Review: Verotel Billing Solutions
by Dr. Ralph F. Wilson, E-Commerce Consultant
Web Commerce Today, Issue 49, August 15, 2001
Verotel Billing Solutions
http://www.wilsonweb.com/afd/verotel.htm
Verotel, Inc.
60 Federal Street #B206
San Francisco, CA 94107
Phone (415) 543-1300
Fax (415) 908-3799
Verotel provides a way to sell subscriptions to a members-only website. They handle all the transactions and handle password management (adding new subscribers, expiring lapsed subscriptions, etc.) on your website.
Merchant Fees
Merchants don't need to get a merchant credit card account since Verotel handles the transactions. However, the cost is a significant chunk of your sale. Since digital content doesn't take money out of your pocket for merchandise shipped, however, it doesn't hurt as badly. The fees are:
|
Transaction Amount |
Credit Card and Direct Debit Fees |
|
US $3.75 to $9.99 |
19% |
|
US $10.00 to $19.99 |
15% |
|
US $20.00 to $75.00 |
12% |
Verotel also enables its merchants to offer subscribers the ability to charge their access to a 900-number, so the charge appears on their next phone bill. The price for 900-number telephone billing ranges from 30% to 20% for $8.75 to $35 totals. The company is fairly unique in that it allows you to sell products using direct debit, used widely in Germany, Austria, and the Netherlands. The system allows you to block or enable subscriptions from any country or geographic region.
Merchants are paid on twice a month on the 1st and 16th of the month. In the US, merchants can receive a direct transfer to a bank account using ACH (free), or payment by a check ($2.50 charge). Merchants outside the US may receive payments by check (free), international wire ($12.50), or deposit into a US bank account (free).
Password Management
Verotel provides password management for the content on the merchant's site using the native authorization and security system available on Unix systems (as well as NT/2000 operating systems that use an Apache webserver). Once the merchant signs up for a Verotel account, he has access to full detailed instructions on how to install a Perl program, verotelrum.pl, in the cgi-bin of the merchant's webserver. Instructions also explain how to test the script by adding a user and provide information on how to password protect directories using a .htaccess file. If you can't set up this system on your website, Verotel tech support will do it at no charge.
Once verotelrum.pl is installed on the merchant's site, when a new customer subscribers, the subscription system on Verotel's website contacts the verotelrum.pl script on the merchant's site to add a new subscriber or delete an expired user.
Types of Subscriptions
Subscriptions to the merchant's online content are made via an online form on Verotel's website which can be customized with the merchant's logo. Merchants can select from various kinds of options for their subscribers:
- Smart Recurring Billing
. The new member signs up on the subscription form. Just before the subscription period expires, the subscriber receives an e-mail that allows him to indicate his desire to renew by simply clicking on a link (opt-in).
- Regular Recurring Billing
. The new member signs up on the subscription form initially. His subscription is renewed automatically with recurring billing of his credit card unless he responds to an e-mail by clicking on the unsubscribe link (opt-out).
- One-Time Transaction
. The customer pays a single time for access to an e-book, software, etc. and then goes to the merchant's site to download the file.
Unfortunately, this type of subscription management is really designed more for a monthly subscription than an annual one. The subscription periods allowable are from 7 to 40 days, or 1 to 6 months. Verotel's set-up process enables a merchant to generate the HTML for the location on the merchant's site that takes the subscriber to the order form on Verotel's site. The merchant could select a single subscription period (for example, 3 months), or five subscription periods (for example, 10 day, 30 day, 2 month, 3 month, 6 month), or more. The merchant can also specific the kinds of payments he will accept (credit card, direct debit, 900-number), and the price for payment by each of these options.
Control Center
Once the merchant's system is checked and approved by Verotel and beginning to take subscriptions, the merchant can use the online Control Center to view account: transaction histories, pending payable amounts, chargeback information, etc.
Subscribers can be viewed via Subscription Management. This function allows you to add, modify, and delete users. You can view individuals from two lists. (1) The active user database, all your active users for each website you are managing under your account. This includes the users who signed up, but cancelled their account later that period (they will not be re-billed), but are not deleted yet. (2) Deleted user database: all the users who are deleted because their subscription on the website has expired. You can either browse users from one of the lists, or search for a record by username.
In addition to credit card information, the subscription form collects the following information: Name, Address, City, State, ZIP, Phone Number, E-mail address, username, and password. Once a country is selected, the program generates a drop-down menu listing all the states or provinces in that country. In addition to modifying this data, the administrator can also modify the subscription expiration date from the web interface.
Verotel also includes a reseller (read "affiliate") program, so that a merchant can get other siteowners to sign up as resellers (affiliates), link to his site, and be rewarded with a commission for each sale.
It's what is missing that concerns me. I saw no way to list all of the subscribers. No way to export subscriber information to a file that can be downloaded and displayed in a database or spreadsheet program. No way to e-mail a message to all the subscribers. In other words, the merchant can see individual financial details but not the big picture. He can view individual subscribers' e-mail addresses but has no way to market effectively to them as a group.
Why the High Rates?
I talked to Bill DeMar, Director of Sales and Marketing, about Verotel's high rates compared to lower rates charged by Verotel's parent company Verza (4.9% plus 99 cent transaction fee for tangible items only). He explained that the risk of chargebacks is much higher with intangible products. In addition to credit card fraud (such as Eastern European hackers using fraudulent credit cards to view content), he mentioned the problem of "friendly fraud," people who don't remember, or don't choose to remember that they paid to view online content. If they disclaim making the transaction, their bank will issue a chargeback, which, in turn, dings the merchant account holder (Verotel, in this case, which passes the $15 chargeback fee on to their merchants). Merchant accounts that have a lot of chargebacks are generally assessed higher discount rates than the average 2.5% for mail order transactions.
I pointed out that ClickBank charges only 7% + $1 transaction fee for intangible products. Mr. DeMar responded that ClickBank doesn't allow any kind of adult content, but is mainly used for sales of software or e-books and the like. I gather that a substantial part of Verotel's business is with adult sites, which would help explain the higher rates. On the other hand, Verotel offers some add-ons that ClickBank doesn't, such as managing subscriptions, recurring billing, password management, and 24/7 support. Mr. DeMar points out that ClickBank's fee for a $25 sale (an average subscription charge) would be $2.875 or 11.5%, not far from Verotel's 12.0% fee. However, for a $50 transaction, ClickBank's fee ends up at 9.0% compared to Verotel's 12.0% fee. I think Verotel could serve its non-adult merchants better if it charged them a lower rate for their less-risky non-adult content sites.
Overall
One of my readers first alerted me to this site. Here's what she says about her experience with Verotel:
"This is an all-in-one solution. I'd been having trouble trying to get all my stuff to integrate well together with so many different programs and services for each different thing. This one lets me do everything all in one shot. Also, I can do unlimited number of URLs and websites all under one account, and I can have unlimited number of membership levels, etc. It also takes care of the membership management with recurring billing and auto expiration according to what plan the customer bought. It also tracks affiliates and pays them for me -- such a time saver.
"What I don't like is that for membership management, customers can only pay for a maximum six months, so if I want them to have lifetime access for one price, I have to go in manually after the fact and change their expiration date so they have access for as long as I want them to. Also, it's annoying that the maximum payment amount is $75. But, if I had it to do over again, I would choose Verotel again. It's free set up, no monthly fees, etc. A 15% per transaction fee is all they charge [for my products], and since they track, calculate, and pay affiliates too, I think it's well worth it."
This kind of user feedback is enlightening. As I see it, Verotel does provide a nice bundle of features for those who run subscription sites with weekly or monthly subscriber renewals, but it lacks the ability to handle annual subscriptions and the tools needed to market effectively to current or lapsed subscribers. The program seems robust, offers a number of advantages to those with an international clientele, provides good documentation, and is relatively easy to set up. But it is also costly at 12% to 19% of the transaction. While this seems to work very well for some content publishers, I believe the product needs some improvements and pricing adjustments before I can recommend it without qualification.
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