even attempt to operate a legitimate business but attempt to defraud consumers and make money by any means. The adult entertainment industry is a business with a stigma, and unscrupulous people use that stigma against the industry as it is hard to defend against. The problem becomes exponential the more that wrongdoers enter the arena. Perhaps the challenge is for each of us to do all that we can to insure that those who are doing the most damage to the system are stopped.
The greatest opportunities, it seems without question, are to expand into the foreign markets with the lessons we have from our past mistakes. There will be great opportunities ahead for the developing online markets of other countries. China in particular. There are several obstacles to the foreign markets, however, those obstacles present opportunities to those who look to expand upon the current methods of doing business. It could very well be the next gold rush.
epassporte takes a giant step in that direction by offering a payment mechanism which is accepted from all markets. It is a global payment method. In it's first week of release, epassporte issued Virtual Visa cards in 79 countries. We feel this speaks loud and clear as to the potential of those markets and to a payment mechanism which addresses a need. We look forward to seeing what the first year of epassporte will bring.
I have to say that Rand‘s responses and the messages coming from Epoch point to a continued bright future for the online adult entertainment industry – or at least for those members that can grow, innovate, and play by the rules, in our evolving marketplace. Thanks a lot Rand! ~ Stephen
