Archive for April, 2010

Eliminate PCI Compliance With Hosted Order Automation

Tuesday, April 20th, 2010

An article in Internet Retailer Magazine discusses the cost burden Payment Card Industry (PCI) regulations place on merchants of various sizes.  Mind-bogglingly, the effort to maintain compliance and pass the annual audit can easily reach $1 million.  To help merchants eliminate this burden altogether, we at Vindicia announced today a new capability in CashBox called Hosted Order Automation (HOA), whereby merchants can completely offload their PCI cost to Vindicia.

Before explaining how HOA works, we’ll briefly describe the background. In a typical online CashBox transaction that’s paid by credit card, a customer who clicks the Buy or Checkout button on a merchant’s site sends his or her credit-card information–securely–to Vindicia for billing.  During that process is a moment in time when the transaction passes through the merchant’s server.  Even if the merchant immediately deletes that credit-card information, the very fact that it touched the merchant’s server requires that the merchant comply with PCI.  That’s true even if the merchant is working with a PCI Level 1 Service Provider in Vindicia.

With HOA, PCI regulations do not apply to merchants who use CashBox because, instead of passing through the merchants’ servers, all credit-card transactions go directly to CashBox.  Not only can those merchants continue to enjoy the other inherent capabilities of CashBox, they still retain control of their customer experience, that is, the look and feel and other user-interface components of the checkout page. Yes, having one’s cake and eating it, too, is actually possible in this situation.

To learn the details about HOA, read its data sheet. Feel free to contact Vindicia for more information or post questions to our community forum.

Sanjay SarathyTags: , , , ,
Posted by Sanjay Sarathy in Best Practices, Marketing Fury | No Comments »

SaaS and Intangible Sales Tax, LA, NY, CO edition

Monday, April 19th, 2010

As the budget pain continues in state government, a couple recent events are noteworthy.

First, New York State has taken the position in an advisory opinion that a SaaS offering is taxable when software is delivered in a hosted model. Advisory opinions aren’t fully binding and the application in question was voice related which may have complicated the analysis so this may be an outlier, but it is troubling that a SaaS provider with New York nexus may be required to remit sales tax for revenue generated from New York residents. My reading of the opinion is that gaming companies have to spend some time with counsel figuring out whether their service is the software or just post software access services which generally haven’t been taxed by New York in the past. Virtual goods models should be untaxed based on Apple’s advisory opinion, but the scope of the new opinion is troubling.

In Revenue Ruling No. 10-001 the Louisiana Department of Revenue has determined that not only are non executable downloads like books, music, movies, or AV updates taxable, but is now attempting to take the position that software delivered in the SaaS model is also taxable. Reviewing Louisiana’s logic, it would appear that true SaaS offerings that do not have client software outside of the browser are not actually taxable, but that the DOR is attempting to create a broad interpretation that states that the generated html in the users browser constitutes the software.

Further, Colorado is in process with emergency regulations that look on first blush to turn CO from a SaaS/intangible goods friendly state into a problem child for everyone in all 50 states. Colorado has come up with the unique idea that they will require all vendors, regardless of nexus to email out how much use tax is due on their tangible sales or sales of executable downloadable software. In addition, Colorado has extended the definition of tangible software to include electronic transfer of the box contents equivalent. For now it appears that Colorado has not extended sales or use tax to SaaS or non-executable downloads. We will be monitoring those developments closely and I expect to post more on the Colorado use tax situation including what will almost certainly be litigation over the far reaching impacts of Colorado’s new use tax notification law due to its extra territorial effects.

Gene HoffmanTags:
Posted by Gene Hoffman in CEO Blog | 1 Comment »

Do Not Assume Payment Methods Are Universal! Demographically nor Geographically!

Tuesday, April 13th, 2010

One of the challenges we all face is being able to step out of what works for us and understand what any one or group of our customers is going to have a preference for. This is especially true for payment choices. The closest thing we have to “universal” in ecommerce is Visa/MasterCard. But, if you are selling to Germans, you better support something called ELV which is a form of direct debit or move on to another country. And, as a person with a marketing degree I have a hard time saying this, but surveying your customers to ask them what payment methods they want or what is most important about those choices, may lead you down the wrong path. What people say they want and how they act in this regard can be significantly disconnected. ie; Is security important to you? Who is going to say “no”? But, many payment methods have fallen flat on their face if the hurdles to usability are significant due to security. What was one of the things that made PayPal grow incredibly fast? All you needed was an email address. Of course, their fraud rates were through the roof too but they had the luxury of taking in a whole bunch of VC money and being able to tolerate the cost and eventually they dug themselves out of the hole. Two of the most important questions you have to ask yourself are; 1) what is my target demographic and 2) what geographies do I want to serve?

Steve KlebeTags:
Posted by Steve Klebe in Payments 101.201.301 | No Comments »

Murdoch: Go Back to the Drawing Board

Thursday, April 8th, 2010

Rupert Murdoch is out making news today that pay walls are a great idea and fingering Google Search as his nemesis. He’s off the mark on two points.

Paywalls are attempting to monetize access to content. That model died the day Tim Berners-Lee released CERN HTTPd. Raw access to content will or has been commoditized and that trend will only continue. Especially in the realm of content creation where there is little value add (read hard news), there just isn’t enough invested that the crowd can’t do as well or better that allows for simple monetization of that access. In point of fact, using the paywall in such a way that you break the network effect devalues the the content in question by taking it out of the conversation.

This is why I say that Murdoch has the wrong boogeyman. Murdoch is not competing with the Google search and Adwords. He’s competing with Google Reader.

As Reader continues to improve it will start to learn how you consume news and start to make staying informed easier for the end user. The real challenge for major news organizations is how to go back to the product development drawing board and understand their businesses as services that add value for their end users.

Newspapers were begun to facilitate news aggregation and to  make keeping informed easier, more reliable, and enjoyable in the days where telegraphs were expensive or even earlier where 6-8 knots or 20 horse miles per day was the speed of information.

It is now time for news organizations to start thinking about how they are particularly able to add value in ways that leverage the network effect (instead of hindering it) and starts to organize the crowd and the news in ways that both entertain and speed the end users acquisition of news information.

Money can be made and subscriber bases can be grown by major news organizations, but they will be grown because the news business makes a pitch to news consumers that adds value to how the consumer uses their content today instead of simply disconnecting content from the open network. News organizations that choose to try to understand the news I want and offer it to me for one price across my PC, iPhone, iPad, game console, Boxee Box, etc. will give me a reason to be their subscriber.

I’ll note that I have but one login to Netflix and that login knows what I like, what I’ve consumed, helps me find new stuff that will amuse me and comes with a single cross channel price.

Which news organization will compete with Google Reader to make me happy to pay them?

Gene HoffmanTags: , , , , , , ,
Posted by Gene Hoffman in CEO Blog | 1 Comment »

No Silver Bullet…But CVNs Make Sense…The Time Has Come!

Wednesday, April 7th, 2010

Card Verification Numbers (CVN), those 3 digits on the back of a Visa, MasterCard and Discover Cards and the 4 digits on the front of an AMEX should be taken advantage of. Aside from the confusing acronyms from each of the card brands (CVV, CVC, etc.), their time has come. When they first arrived on the scene, consumers were confused and this may have led to some abandonment. Now it appears, that merchants who do not ask for them may be risking abandonment. While far from perfect, and nothing is, there is no question that successful authentication of the CVN does provide significant fraud prevention and remediation benefits. It is true that the card skimmers of the world now capture the CVN too and when card numbers are sold on the Internet (or in some back alley), ones with valid CVNs fetch more dough. As with all fraud prevention and remediation efforts, you have to take advantage of multiple layers. In the physical world, the holograms that are applied to cards were counterfeited within weeks of their introduction but it is one more thing the bad guys have to deal with, it increased the cost to commit fraud and continues to keep the casual fraudster at bay.

Steve KlebeTags:
Posted by Steve Klebe in Payments 101.201.301 | No Comments »
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