Small Business Strategies

How to run a successful online business

Free Online Credit Card Calculator to Help Web Merchants Lower Processing Costs

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Most web businesses are looking for ways to reduce operating costs in order to improve their bottom lines. One area overlooked due to its complexity is the cost of credit card processing.

To help address this, Optimized Payments Consulting has launched a free online calculator.

"It is a simple tool that will clear up misconceptions about processing costs and show businesses their true effective cost of processing credit and debit cards. This realization will cause merchants to take action and in the process add significant savings to their bottom line," notes Anand Goel, founder of Optimized Payments.

Pricing in the credit card processing industry is very complex and most merchant statements do not make it any easier to understand.

There are so many technical and industry laden terms (Interchange, qualification tiers, downgrades, batch fee, ACH fee, authorization fee, settlement fee, AVS fee, PCI compliance fee, etc.) that even a sophisticated financial manager can get cross-eyed.

This free online credit card calculator tool simplifies some of the complex pricing schemes used by processors and calculates the ‘real’ percentage rate of processing credit and debit card sales.

For many web merchants this should help clears up misconceptions about processing costs.

Most web merchants just want to know that the overall cost of processing card payments – it is really 2.5% or some artifically low "Qualified Rate."

This tool helps calculate your effective cost of card processing. If you wish the company can also send you a personalized analysis that compares your effective rate with other merchants of your size and in your industry.

Online credit card calculator: http://www.optimizedpmts.com/calculator/calculator.php

Is GameStop in denial? Digital Downloads Not Relevant Until 2014?

Matt Peckham reports on PCWorld that GameStop is playing with numbers as it tries to play down the relevance of downloadable games.
It cites the IndustryGamers reports which says that ‘GameStop doesn't expect digital distribution to be a threat to stucco-and-rebar-retail until 2014.’

GameStop "has been monitoring and studying the capabilities of digital downloading and its potential adoption over the last several years" and that the company recently "conducted the most thorough study to-date on its capability."
Matt takes a pretty hard look at the figures.
GameStop believe that an "addressable market" for digital downloads won't exist for another five years; only 25% of the population will have access to the technology necessary to download full games.
As I write, I have Second Life on my 4 year-old laptop and have streaming music coming down the wires.
Why the 5 years?
Costs are another issue.
It reckons ‘service costs ($100/month), storage limitations, and consumer price intolerance will offset digital's chances of supplanting retail anytime soon.’
According to the study, consumers will pay up to $39 per downloadable game, an expectation GameStop thinks will act as a ‘disincentive for publishers facing escalating production costs’.
This is rubbish.
I have high speed broadband for less than 10 USD per month, almost unlimited storage with Gmail and my web hosting ($5 per month) give me GBs of space/traffic.
Math points out that ‘download portals don't charge a usage or monthly/annual membership fee, and as the broadband market grows, competitive pressure should keep even the fastest consumer services from moving up much past $50 a month, while legal obstacles should prevent companies from enforcing usage caps or engaging in traffic shaping or bandwidth throttling.’
Sterne Agee analyst Arvind Bhatia, who wrote the report, notes that GameStop's “Management.... feels that digital growth and brick and mortar growth can co-exist,” said Bhatia. “Through their brick and mortar locations, the company can help facilitate and capitalize off digital. Overall, management did not seem at all concerned about the near-term threat but instead is looking at ways to potentially profit from digital.”
Read that line again - management did not seem at all concerned about the near-term threat.
James Brightman, over on IndustryGamers, thinks that GameStop will be hurt by the digital revolution in the games industry, as video games move away from the boxed product model and towards the games as a service model.
He warns that ‘If GameStop doesn't want to see its stock tank, the company will have to start thinking about how to transform its business for the near future.’
Here's the bottom line.
Matt again – ‘In a thriving digital distribution market, GameStop loses. They're late to the game, and not doing much to distinguish themselves from their more evolved and intrepid competition.’
Their revenue model depends on dominating the high street. On the web, they’ve missed the boat and are flapping around trying to avoid the inevitable.
Update: a post on IndustryGamers make the point that ‘a download-only game (XBLA Magic the Gathering) was in the top 5 most played X360 games this week… points to the fact that the Age of Download is coming faster than many may expect or desire.

5 limitations of Clickbank & where it needs to improve – Part 1 Delivery Problems

I've used Clickbank to sell digital products for 10 years. In that time I have seen other competitors, such as eJunkie.com and PayLaodz.com arrive and give Clickbank a run for its (digital) money. What disappoints me about Clickbank is that its failure to address its weakness and improve product designs that would make it a truly remarkable product.

With a little tweaking, Clickbank could be in the industry standard for selling digital products.

So, if anyone from Clickbank is listening here are five areas you could improve.

1. Digital Delivery

When you buy a product on Clickbank, it sends you to a download page on the customer’s site where you save the file. This has a few problems.

1. This web-page can be bookmarked and sent to others, who can then download the product.

2. This webpage must be created by the seller for every product. Time is money and this takes a lot of time.

3. This download page must be available 24*7. So, if your hosting company goes down, your customers cannot download their product.

As far as I know, Clickbank is the only leading e-tailer that uses this (old-fashioned) system.

What’s the alternative?

When you buy with Payloadz.com, the customer is sent an email with a link to the download. This removes the need/time to create unique web-pages for each product ala Clickbank.

Ghacks.net also takes up this point, “take a look at their requirements for pages, or better thank you pages that sell Clickbank products.”

It points out that the “requirement is that a thank you page has to be created on the website that is selling the product which will be displayed after the purchase has been made. Many Clickbank webmasters put download information of their products on this page to make it as easy as possible for their customers to download the product once the purchase has been made.”

Ghacks.net adds some tips on securing the pages. Most Clickbank Thank You pages contain the following or a similar sentence:

‘Please Note: Your credit card will be billed by “CLKBANK*COM”. The name “CLKBANK*COM”will appear on your credit card statement.’

Searching for ‘clkbank right click’ reveals hundreds of product pages that offer the product as a download after making the purchase.

Read more here http://www.ghacks.net/2007/12/22/clickbank-we-have-a-problem/

Going back to Payloadz.com, it also means that the delivery is quicker.

The customer is not sent from

1) your site to

2) Clickbank and then

3) back to your site.

Also, the customer gets 5 attempts to download the product with Payloadz e.g. http://store.payloadz.com/detail_html.asp?Id=196478 and then the link expires.

Does Payloadz.com work?

I have used Payloadz.com since April. Not one complaint. Read that again. Not one complaint.

Why use Clickbank?

I still use Clickbank as I have designed the whole site around it and to change the code would take weeks.

Sadly, every morning I get emails from customers saying they didn’t get the product, the link doesn’t work, where is the link…

Over the course of a week, this takes several hours of customer support to address, which is proving to be very time-consuming and expensive.

Next week, I’ll discuss another area where Clickbank can improve - hoplinks!

Let me know what you think.

PS: my shop on Payloadz.com is here: http://store.payloadz.com/results/results.asp?m=33579

Ivan

Twitter: http://www.twitter.com/ivanwalsh

Facebook grows to $300 million, Experimental Phase of Social Networking over

eMarketer projects that US marketers will increase their social network ad spending 13.2% in 2010, to $1.3 billion.

“The expected rebound in spending will come as more companies focus on creating and implementing an overall social marketing strategy,” says Debra Aho Williamson, eMarketer senior analyst and author of the new report, Social Network Ad Spending: A Brighter Outlook Next Year. “And it is a clear indication that the experimental phase of social network marketing is finally drawing to an end.”

2009 is turning into a year of major shifts in the social network business.

“Facebook, once a distant second to MySpace, has outperformed its rival in nearly every measure of usage—and is on track to surpass MySpace in ad spending by 2011,” says Ms. Williamson..

US spending at MySpace is expected to fall 15% in 2009, to $495 million, while US spending at Facebook is projected to rise 9%, to $230 million. Consequently, MySpace’s share of US spending is projected to fall to 43.4% in 2009, while Facebook and other social network venues will increase their share.

While the US accounts for the majority of ad spending on MySpace and Facebook, non-US spending is growing rapidly at Facebook. eMarketer estimates that marketers will spend a total of $520 million to advertise on MySpace worldwide in 2009, down 14% from 2008. Worldwide spending on Facebook, by contrast, is expected to grow 20%, to $300 million, in 2009.

“Regardless of which site is in the lead, 2009 is the year of building social marketing strategy,” says Ms. Williamson. “2010 and beyond will see increased activity and deployments.”

Social network users create a gigantic amount of data about themselves—their friend networks, likes and dislikes, content-sharing activities and more.

“Harnessing this information to deliver advertising not only within social networks, but on other sites a consumer may visit, is a marketer’s dream come true,” says Ms. Williamson.

CNN’s report on how Virtual cash meets the real world

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Developers of epayment systems and virtual currencies should take a look at this CNN report in the transition of virtual currencies into the retail banking sector.

 CNN report that in March, MindArk, creator of the massively multiplayer online role-playing game, Entropia, saw its wholly owned subsidiary Mind Bank granted a banking license from the Swedish Financial Supervisory Authority.

This license allows Mind Bank to be the first bank to directly incorporate real-money transactions with virtual-world activities.

Selling virtual assets directly between players for real-world cash has been strictly prohibited by most game publishers, which find themselves looped out of the profits.

This takes the exchange of virtual currencies into real monies to a new level.

While World of Warcraft and EverQuest users have engaged in "gold farming", i.e. gathering weapons and other status symbols, and then auctioning these off, usually on EBay.

Games publishers have started to monitor with mixed results. In response, PlayerAuctions have adopted a PayPal-like approach where it brokers the deals, acting as an open marketplace for player-to-player exchange of digital assets.

CNN interviewed Simon Newstead who explained: "The idea with dual currencies is that there is a paid currency [Gold Coins], which is paid for using real money and exchanged between sellers and buyers. In addition, there is a second currency -- a free or so-called 'earned' currency [Silver Coins] -- which is gained through activity and progression in the world or game."

"In this way," he continues, "the economy can recognize different forms of contribution, and in newer economies these can also be traded between each other. For example, people earning currency and selling it to people who have less time but have real money."

Virtual currencies in Second Life

Second Life's marketplace includes objects and services for sale, including real estate.

In 2008, over $100 million worth of Linden dollars (Second Life's currency) were bought and sold on its LindeX exchange.

"In Linden Exchange, the U.S. dollar part of the transaction is via PayPal, a well-known entity, so there's a certain amount of trust that comes with it," says Darrly Chang, co-founder of D&D Dogs, who sells virtual dog pets and avatars to Second Life residents.

CNN’s reports also discusses, GoldMoney, who launched a dedicated iPhone application allowing account holders to exchange gold and silver units within minutes.

This iPhone application let you manage your own digital gold like on other banking applications.

GoldMoney is firmly anchored to real-world assets, forbidding anonymous accounts.

This contrasts with E-Gold, whose founder pleading guilty to money laundering-related crimes..

How realistic is the prospect of a digital currency?

"It all comes down to trust," says senior economist Frederic Neumann. "We trust the government to guarantee our 'virtual' money for real currency. [With digital gold] the gold standard is guaranteed by a private company. Governments already have several hundred years of sovereignty engrained in people's minds, so that trust is very difficult to establish."

Learn more at http://goldmoney.com/ and http://secondlife.com/whatis/currency.php

What’s been your experience buying and selling digital goods, especially if it involved virtual currencies?


Regards,

Ivan Walsh

How Virtual Banks may create the Next Financial Crisis - Trouble at EBANK

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Steven d. Levitt reports in the New York Times that while the financial woes of Lehman, Bear Stearns, Washington Mutual may seem old hat, we may need to prepare for another round of bank failures in the virtual world.


In some respects, it’s already happened


Blame a character named Ricdic.


Ricdic is part of Eve Online, which has about 300,000 players. They all inhabit the same online universe and play games that involve trade, mining asteroids and the efforts of different player-controlled corporations to take control of swathes of virtual space.


Ricdic, who used to run a large virtual bank on Eve Online, stole virtual funds and traded them to other players for real money, making a down payment on a very real house and paid off medical bills.


The result of all this?


A huge run on Ricdic’s bank.


Mr. Levitt notes that there in some irony in Eve Online’s banking crisis. After all, Eve online is run by an Icelandic company and real Icelandic banks were some of the worst casualties in the financial crisis.


According to the BBC, one of the game's biggest financial institutions lost a significant chunk of its deposits as a huge theft started a run on the bank.


It reports that one of the bank's controllers stole about 200bn kredits and swapped them for real world cash of £3,115.


What happened next?


Just like in the ‘real world’, as news of the theft spread, there was a run on the virtual bank with many customers removing their virtual cash into ‘safer’ locations or converting their virtual monies into real dollar.


Reuters followed up this story.


"This character was one of the people who had been running EBank for a while. He took a bunch of (virtual) money out of the bank, and traded it away for real money," Ned Coker, of Icelandic company CCP which runs Eve, told Reuters.


The scandal is not the first to play out in Eve Online. In early 2009 one of the game's biggest corporations, called Band of Brothers, was brought down by industrial espionage.


What’s the response from EBANK?


EBANK were quick to address this on their site.


“There are a number of wildly inaccurate news stories floating around right now about EBANK. The most common one claims that EBANK had 8.9 Trillion ISK in deposits or that the Chairman committed the theft.”


Ricdic was the CEO, not the Chairman and at most, we've had 2.5 Trillion in deposits.

Also, the Bank run has ended for the most part and we have not been forced to tap other lines of capital infusions. We are very well capitalized at the moment and withdraws are being processed within our 48 hour SLA. More at http://www.eve-bank.net


In an interview with Massively.com, the directors of Ebank make some further clarifications.


"The run on the bank has come to about 600 billion ISK, which has been withdrawn. They add that it has deposits of about 105 billion ISK sitting in Sweep to keep it liquid. Currently the run seems to be mostly over with only a slightly higher withdrawal rate still, than deposit rate. That's to be expected, and in-line with EBANK's strategy to shrink to a more managable level."


EBANK has always been sound due to massive reserves. Checks and balances have proven themselves to work as a mitigation device and by having the reserves spread out over several directors, the embezzlement was kept to a minimum.


However, the run on the bank had the potential to do great damage to EBANK as people frantically made withdrawals to ensure they would not be caught if the bank ran short.


Massively: http://www.massively.com/2009/07/02/new-perspective-on-eve-onlines-latest-bank-embezzlement/


Annual Report: http://www.eve-bank.net/EBANKAnnualReport07-08.pdf

 


Regards,


Ivan Walsh


Twitter: http://www.twitter.com/ivanwalsh 

Facebook: http://www.facebook.com/ivanwalsh 

Flickr: http://www.flickr.com/photos/ivanwalsh

Ivan: http://www.ivanwalsh.com

Web: http://www.klariti.com

Amazon TextPayMe - Most Popular Text Commands

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You can now use Amazon's TextPayMe to send payments to your friend by mobile/cell phone. Remember to send your text messages to '262966' (AMAZON).

To send a payment
Command: 'pay' or 'p'
Text 'pay', the $ dollar amount and the recipient's mobile number.
E.g. Pay 5 2065551234

To check your balance
Command: 'bal' or 'b'
Text 'bal' to check your account balance. 
You will then get a message with your account balance and current send and receive limits.

To use the alias feature
Commands: 'alias <your alias>', 'alias <on/off>'
Text 'alias whatever' to set your alias to whatever. 
An alias must start with a letter (a-z) and cannot be more than 10 characters long. 
It also cannot be registered by another TextPayMe user.
Text 'alias on' to allow other users to send money to you using your alias instead of your phone number. 
Text 'alias off' to disable this feature.

To use the request payment feature
Commands: 'req <dollar amount> <phone number>'
Text 'req 10 2065553421 4251113421' to request $10 each from two users at once (those with the phone numbers listed). 
You can request money from up to 3 phone numbers in a single "request" command.

To get Help
Command: 't'
Text 't' to receive TextPayMe help on how to use basic commands like "pay" or "bal".

Alipay overtakes PayPal as the world's biggest third-party online payment platform - 200 million users

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Alipay, a division of Alibaba Group, has replaced PayPal to be the world's biggest third-party online payment platform with more than 200 million users.

According to the Hangzhou-based company, this rise is mainly attributable to a brisk growth in the past ten months, when its user number doubled from 100 million.

Alipay did not see its user number top 100 million until August 2008, nearly five years after its birth.

It expects to overtake PayPal in transaction volume in the three years, says Shao Xiaofeng, the company’s President.

Currently, this online payment service provider still lags behind PayPal in terms of actual transaction volume.

However, the five-year-old Alipay has grown into one of the most important applications in the domestic Internet industry, said Mr. Shao, noting that the fast expansion of Alipay demonstrates a robust growth in the Asian e-commerce market.

Alipay initiated the world's first transaction-guaranteed payment model in an effort to keep sellers and buyers away from possible risks. Under the model, Alipay serves as a third-party in the transactions - buyers are supposed to transfer payment to Alipay, which will then hand over the payment to the sellers after products are received.

"The number of Alipay users take up 62.5% of the total netizen number in the country," said a market observer, "that is to say, six out of ten netizens there are Alipay users."

More importantly, the Chinese Internet market is forecasted to maintain an energetic growth in the future. The country is likely to see its netizen number exceed 600 million two years or more after the figure touch 320 million, predicted analysts earlier.

Alipay, which emerged as an online payment solution for Taobao.com, turned to an independent operation on the eve of Alibaba.com's listing. (USD 1 = CNY 6.83)


Ivan Walsh

PayPal Report – Download free Podcast on What Gives Online Shoppers Cold Feet?

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PayPal has published a report on why a large percentage of customers abandon their shopping carts during ecommerce transactions, especially when close to the Checkout phase.


‘You point and click your way to buying something you're sure will somehow enrich your life, but then at the last moment before completing the purchase, something scares you off.’


PayPal looks at what makes internet shoppers "abandon" their items before moving to the checkout.

You can listen and download the PayPal reports at:


http://inr.mediaseed.tv/oneClip_C/?feed=5R0_z1Oofk4lkdIFCB_bgOSXcRZUTH5t

Journalists can access video, audio, text, graphics and photos for free and unrestricted use at http://www.mediaseed.tv.

Ivan Walsh

Twitter: http://www.facebook.com/ivanwalsh