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Conflict of Interest: Payment Processors vs uISVs

Posted on July 5, 2007 by in Checkout, customer service, microISV, Paypal

I sometimes take a bit of guff from other uISVs for not using a “real” payment processor.  Some folks believe Google Checkout/Paypal are “unprofessional” or “hobbyist”.  I respect that opinion.  However, if the recent events at SWREG are any indication, I’ll wear that amateur label proudly.  They recently introduced a new upsell item in shopping carts of the uISVs they serve, and its one that makes one recall the many alternate definitions of the word professional.

Andy Brice has got the story covered and the BoS forums are buzzing about it, but in brief, SWREG has placed a button labeled Continue after the last page after the checkout funnel.  If you click the button, you will be billed $9 a month to your credit card, silently, until you figure out who the heck is billing you and try to cancel.  This is orchestrated by an outfit called Reservation Rewards aka WebLoyalty.com aka TravelValuePlus aka BuyersAssurance.com aka AnyoneWithSixDBAsIsTryingToScamYou.com.  Theoretically, they send you coupons in return for your $9 a month.  Many, many folks report never getting the coupons, never receiving a single of the multiple emails they steadfastly claim to send, and never having done the double opt-in gymnastics that they claim isolates people from getting locked into their service without wanting to be.

See, here’s the rub.  There is a nice feature of the Internet that folks learn early: if you don’t give your credit card details to someone, they can’t bill you.  Entering your credit card details is a signal both of major trust and of the fact that you understand that, absent you taking some action, you’re about to authorize forking over some money.  WebScamInc could never get “millions of satisfied customers” to authorize the $9 for nothing purchase with their lack of service, so they piggyback on the trust the customer has in you.

And THAT, more than anything else, is what burns my biscuit about this.  It is bad enough that a business would abuse their own customers enough to facilitate theft by fraud from them, and some large businesses did this quite often in the Wild West days of the Internet.  What makes it particularly galling, though, is that a customer at SWREG is not SWREG’s customer — he’s the customer of some uISV somewhere who stays up nights toiling away writing emails, polishing web copy, and smashing bugs to earn the trust of people he has never met over the Internet.  And what does the customer get for being foolish enough to trust him?  He gets stabbed in the back by someone whose only purpose in life is to be a convenient CGI interface to a merchant account.

Oh, but it gets better.  Over at Andy’s blog, Jessy from SWREG has this explanation of why they allowed a scammer to take up residence on their service.  Its… well… here, read it.

Hello,

The offering is a perks offering for customers. In no way are they tricked into using this, and it is clearly disclosed what they are signing up for. The signup page looks nothing like the order form or SWREG clearly differentiating it from the product purchase.

Customers are also very easily able to cancel the perk offering at any time. They can choose to pay the fee and receive great discounts at very popular, well-known brands/stores within their country.

SWREG has made this optional for our clients. These are offerings used at Amazon and EBay, nothing new or out of the ordinary for customers.

If you have any questions please don’t hesitate to contact me.

Thanks,

Jessy

(Email address omitted by me.)

This is willfully obtuse.  Yes, if you read every word on the SWREG order page, you will indeed realize that the 8pt font says you are submitting your data to a third party and authorizing them to debit your credit card.  The 24 point font on the blue button, however, says “Yes.  Click here now”.  And SWREG, as an e-commerce merchant, should darn well better know that Internet pages are not made to be read.  They are made to be scanned — readers evaluate, in a period of seconds, whether or not anything on the page has interest to them and then they drill down into that content, either by reading it or interacting with their interface.

A large block of small text font on a web page, placed against a blue button with a strong call to action, isn’t asking to be read.  Its asking to be missed.  It is exactly where any web site designer worth their salt would say “You know, if I put that in CrazyEgg or did a real heat map study, that area would be a deep blue dead zone.  I sure hope the content writers don’t put anything important there.”

There is also the context to consider.  This is important — if you are in the middle of a transaction, and you have already gotten over the mental “Give this vendor [i.e. the uISV] money” barrier, then everything from the start of the funnel to the end of the funnel reads Click next to continue.  If that button had said, in 48 point font, “Click here to format C:\” I still could have gotten 5% conversion with it!  Its like putting something on the second to last page of an installer — we all know that nobody reads anything, they just mindlessly click next until the application pops up or they are dumped to their desktop because our industry has trained them for decades that nothing they are about to see is important.  That is why, when we design web applications, we put destructive actions behind popup confirmations, and we put really destructive actions behind things which are designed to jar the user out of their GUI induced fugue, like “Type d-e-l-e-t-e to drop the database”.  Spending money is customarily put behind a similar speedbump, entering credit card details, and this scam is designed precisely to circumvent that safety valve.

Oh, but spending money isn’t necessarily destructive, as Jess points out.  Maybe folks like the discounts they’re getting at a wide variety of establishments in their country, for the low, low price of $9 a month.

Tell me, do the one thousand, nine hundred, and seventeen customers who commented on just one of the “Reservation Rewards is a scam” thread sound like they are satisfied customers happy to have received discounts?  Lets review a couple of these comments, shall we?

Daniel said

wow i cant belive this i just noticed these same charges on my account and only noticed because it made me overdraft in my debit account. i called the bank and they told me that it has been going on since july thats $54 that they have talken with out me knowing i have no idea where they got the info tho i always shop through paypal but makbe that is the problem all i know is that this needs to be stopped it is wrong. 

Matt said

Thanks for putting this up. I just got off the phone with these guys. They claimed they “were making an exception to the rules” when they refunded 4 months worth of charges to me. I asked where they got my CC# and they claimed it was from ebgames.com, a site I sometimes buy stuff from. I’m filing a complaint with the Connecticut Department of Consumer Protection and will be taking the issue up with ebgames.com customer service and perhaps the Pennsylvania Bureau of Consumer Protection if that doesn’t work out well.

(You can feel free to add this to the SWREG defense: Well, if Reservations Rewards is good enough to scam ebgames’ customers, then it is good enough to scam ours!)

Don said:

I am currently serving in Iraq, have been for 4 months, and noticed that I have been recieving charges from WLI for $7 (am I a lucky one to get off so cheap?). I have gone to their webpage with an unloaded weapon—you see, you have a logon & password to see “your” account information. Beings I did not know I was a member, needless to say I do not have that info. So I e-mailed them my name as it appears on my credit card, told them to cease, desist & refund….. Hoping for the best.

You know what lack of capital letters, fractured syntax, and a certain lack of savvy about e-commerce reminds me of?  Oh, yeah, a significant portion of my customers.  (Even English teachers “let their hair down” when they are writing emails, sometimes.)  Unlike any significant portion of my customers, these folks are howling for blood.  And if you’re using SWREG, they are howling for your blood, because despite the fact that you are the little minnow and SWREG is the multi-million dollar corporation to the extent that anyone realizes you are in fact separate entities (and most don’t) the presence of SWREG’s website wrapped within a mere portion of your own makes it look like they’re working for you.  And, hey, with them getting a sliver of the transaction, that is what the relationship really is.

Which is the problem from SWREG’s point of view.  They can’t increase their cut of the transaction size, or you will flee to one of their competitors, or decide to go to e-junkie/Paypal.  You can get a customer to purchase from you multiple times to increase your revenue, but that is only an option for SWREG to the extent that you stay one of their vendors.  So they are constantly on the lookout for new revenue streams, and both aggressive cross-selling to your customers and selling them down the river to scumbuckets.com are apparently options on the table.

So, what to do about it?  Well, if you’re not a customer of SWREG, great.  Celebrate your good fortune… and give your e-commerce provider a jaundiced look and a quick assessment of whether they would ever stab your customers in the back.  If they would, make preparations for your inevitable separation as soon as that provider makes the decision that your future loyalty is worth less than the amount they can extract out of your customers today. 

I came very close to giving Google Checkout the boot once, on Earth Day.  They proposed to cross-sell my customers into a $10 carbon offset.  It wasn’t nearly this scummy — the carbon offset was clearly marketed as a separate item, it would have required another separate checkout process to buy, and of course the only reason you would actually click on a button saying Click Here To Buy a $10 carbon offset is if you wanted to actually buy an indulgence offset.  Google’s saving grace was that they realized this was going to be controversial and offered me an opt-out.  (It really should have been an opt-in.  I have no strong opinions either way on begging for alms soliciting charitable contributions but impair your customers’ experience to do it, not mine.  I don’t see any “Thanks for searching for flapjack recipes on Google.  While you’re here, interested in buying a carbon offset?” cluttering up your famously minimalist interface.)

And if you are a SWREG customer?  I think Tom Rath on the BoS boards said it best:

Now I need to spend the next few days alerting my customers of this con, apologizing profusely to those who found themselves roped into it, and write cheques to cover whatever expenses have been incurred by those foolish enough to trust my company’s judgment.

I don’t know what Tom Rath sells off the top of my head, but whatever it is, that paragraph makes me want to buy one on general principle.  Those are the words of a man you can trust.  That is the tone that we strive to strike as little honest fish in a stormy ocean filled with unscrupulous sharks trying to take a bite off of anyone doing business on the Internet. 

And SWREG?  Well, suffice it to say that the W in the name is looking like a dorsal fin to me at the moment.  Duh duh, duh duh, duh duh duh duh duh duh…

Minor Usability Errors In Checkout Funnel = You Lose Lots Of Money

Posted on May 12, 2007 by in Checkout, support

Recently I discovered that I have been inadvertently making it very difficult for customers to order CDs, which are a very popular item.  They’re so popular that I think a significant portion of my customers would walk away if they couldn’t get them.  Here is the percentage of orders I’ve had which requested a CD since I made the CD an easy and obvious item to get:

February (CDs offered prominently midmonth) : 6 / 17 = 35% (its over 50% if you count only the orders past when I started offering CDs prominently)

March: 2 / 30 = 6%

April: 4 / 26 = 15%

May: 3 / 12 = 25%

Now, granted, part of this is natural variation and small numbers throwing things for a loop.  Part of it in March was a bug in my webpage which made it flatly impossible to order CDs through the two most obvious links.  I expected the CD rate to recover to 50% or so after fixing that, but it has been fairly low in April/May, and I recently discovered the reason why.

The problem was the e-junkie cart.  Basically, to ship a CD you have to mark it as a Shipping item.  If you have a Shipping item in your cart, the cart interface changes.  Try it out now on my website.

If you don’t have a shipping item in your cart, your cart looks like this:

Cart Without Shipping Item

You hit one of the two checkout buttons and you are instantly whisked to the checkout page in Paypal or Google Checkout.  Brilliant, you now have something approaching a 60% chance of giving me money (guesstimate from available analytics data).

If you do have a shipping item in your cart, you get

Cart With Shipping Item

So you click on the checkout button and are instantly whisked to… an error message.

Cart Error Message

Thats not good news, but being a computer user you don’t actually read the error message.  Roughly half of you abandon the checkout instantly.  The other half of you input your zipcode again and slam on the checkout button.  Where you get whisked to another error message.

Yep folks, like the old public service announcement said, reading is fundamental.  You have to click update cart then click checkout.  Only 20% of the people who reach this stage of the game are capable of completing those two steps in order.  For those keeping track, thats 50% lost at the first error message times, then 80% of the remainder lost at the second error message, means a total of 10% of the people who wanted to buy CDs make it through The Cart Gauntlet.  Then its on to checkout where the slightly miffed survivors convert at a 60% rate, meaning I lose NINETY FOUR PERCENT of the people who have expressed interest in buying a CD.

Clearly, this is a suboptimal state of affairs for me.  Luckily, my shopping cart was created by the best guys in the business, e-junkie.  I swapped a pair of mails with Robin detailing the problem and they’ll have a fix pushed out to all their carts in the world (hosted web apps: so nice) by the end of the weekend.  Other e-junkie users who sell to non-technical customers, I hope you enjoy your magically increased sales as much as I will.

So here’s the take-away lesson: you’ve got to sand down the rough edges in your checkout funnel or they’ll bleed you to death. 

Many people might say “Wait a second, isn’t the cart itself a rough edge, since you go directly to the checkout button?”  Oddly enough, no.  I can substantiate that with conversion numbers — the page performs much better with the cart than with buttons taking folks directly to Google Checkout and Paypal.  My guess is that this is psychology — you get one choice to make “Download or CD?”, you make it, and after you’ve committed to that the virtual salesman gives you another minor little prompt “So, how do you intend to pay for it?” and we’re off to the races.  If, however, you offer a bewildering array of options at the start of the process (“Would you like to buy the downloadable version from Paypal for $24.95, the downloadable version from Google for $24.95, the CD version from Paypal for $29.95, or the CD version from Google for $29.95?”), customers can get decision paralysis.

A Happy Milestone

Posted on March 13, 2007 by in Checkout, Paypal

Its March 13th in Japan and my profits for 2007 just exceeded my profits for 2006.  March is shaping up to be my best month ever (I’ll, knock on wood, probably hit $800 to $1,000 in sales, with expenses in the $150 region depending on how many folks decide to buy CDs).

Google vs. Paypal — Customer Preference

Posted on February 26, 2007 by in Checkout, Paypal

This is mostly anecdotal but someone asked me for the numbers today.  I figured other people might like them so I’ll promote this to a post instead of a comment.  Note that the sample size is fairly low because I made a major error 2 weeks ago and that resulted in my sales declining about 80% over the period (d’oh!).

From a universe of 29 transactions, 13 were Google checkout and 16 were Paypal.  (This excludes one additional transaction which would have been Checkout if not for Google denying it for, ostensibly, security reasons.)  The presentation of the Checkout and Paypal buttons is fixed and exactly symmetrical unless folks choose to buy directly from lower on the page rather than from the cart.  Most (80%) of my transactions come from the cart.

Interestingly, none of my Google checkout customers had their account prior to signing up to do business with me.  Back when I accepted primarily Paypal, a rather high percentage of my customers had existing Paypal accounts (its inefficient for me to check exactly how high, but I have quoted 60% at previous times so lets call it 60%).  The percentage of Paypal users who have preexisting verified accounts has gone up significantly since I began offering checkout.  My interpretation of this data point is that people who already use Paypal are likely to seek it out as an option when given comparable alternatives.

I should note that my cart interface always presents Paypal and Checkout in the same order (Checkout on the left, Paypal on the right).  If I had my druthers that order would be randomized for every load of the cart.   I suspect many customers are just mashing on any button that they know is in the contextually accurate place for Continue This Transaction Darn It rather than making a conscious decision for or against either provider.  Thats fine by me, incidentally, since I hate having customers have to decide things prior to giving me money.

I should note that my demographics are probably vastly more accepting of Paypal than some demographics.  Many software developers, for example, hate Paypal like the plague for some reason.  I think this viewpoint is rather less prevalent among middle aged ladies, who make up a good deal of my customers.  eBay is a big hit with them, and Paypal acceptance among eBay users is extraordinarily high.