The PhoneBoy Blog

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Why VoIP Providers Don’t Take Checks

Someone asked Ken Camp about why VoIP Providers Don’t Take Checks. Here’s my answer to that question, and it’s real simple: credit cards are cheaper–much cheaper.

You may not realize it, but most companies that provide Voice over IP service are small or came from relatively small operations. The amount of people needed to keep a VoIP company operational is low. Perhaps the most expensive part of the process is customer service, i.e. interacting in real time with customers. Many of the smaller providers don’t even offer live customer service because it’s just too expensive. Those that do offer live customer service have had issues. One only need to go read through the VoIP forums on DSL Reports or Voxilla Forums to know that many VoIP providers have “customer service” issues.

Onto the topic of money: checks are very “expensive” to process, not in terms of actual bank fees–credit card companies charge the merchant a fee to use their services–but in terms of labor. Larger companies like your credit card company have their own payment processing centers. I’m sure they’ve spent milliions and millions on perfecting a system of accepting payments by check and have automated the snot out of it. Credit card companies have millions of customers,  so it is cost-effective for them to run these payment processing centers. Furthermore, they must accept payments by check. You can’t very well pay your American Express bill with your Visa. Well I guess you can with a balance transfer check, but that only works once or twice. If you do that too many times, that’s called kiting and, at least in the US, its illegal.

Most VoIP companies don’t have the benefit of being able to use a check processing center like the credit card companies use. So someone, a human being, has to open an envelope. They have to look at the check. Figure out which account it should be credited to. Deposit it in the bank. Wait for the check to clear. Credit it to the right account. Repeat  hundreds or thousands of times. You have a process that is fraught with possibilities for human error. You’d be lucky if the amount you paid got credited correctlty to your account.

Compare this to electronic payment. At the appropriate time of the month, your credit card is debited a set amount per month. Your account is “refreshed” until the next term. Automatically. Very little opportunity for a human to screw up. Oh sure, the billing system has to deal with credit card declines and whatnot or maybe the occasional overcharge. Those things happen. In most systems, those are exceptions rather than the rule. For the vast majority of customers, the money just automatically comes in without having to do much work at all. It’s as much a cost-savings device as it is a labour-savings device.

#Cybersecurity Evangelist, Podcaster, #noagenda Producer, Frequenter of shiny metal tubes, Expressor of personal opinions, and of course, a coffee achiever.