Mikhalia the Picky wrote:
So what -is- the reason behind paying some company in the UK that I've never heard of instead of just having SE taking my money directly once a month like they did through POL?
SE are the only folks who could tell you the reason with certainty, but if you understand a bit about the system and you know the history it's not hard to come up with a reasonable explanation.
Not all that long ago, I read about issues SE was having with chargebacks. For a company to come out and make any kind of statement (publicly or even to customers on a one-to-one basis such that word can get around) about a high rate of chargebacks means it's gotta be pretty high. For a company to alter policy in an attempt to deal with their rate of chargebacks also suggests that SE's chargeback frequency was quite high.
A chargeback is what happens when a customer phones their credit card company and says, "I didn't authorize this charge" and the credit card company says, "Okay, we'll reverse the charge and credit the amount to your card." It's great fraud protection for consumers but it can cost companies dearly. Depending on the fee schedule set out by a company's acquirer, there can be a flat fee charged to the company for every chargeback, similar to an NSF fee on a bounced cheque.
Oh, but that's not all. Credit card acquirers keep a percentage of every transaction's value. It's referred to as their "discount". That's how they make their money. That percentage tends to range from 1.9% up to 5%. So if you have a business and I buy something from you with my credit card for $100, the acquirer will keep anywhere from $1.90 to $5 as their fee for handling the transaction. Just what percentage the acquirer charges is based primarily on two things: how much money they collect on your behalf on a monthly basis (more money generally equates to a lower %), and what they assess your risk factor to be (higher risk = higher %). And they can adjust that % based on changes in your business. A high rate of chargebacks equates to a higher risk, so when you've got hundreds/thousands of gilsellers paying for their game accounts with stolen credit cards that wind up as chargebacks to the game developer, not only does the developer get nailed with chargeback fees, they run the very real risk of having their acquirer discount increased. It's a double whammy that's killer for businesses. What makes it especially difficult is that the relationship between a business and their acquirer becomes almost like an informal credit rating, so if your acquirer jacks your discount because you're deemed to be a higher risk than they originally anticipated, you can't always just drop your acquirer and go find another one to start over.
So now that we have an idea of how things happen between business and their acquirers, and we know SE had significant issues with chargebacks for XI, there are at least two plausible reasons for why SE might want to go with a third party fee collector:
1) SE's acquirer discount rose to unacceptable levels and they couldn't find another acquirer who would cut them a break so they're shifting the risk on to a third party and washing their hands on the deal (hence why CnB charges a risk premium)
2) SE has decided that they don't have the resources to manage the security necessary to reduce the risk of chargebacks in-house, so they've opted to outsource.
Those are just two potential reasons why SE might have gone the route that they have. I can guarantee you it wasn't a decision made on a whim, or just to @#%^ with you, or because SE doesn't know what they're doing. They're taking a risk by going with a third party like this (just ask the folks behind Warhammer what can happen if your third party billing company drops the ball), and no business takes risks like that lightly. Edited, Sep 21st 2010 5:48pm by Aurelius