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Message # 5200.2.1

Subject: coding and control

Date: Sat 09/08/03 06:11:22 GMT

Name: crazygirlsbrian

Email: webmaster@crazygirlsinternational.com

Website:

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Sorry, you are being misled. The coding you are talking about was between the merchant and their own bank. It was this that governed the commission rates charged to the merchant by the bank and it WAS a purely commercial thing.

It is NOT needed for dispute resolution as any resolution does not use the type codes, but the transaction number which has always been shared between the sellers and the buyers banks.

The difference now is that the coding has to be divulged to the buyers bank, giving the buyers bank a record of the type of goods the buyer is buying. This is part of the new regulations imposed by Visa as part of their crackdown on markets they do not approve of.

If it had been necessary for sound commercial reasons, the European banks would not have opposed it and would not be going to court to prevent it.

On your comments about risk. As others will tell you, the biggest risk in the adult market is when you sell a service to a customer in the U.S.A. In Europe, before chargebacks are applied the buyers bank must contact the merchants bank who contacts the merchant to give them a chance to resolve it. US banks simply apply the chargeback, no questions asked. The most common reason given is "card used without authority". (ie - wife sees something on a credit card statement - husband claims "I didn't order it" and rings the bank to do a chargeback.)

In the UK that would mean cancelling and reissuing the card. In the US, with most banks it does not, so the dishonest customer gets away with it, in most cases.

Every security system proposed by other banks has been refused by Visa USA even though Visa USA has more chargebacks than anyone else, and then fines the merchant $30 or more for every chargeback and the banks millions of dollars if they go over 1.5%, which is why most European banks are getting out of the adult market.

If they wanted to tackle chargebacks, there are ways to do it. They have chosen not to do that, but to take steps to make it more and more difficult for a bank to accept adult payments. Given the millions of dollars involved, it is clearly does NOT make commercial sense to do this, so that leaves one obvious reason.

It should be noted that those with long experience in the field point out that every clampdown on the adult market has come in a Republican term of office. (Without exception - check if you don't believe me) Now tell me that politics and imposed morals aren't involved.

In reply to Message (5200.2)

Re: VISA is spying on you and the future for Visa

By AnthonyX - anthonyx@jowc.net Sat 09/08/03 05:17:45 GMT

Website:

It should not surprise anyone that your credit card company (Visa, Mastercard, or whomever) knows who you've been buying from. They have to; otherwise they can't do what they're in business to do, or resolve billing disputes. Since it is largely the banks who are on the front lines for customer service, they need that information also.

Merchants are assigned category codes by the credit card companies. These codes usually affect the "merchant fee" - how much the credit card company makes on each transaction... ie if the merchant fee was 2%, the merchant only gets $98 of $100 of goods or services sold. The actual amount depends on the type of business. I understand that adult videos seems to be at the higher end of the merchant fee spectrum. I think it has more to do with financial risk than anything else. I can understand why financial institutions would want to back away from online gambling - people running up debts they can't pay back and leaving the institution caught in the middle. I can also understand why internet-based sales, and particularly adult videos are deemed high-risk. Someone could easily set up a presence, start making sales with no product to deliver, and disappear before customers start complaining about non-deliveries.

Think about it from the financial institution's point of view... Would you lend money to a stranger? How much would you want to know about a person before you trust them with YOUR money?

Whether they know this information or not, I can't see how your bank is going to care what you do with your money, as long as you don't default on your loans or credit card debts with them... I think they have an obligation to keep such purchase information confidential though.

I can't understand why credit card companies would refuse merchant accounts with adult video businesses, unless there has been an excessive history of fraud. One way around the problem is if the credit card company withholds payment until the customer has had a chance to receive the goods, and their statement, and initiate any non-delivery claim. It would give the cc company no excuse to refuse business, but would hurt businesses who have to wait for delayed payments.

On one point I do agree: banks and credit card companies have no business imposing someone else's morals or beliefs on how a person chooses to spend their money... but then, I don't think that is what is happening here.

I don't see this as a civil liberty issue at all... it's purely about money, fraud, and financial risk.

In reply to Message (5200)

VISA is spying on you and the future for Visa

By crazygirlsbrian - webmaster@crazygirlsinternational.com Sat 09/08/03 00:49:52 GMT

Website:

While investigating why Multicards stopped processing transactions for us, I learned that almost all banks in Europe have stopped adult transactions due to the new Visa Regulations and privacy concerns.

You may not know it, but every Visa transaction you make is coded.

That code tells Visa and your bank what TYPE of goods or services you are buying.

And it is NOT only used for statistical reasons.

According to the European banks these and other changes were brought in by Visa at the request of the U.S. government.

For example banks in France, who handle the billing for many online gambling sites, have had many transactions turned down because they refused to use the code that would divulge to Visa that the transaction was for gambling. This is because France has a privacy law that actually MEANS something.

When they were forced to comply with Visa or face being cut off from Visa, they found that 50% of their sales to US customers were refused by the customers bank because they did not allow their customers to use their Visa card to gamble online.

The privacy and civil liberties implications are obvious.

Your bank has a record not only of what you spend and who with, but the type of goods and services you are buying online and they use this information to decide whether you can use their card.

Do you want your bank to know that you subscribe to adult sites? No? Well, despite the innocent-sounding name that may appear on your statement, your bank KNOWS.

Because of this and other recent actions by Visa and MasterCard, the banks in Europe are in discussions about launching a new card, which will free their customers from the all-seeing eye and might of Visa.

In addition, some major banks IN the U.S.A. are looking into starting their own non-Visa cards. Several are actually in litigation with Visa USA over the matter at the moment as Visa USA are trying to stop them.

It is possible that the European banks may end up refusing to handle Visa and Mastercard although their past cowardice suggests that will not go that far in standing up to Visa. However, if they do, banks in Asia are threatening to follow suit.

That will mean that the U.S. will be isolated. Americans will not be able to use their cards in most other countries and most people will not be able to use their cards in the U.S.A.

Canadian banks are watching and waiting to see what happens.

Brian

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