Author Archive for Sanjay Sarathy

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.

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

The Value of Automatic Payment

Tuesday, April 6th, 2010

The Services Tsunami–characterized by rapid product iterations, immediate customer feedback, and the growing acceptance of subscription billing–has affected many industries, from gaming to software. Nonetheless, many companies in this era still issue traditional invoices and incur the significant overhead of days sales outstanding (DSO), that is, the average number of days it takes to actually receive revenue from a customer contract. Terms like Net 30 or Net 45 result in fairly significant DSOs, an obvious setback for a company’s cashflow.

To reduce DSOs, consider offering your customers automatic payment so that they can charge their payment method (credit card, debit card, ACH, and so forth) the amount of the transaction when payment is due. Subsequently, your DSOs will drop by a couple of days to a week, a benefit that’s well worth the cost investment of implementing the related payment and billing infrastructure.

Plus, a key factor for successful online services is customer “stickiness,” which, along with other best practices, enables you to maximize customer lifetime value. In sending customers monthly invoices, you give them 12 opportunities in a year to rethink whether or not to continue their subscriptions. With automatic payment, you minimize those second thoughts and the potential delay in cash from 12 separate checks arriving in the mail. Lengthier customer loyalty with more predictable cash in the bank–what’s not to like about automatic payment?

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$40 Million

Wednesday, March 17th, 2010

In my previous post, I alluded to statistics that highlight how Vindicia CashBox helps clients retain customers and thus lift revenue streams.  In a press release issued at the Game Developers Conference in San Francisco in early March, we mentioned these numbers:

  • Over the past year, thanks to our retry logic, Account Updater, and other retention capabilities, our clients gained 10-25 percent more of the customers who failed in their initial attempts to renew subscriptions.  We have seen this trend across all the vertical markets we serve.
  • Take those percentages and aggregate the dollars across our client base over the past year, you get a total of $40 million.  More importantly, this number grows every day as we add clients and as our existing clients’ business expands.
  • Our transaction volume has risen by about 45 percent over the past year: We now handle about 250,000 transactions every day while remaining PCI-compliant at the highest levels for the fifth year.

Speaking of PCI compliance, its juxtaposition with cloud computing is catching more and more attention.  If you’re attending Cloud Computing Expo in NYC in April, check out our CTO Brett Thomas’s presentation.  You’ll hear something very novel that will radically change your thinking about PCI compliance in the cloud.  I promise.  Don’t miss that talk!

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A New Analyst Report on Subscription Billing

Tuesday, March 9th, 2010

Diversity Analysis, an independent consulting group that specializes in SaaS, cloud computing, and business strategy, recently published a report that includes 10 questions any online business should ask of its billing infrastructure.  I found the entire analysis worth reading and would like to highlight here a few quotes that reflect what many of our existing and potential customers have been pointing out are especially important to their business–

  • The need to be able to react to international taxation rates and laws, international currency issues, diverse payment methods and multiple languages are all factors that need to be taken into account.
  • In a business to consumer (B2C) operation, it is entirely possible that a business may have hundreds of thousands of customers and hence millions of billing transactions – scaling for subscription billing is therefore far more complex and time consuming than for traditional product companies who generally invoice on a one-time basis.
  • Of all these regulations, it is most critical that the billing solution is compliant with PCI. It is important that not only the infrastructure housing the billing solution is secure but also the flow of financial data, thereby ensuring data security standards.
  • Specialist and comprehensive billing systems are built to automate many parts of the billing and subscription process and in doing so both save money (in terms of time savings) and drive extra value (in terms of increased customer retention).
  • Similarly a billing and subscription service should be seen as a core part of the customer relationship management operation. It should give the business sufficient visibility into a customer’s needs to enable targeted marketing by way of up-selling or cross-selling.

The billing infrastructure wields a significant effect on your business, as Diversity Analysis emphasizes in its report.  In an upcoming post, I’ll go into some numerical depth on the value of CashBox for our clients.

You can download the report here.

Sanjay SarathyTags: ,
Posted by Sanjay Sarathy in Marketing Fury | 2 Comments »

Soccer and Online Billing

Thursday, February 25th, 2010

El Clasico refers to the annual soccer match between two well-known soccer clubs, Barcelona and Real Madrid.  With some of the best players in the world on both sides, the November ‘09 match was fascinating to watch for both individual brilliance and sublime team play.

What does great soccer have to do with robust online billing?  Quite a lot, actually.  Both are about how different parts that work together well make for success.  Understanding how components like automated retry logic, flexible payment methods, chargeback management, and sales-tax calculation should integrate to maximize customer lifetime value is critical for online billing, whether home-grown or outsourced.  For example, it does no good if you have an ideal strategy for winning customers but then your chargeback rate exceeds the infamous one percent and the MasterCard and Visa fines are threatening your bottom line.

Also, ensuring that those pieces fit together in theory is only one piece of the puzzle.  Operating at scale is another.  As your business expands, ask yourself if your billing operations can support subscribers in different geographies with multiple payment methods and communications in your customers’ preferred language.  There is no greater frustration if your product or service is a great match for a particular market segment yet you can’t properly meet your customers’ needs in terms of billing and payment infrastructure.  Focusing on those areas early minimizes the work and overhead that you have to absorb as your business grows.

Sanjay Sarathy Posted by Sanjay Sarathy in Marketing Fury | No Comments »
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