Web Hosting Talk : Web Hosting Main Forums : Web Hosting : what do you have to lose?

[trombone]

I'm live in Asia, but use a credit card from home. It's very difficult finding a host who will not bounce me the moment a payment company issues a warning. (I'm fine now, happy with my host.)

But I don't understand it. Aside from domain name registration, which you can restrict, what do you really lose by setting up an account and waiting to see if the card clears?

[Jay H]

The possibility that the order is fraudulent and the credit card used is stolen.

Which is very common in our industry.

Usually when a credit card company issues a fraud warning on an order, there is something fishy about it. Maybe the ordering IP doesn't match the country that the card was set up in, maybe the CVV2 code didn't match what is on file, etc.

What's that mean to the host?

A possible chargeback (which they do charge us chargeback fees.. so we are losing money).

We now use a fraud screening program and any orders that are flagged, we postpone setting them up until we have verified the order with the purchaser and the card has cleared through the banks.

[eddy2099]

I am from Asia and have not experienced any problems as yet using my credit cards. It might be because I am using my Amex card. I do get times when they do ask for extra verification like a fax of my credit card or photo id. Usually they process it manually and it goes on without a problem.

[trombone]

<quote>A possible chargeback (which they do charge us chargeback fees.. so we are losing money).</quote>

OK, I didn't know this.

The only problem I seem to have is with hosts using billing companies. I never have a problem buying online through Amazon or others.

Paypal made me jump through all sorts of hoops (twice), then on a trip to Malaysia I signed on and was immediately axed. Seems Malaysia is a banned country. So I just gave up.

[Jay H]

We actually switched from 2co (3rd party CC processor) as we were having too many issues and their fraud system could have been better designed by a 3yr old with no experience.

We have had our own merchant account for quite some time now, we have less fraudulent orders (thanks to the fraud software we have deployed) and we, and our clients, are overall happier.

<edit: Oh dear, my grammar at 4am in the morning...>

[Reality Hosting]

For us, if someone's card is fraudulent. A chargeback means a $25 US fee as well as a refund of the money. Also, if you have too many chargebacks, you can loose your merchant account.

[trombone]

A chargeback means a $25 US fee as well as a refund of the money.

That's really brutal. It's like Visa (or is it 2checkout and others) is punishing you for honoring the cards they issue.

[Coach]

Yes it certainly is. Those fees are as high as $35 to $50 with some companies.

As far as why a host can't go ahead and setup an account before a payment clears is because in many cases a fraudulent order will come from a spammer. If we went ahead and set up the account and then he abused the servers and millions of people out there with his trash emails, there would be no way of a host going after the person.

[aeromit]

Client always can issue a chargeback. My company receives fraudulent orders from time to time. Actually hosts never know if the order is fraud or not specially when the it's IP address is different from CCard billing address. That's why sometimes we connect our customers by phone.

Regards

[Incognito]

The cost of Chargeback.

The damage to reputation with merchant account provider.

The potential of spammer, abuser.

The reason web hosting is much different that amazon.com, for instance, is that you are not shipping a product. I also sell products, in addition to hosting. There addresses are verified and shipping is only to the address on the card. So, for the most part, one cannot obtain the product fraudulently.

[Vidvandre]

Is this really the case; $25 chargebacks? Is this a "norm" or does this vary much from CC processor to CC processor....

How often does fraud->chargebacks happen? Anybody care to share their experience....

[VNPIXEL]

what do you really lose by setting up an account and waiting to see if the card clears?

A LOT. Wait until you become a host and you will know.

[Lesli]

One single chargeback in and of itself isn't all that bad.

It's when a merchant gets several chargebacks against their account that the problems can begin. Whether they have a merchant account of their own, or whether they use the third party processors like 2Checkout or Paysystems, they run the risk of having their account terminated. At the very least, a volume of chargebacks can mean that their business has a harder time getting credit, securing loans, and more such. Another poster pointed out that hosting is a service industry. There is no product to be shipped, hence no double-check of the shipping address against the credit card's billing address. Hosts have to use other methods to insure that they are indeed providing the service to the holder of the card in question - or that the person using the card does have the cardholder's full permission to use their card for the service.

We don't set up any accounts until the payment has been received, processed, and verified. If this means that we have to contact the client and ask for a faxed copy of both the card and a government-issued ID, so be it. That's how to safeguard the business' credit rating and reputation, and safeguard the hosting server environment as well. We owe our paying clients a secure, stable environment with as few disruptions as possible.

If you place an order, and your card does clear - or you send in ID verifying that, yes, this is indeed you - you get the same protection and quality of service.

As to the chargeback fee: $25 seems to be the most prevalent amount charged by the different payment processors and gateways, but there is some variance.

[Reality Hosting]

That's really brutal. It's like Visa (or is it 2checkout and others) is punishing you for honoring the cards they issue.

Not to mention we have almost no recourse. You can't win a chargeback basically...unless you have a signature on file.

[marinedog]

get a host that lives in ur area