There are many operational challenges when it comes to running a deals site. Merchant management, Sales management, customer acquisition, setting up and and configuring deals, customer service issues, refunds, complaints, email delivery,  etc. One of the most important aspects, crucial really, is the ability to take orders on the deals site. Without the ability to transact, well, your deals site cannot operate.

Last year, when deal sites were this new breed of ecommerce sales machines, payment processors including Paypal were more than willing to offer their services to the deal site. Fast forward to the end of the year and payment processors, including Paypal no longer wish to support this industry;  stating above average charge backs and fraud from consumers buying vouchers. Apparently a percentage of consumers are buying vouchers, using the voucher and then calling the credit card company to cancel their purchase. Kind of sneaky and thanks to a very small amount of hooligan consumers, the industry is suffering.

I have been on the phone most of the week talking to deal sites, new sites, established sites and most have mentioned that their present payment processor would like to either significantly increase rates or discontinue servicing the daily deal industry. Of the 5 daily deal start ups we have spoke with this week alone, all of them cannot seem to get a payment processing service to authorize them. We even spoke to an established deals site where Paypal STILL has a hold on a good chunk of their sales. Essentially crippling cash flow for this deals company.

Given all my conversations this week, 2 things happened: First I got quite frustrated and upset at the industry and the payment processing industry. If there are solutions for gambling sites, porn sites, dubious ebay ecommerce sites, then surely there must be solutions for daily deal sites in Canada. Second, I decided to do something about it. Here is what transpired:

After calling a handful of payment processors and getting frustrated with their answers or lack of answers, I will not bother publishing their names, I decided to reach out and connect with my old contacts at Admeris Payment systems. They have always been helpful in the past and wondered what their take was on this industry. I reached out to Jeremy Murray, their VP and we started discussing the challenges of this industry. Low and behold, they already look after some daily deal sites, some major ones. After discussing the obstacles with Jeremy, it became clear that Admeris had a few solutions at their disposal that could help all of the sites that I had spoken with this week.  Paypal putting a hold on your payements, no problem he could look into that; daily deal startups not getting any respect or love from other payment processors, not a problem, Admeris will work with them to get their application approved instead of flat out denying their application.

Beyond the credit card processing, there is one other option that Admeris offers that will and can significantly reduce the amount of charge backs in the deals business. I encourage every single deals site to offer this option; INTERAC processing. This is where the consumer can pay the deal site online directly with their Interac card. Not only will this reduce the rates that the deal sites pay compared to credit card fees, but there will hardly be any charge backs…since the money was removed from the consumer’s account directly and immediately.  Admeris offers Interac processing. Call them.

After speaking with Jeremy I am now quite hopeful that there may be a viable solution for most deal sites in the country. It is a shame that the growth of a business is halted due to something as basic as credit card processing. If you call Admeris, get a hold of Jeremy and let him know I sent you. He is as passionate as I am in terms of helping deal sites succeed.

On another related note.

Another “cool” way of dealing with consumer online payments and reducing fraud and chargebacks is for deal sites to use services from Rogers Catalyst. More specifically, using a consumer’s rogers telephone # account in order to process ecommerce transactions. Once a consumer  wants to pay, they simply enter their rogers phone number and payment is processed. When they get their next Rogers Bill, their charges from the Daily Deal site will occur on their bill. A very convenient feature and one that will also reduce chargebacks somewhat. Take a look at Rogers Catalyst for further information.

Thanks again to all the deal sites I spoke with this week and thank you to Jeremy from Admeris for getting things done.