Across the Board

Blog on e-business and online payments.

Online Payments in Hosting Business – What Can Go Wrong?

Not so long time ago we published posts about online payments in charity and an article about accepting money on marketplace platforms.

Here they are:

Today we continue with yet another type of company – a hosting service. The intricacies of managing the online payment system in such entrepreneurship are slightly different, mainly because of other set of risks involved in the process.

But does this mean that implementing online payments is impossible, or particularly troublesome? Find it out by reading this blog post!

Web Hosting Makes the Internet Possible

Without hosting companies and their services there would be almost no pages out there.

It would be just like in the old days, when it was necessary to own the whole infrastructure required to operate the website. In addition, you’d have to obtain the expertise that would make it possible to make the page available online. Back then, the Internet was mainly a domain for scientists and engineers. No advertising and online shops. No kitten videos. No memes. Nothing! Dark, dark times.

And then – hosting companies came along and made things easy for all of us.

Web hosting is a service which allows people (individuals, organizations, companies) to create websites. The page, thanks to the hosting provider, is accessible via Internet.

Of course, in the light of what I’ve said, web hosting businesses are practically what makes the web we know possible. And so, they are completely normal (and needed!) internet businesses. But their activity may give access to illegal practices and fraud, which makes them automatically burdened with risks. What are those risks?

The Dangers of Offering Hosting Services

The opportunity to upload various content online and to make it publicly available can be, unfortunately, a double-edged sword.

What does a hosting business owner have to worry about? The list is not excruciatingly long, but some issues definitely have to be addressed for things to work out.

1. Shady content

Malicious software and viruses, but also, e.g. various materials that are against the law, or files from illegal sources (like pirated movies and music) – all of this smells like trouble, doesn’t it?

Malware and computer virus infections can be a big threat for the system users and for the internet pages, as the infected systems may be responsible for infecting other systems, and performing DDoS attacks.

2. Spam messaging

Another spectacular branch of illegal activity, stuffing millions of inboxes with unnecessary and/or dangerous material every single day.

There was the time when this kind of activity was used for advertising purposes. Today it’s a totally obsolete method of gaining attention, one that can cost the sender big time. (The most common penalties for these practices are: getting blacklisted by the internet service provider, fines, lawsuits, and… hate mail! Indeed, what would be the Internet without hate mail?)

Nowadays, unsolicited email messages are mainly a gateway to numerous data breaches, scamming, phishing, and other types of fraud.

Many web hosting providers refuse to offer their service to companies that send spam. Sending monstrous volumes of mail is easily trackable after all.

3. DDoS attacks and break-ins

Another nasty thing a hosting business has to deal with.

DDoS (Distributed Denial of Service) attacks can make sites work very slow, or even render accessing them impossible.

There are various types of DDoS, but, to put it in a nutshell, it is a traffic attack. It takes place when, for instance, multiple compromised systems, infected with a trojan virus, flood the target site with hostile requests. As a result, the unnatural amount of traffic from different sources – created by systems controlled by the hacker – makes the page hard to access or inaccessible at all.

The other threat which a hosting service company has to look out for is a break-in to a hosting or an e-mail account. Forced entry may result in, e.g., leaked personal information (such as passwords, addresses etc.). It may be later illegally used or distributed by the third party that was responsible for breaking into the account.

4. Service user complaints

Unhappy clients. This one thing is common for almost every type of business.

The probability of hacker attacks means the provider can’t really foresee all that can happen within the infrastructure, yet still has to deal with the fallout when the end product doesn’t meet the client’s expectations.

Sometimes it’s a matter of one DDoS attack that couldn’t be countered on time. When such situation occurs, the string of user complaints follows, as the service is, very often, completely paralyzed. Customers’ sites do not work at all, or work painfully slow, and therefore don’t comply with SLA (service level agreement).

This may lead to a sudden spike of refund requests.

To Host or Not to Host?

Inevitably, hosting companies are more prone to legal claims. And though our list is quite short, that’s still a lot of things to have in mind.

Not always the risk is something fully tangible. All seems to be fine until, one day, copyright claims suddenly arise. Or the users start to contact you because the service doesn’t work according to the expectations. (Or they just smack you with a chargeback.)

Things like that make it a tad more work, online payments are still attainable though!

Your payment service provider may ask you to fulfill additional requirements before processing, and those additional conditions help you balance out most of the possible hazards. These additional guaranties and precautions may take a form of, e.g, a higher rolling reserve.

At PayLane we provide our service to hosting business merchants as well. Their verification may take a little longer than with our standard accounts. It’s because we need to accustom ourselves with the procedures and processes of the particular hosting provider. We research the way the implemented systems work, and explore the options guaranteed to the clients. Thanks to that, we know the company’s plans in regard to ensuring the clients’ satisfaction.

And so, processing online payments for hosting businesses is absolutely possible, but at every single one of such companies we need to look at from an individual angle. Only then are we able to offer a good solution.

PayLane's CEO with all kind of skills - programming, marketing, team leading and more. A movie lover and snowboard fan. @KarolZielinski

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