18+

Adults only

This season covers the business of the adult industry: companies, money, technology and regulation. There are no images and no adult content here, but the topic is 18+. Please confirm that you are 18 or older.

← Back to internet history
← all stories

Era 3 · Traffic economics: affiliates and processing

1996–2010private company Epoch.com LLC, Santa Monica; still operating…

Epoch

Paycom

Epoch is an American payment provider from California that, from the late 1990s, accepted card payments for sites whose sales volumes ordinary banks considered too risky: it signed contracts with acquiring banks itself and, according to the company in 2003, took an average of about 15% per transaction. In the 2000s it went through the tightening of network rules, a chain of changes of acquiring banks, and an unsuccessful antitrust suit against Mastercard (2003–2006). The company is private and still exists.

Founders —
Domains epoch.com · paycom.net
paymentshigh-riskcross-bordercard-networks

In brief

Epoch is a California payment intermediary that in the late 1990s accepted card payments for sites with a heightened risk of payment reversals and signed contracts with acquiring banks itself, acting as an agent for sites that, by its own account, numbered in the thousands. The payment brand on the paycom.net site lasted at least until the end of 2004; the "Epoch / Paycom" pairing as a single company is documented in a joint notice from 2002 estimate. Its history is the history of the price paid by a processor that stands between a site and a card network: a commission of about 15% (according to the press in 2003), a chain of banks that either turned it down or held back payouts, chargeback fines, and an unsuccessful antitrust suit against Mastercard that dragged on from December 2003 to October 2006.

The main takeaway for this installment: rules for high-risk and for cross-border acquiring existed long before 2010, and Epoch itself was a party to the main court dispute over those rules.

How it started

The primary source on the beginning is the self-description on the site, which says that Paycom.net had helped thousands of online stores since 1996 and calls it one of the largest internet transaction gateways in the world. Modern profiles of Epoch also give 1996 and Santa Monica, while other aggregators date the legal entity Epoch.com LLC to 2004 estimate; in 2003 the business press described the company as based in Marina del Rey. In the season, the dossier sits in the 2000–2006 era because of its main storyline (the IPSP rules and the suit against MasterCard), although the payment business already existed in 1996–1998.

The business model as described in the court documents: the sites had no merchant account of their own; Paycom signed contracts with acquiring banks and acted as agent for the web merchants, crediting them with revenue minus its own fees; all purchases were card-not-present. The founders are not named in the primary documents unverified. From December 1998 to May 2001, according to Paycom itself, an intermediary ISO introduced it to various banks and, each time the latest relationship went sour, found a new bank.

Year-by-year timeline

Lesser-known but significant facts

  1. The processor was itself a merchant of the network. The court describes Paycom as a purchaser of MasterCard's services that had signed a contract with an acquiring bank directly, not as an intermediary with no contractual relationship. The suit foundered on something else: the fines are assessed on banks, not on Paycom, and it was found to be an indirect payer.
  2. 2002: three storylines at once. In June a court in Michigan hears Paycom's own suit against an intermediary and a bank; on 2002-09-30 the rights holder Perfect 10 files suit against several billers, including Paycom; by 2002-11-01 Visa's IPSP rules take effect. In a little over a month, the processor came under pressure from two sides: the rights holder and the card network.
  3. Visa's 2002 fees were charged per company, not per URL. $750 at registration and $375 a year for each Sponsored Merchant (of which $500 and $250 go to Visa through the acquirer); reporting, meanwhile, went down to the URL level.
  4. The court noted that Visa's terms for CNP merchants were slightly better than MasterCard's, but competition did not affect MasterCard's policy. For a merchant, the choice of network was a lever, but a weak one.

Legend vs. the record

The first growth lever

Epoch's lever was not the site and not its pricing but the ability to take on risk that banks turned down. According to the press in 2003, Paycom called itself the second-largest player in the niche, took an average of 15% per transaction, and claimed that MasterCard had debited more than $2.5 million from its account in a year in fines that it considered unjustified estimate. Growth here came at the price of risk: the higher the sites' chargeback rate, the higher the commission and the greater the need for capital and for banks willing to look at such a portfolio. The company covered this through several banks and jurisdictions (the US, the British Virgin Islands, the Bahamas, Denmark, Costa Rica, judging by the list of defendants in the suit; the banks and offshore companies themselves are named as parties, not as proven partners), and when Visa applied pressure in 2002 it acted together with its competitors. In 2003 the company told the press that it limited risk by selecting its clients and by the geography of the cards it accepted estimate.

The figures visible in the documents: $750 at registration and $375 a year; a 1.0% threshold versus the previous 2.5%; the $23 million suit is stated only in the press. Our estimate estimate: with a commission of about 15% and a 1.0% threshold, a processor survives as long as its clients' chargebacks stay within the network's thresholds.

The paired story

The pair is Segpay, a processor in the same market that entered it only after the IPSP rules had been introduced.

Parallels today

What a builder can take from this in 2026

Discrepancies and what we could not verify

Sources

Primary:

Secondary:

Internet History Keeper

Every historical dossier here is free and open, and it will stay that way. If you want the series to keep going (new dossiers, checks against primary sources, the English edition), support it with a subscription for $9.90 a month. It is support, not access, and you can cancel at any time.

Become a keeper — $9.90 a month →

The same thing, about today

The same breakdowns, but of projects launching right now: what the product is, where the first users came from, how they charge. The card is free, the full dossier is $5 (the dossier itself is written in Russian).

Browse the dossier catalog →