It appears that companies that are engaging in ‘negative billing’ and/or ‘continuation billing’ have finally started annoying more than just the consumers. The credit card companies are finally getting aggravated by it as well. Perhaps this is because of the sheer amount of complaints or return requests they receive. But whatever the reason, it’s a step in the right direction for everybody who has had to suffer from these types of underhanded billing procedures in the past.

It has come to the attention of the major credit card companies such as Visa and MasterCard, that these billing practices are giving just about everybody a bad name, including them. And this of course won’t do. If Visa and MasterCard are to be given bad names in any shape or form, they would rather be responsible for it themselves, not because of some small third-party outfit.

In many of these negative billing cases, a customer agrees to purchase an item or service and unknowingly also agrees to an ongoing charge with their credit card. A prime example of this would be getting a free trial of an anti spyware software and then not cancelling it after the trial runs out. Your card is then charged automatically for the software even though you have not specifically ordered it.

A similar type of transaction is known as forced continuity where customers are charged on a regular basis for one specific good or service if they want to receive another offer. This of course, is great for the business, but not for the consumer.

MasterCard has already warned businesses about ‘negative option’ enrolment tactics and has considered them to be ‘brand damaging.’ This term is actually quite broad in meaning, but I think most people get the idea of what it means. It seems that MasterCard will soon be trying to put an end to any type of negative billing transaction on their credit cards. Visa has also enlisted some policy changes regarding various types of direct response offers as they are trying to eliminate it too.

They are taking aim at companies which like to offer things such as free trials, deferred billing and/or shipping-only charges. The credit card companies want to make sure the customers are actually receiving a tangible good or a service in exchange for their credit card payment. Discount offers are considered fine as long as an exchange of goods or services takes place. But what won’t be accepted are instances in which credit card customers are receiving unexpected hidden or delayed charges further down the road and ‘free’ offers that aren’t really free at all. They basically want card holders to authorize each and every transaction that takes place and everything to be done according to guidelines.

And speaking of guidelines, the FTC recently came out with a set of them concerning negative option enrolment programs and is taking an aggressive stance against merchants that are involved in this business practice. The FTC recently fined two firms for a total of more than $9,000,000 due to their negative option marketing practices.

The FTC has deemed that all material terms should be displayed in a clear, concise manner and that any unnecessarily long or inconsistent terms are seen as an attempt to mislead consumers.

The terms should be clearly placed, labelled, and easy to read on merchant websites in an area that indicates their importance and relevance to the pending transaction.

All material terms of the transaction must be displayed before the consumer has committed themselves to a financial obligation.

The consumer must also give their consent to any transaction by clicking a mandatory “I Agree…” statement checkbox. This means the consumer has read and understands all of the terms and conditions of the offer. However, pre-checked boxes on the website are not considered to reflect a customer’s consent.

Merchants must also make it perfectly clear how consumers are able to cancel their transactions. 

A prospective client recently contacted us and mentioned that he was not looking for an Authorize.net merchant account as he already had the credit card processing piece.  He requested our rates for the "Authorize.net gateway only."  I explained that we bundle this payment gateway with our merchant account program.  Although we could not accommodate his request to provide Auth.net by itself, I decided to investigate standard pricing quoted for only Auth.net.

Upon my research, I was surprised to learn that most gateway providers charge a set-up fee, typically $99.  Some quote a sales price of $49 which while it won't break the bank, may be $49 more than necessary.  Monthly fees vary, generally fluctuating between $10 and $30 -- the same price range that merchants should be able to get for both a payment gateway and credit card processing capability.  Per transaction costs, often quoted between 5 and 10 cents, should be obtainable whether you purchase Authroize.net by itself or with cc processing.

Online business owners need to understand that aside from an Internet site, a shopping cart or order page, they need to acquire a gateway with the means to accept credit cards.  In the course of my work, I've spoken with folks who had the payment gateway component without a merchant account, and vice versa.  Such business owners would have saved money had they purchased the two simultaneously.

This is analogous to any package deal.  Consider a standard vacation package where discounts are provided if one opts to get air flight tickets, hotel accommodations, passes to attractions, car rental, etc. at the same time.  It typically is more cost-effective to bundle all necessary components than to purchase separately.

At the risk of self-aggrandizement, our Auth.net fees are $5 per month and 5 cents per transaction with no set-up fee.  (Other companies offer similar low rates) for Auth.net ... provided you use their credit card processing package.  In the scope of research, I did not find one provider who offers Auth.net by itself at this affordable rate or lower.  Subsequently, factoring in the fixed monthly cost associated with a merchant account, the TOTAL monthly fee becomes unnecessarily inflated.

All in all, it makes sense to look for an Authorize.net merchant account -- a program that can simultaneously provide Authorize.net with an Internet merchant account.  In this way, you can more quickly and conveniently get the entire means to accept credit cards online while keeping more cash in your pocket.  Here, "not sold separately" should prove advantageous.

Secure, reliable, and affordable credit card processing (including payment gateway) is readily available so perform your due diligence when examining the myriad choices when seeking a full-service Authorize.net merchant account.     .