Businesses categorized in the continuity industry include membership and subscription-based products and services. Most products billed through a continuity program are sold online or through a mail-order/telephone order company. The frequency for chargebacks and returns is problematic for these merchants and is vastly responsible for their grouping into the high risk merchant category.
While most payment processors will accept any merchants to being with, most will decline to continue working with recurring billing clients. Many times this leaves merchants with paying customers and no way to bill their credit or debit cards. Many times these payment processors will not allow merchants to access their customer’s billing information, forcing merchants to have to sign up customers once again.
Finding a suitable payment processor can be difficult for many membership or subscription-based businesses. The field of payment processors and financial networks willing to allow these transactions is minimal. This makes finding and retaining their relationship essential for merchants looking to start a successful business.
What are is Subscription Business?
Businesses falling into the continuity category are given consent to bill a customer on regular intervals. Charges can be either for products or services that are provided on an ongoing or monthly basis. Customers are charged without notice, leaving customers responsible to continue paying until they cancel their account.
Many of the continuity programs are based on customers opting into a program. Most of these programs begin with a low to no cost introductory period to try the product or services. Services will continue to be provided and products shipped until the customer contacts the merchant to end their subscription.
After the introductory period, customers that do not return or otherwise cancel their subscription will normally begin being charged the full price. While customers are informed of these billing changes during the initial sign up, most merchants do not remind the consumers again. This can come as a shock to some consumers and results in the high refund and chargeback rates in the continuity industry.
Some of the typical types of businesses in the continuity industry using a recurring billing merchant account service include:
- Media Services Merchant Accounts:
Access to online entertainment; whether television, music or print media. - Telecom Services Merchant Accounts:
Offering customers contracts or month to month service plans is common from telecom and broadband providers. - Software Services Merchant Accounts:
Providers of various software; whether marketing, support or other office products often use monthly rebills. - Membership Club Merchant Accounts:
Retailers offering discounts to consumers might charge a yearly fee to access their discounts. - Extended Warranty Merchant Accounts:
Manufacturers or repair companies can provide customers with ongoing support through warranty plans. - Nutraceutical Merchant Accounts:
From weight-loss supplements to energy boosters, nutraceuticals provide consumers continuous monthly product shipments. - Subscription Boxes Merchant Accounts:
Monthly gift box services have become increasingly popular by billing customers indefinitely. - Non-Profit Merchant Accounts:
Many of the non-profits in operation today charge donors nominal monthly fees until the donations are canceled.
Startups in any of these industries will face obstacles during their application process. Most financial institutions do not allow or want to have unproven merchants processing transactions through their networks. Businesses that have a proven track record can experience problems with their payment processing services. Financial institutions looking to reduce risk have terminated merchant accounts for even the most established continuity businesses.
Finding a specialized payment processor for recurring billing business models is essential for a merchant’s stability and longevity. At Allied Payments, our partner banks have built their business models around continuity and other high risk industries. Contact one of our payment processing professionals to apply for a merchant account and start processing payments as soon as tomorrow.
Chargeback Reduction for Subscription Merchant Services
Experiencing high chargebacks and returns will be a part of most continuity businesses. Protecting themselves with a strong Terms and Conditions statement is one way to help reduce chargebacks. Some of the points used by existing businesses can include:
- Description of the Products and/or Services being purchased
- Explanation of billing; including frequency and cost
- How to cancel membership; including merchant contact information
- Clear return and refund policy for products and/or services purchased
- Cost for products or services not canceled in allotted timeframe
- Accepting Products and/or Services constitutes acknowledgment of billing agreement
- Products and/or Services will continue to be provided until cancellation
- Frequency of Products and/or Services being delivered or rendered
- Time for customers to review products or services before payment is made
Besides having a complete Terms and Conditions webpage, merchants can also take steps in addition to on-page information including:
- Concise credit card descriptor with customer service phone number
- Refund customers immediately when contacted
- Implement a chargeback mitigation service to catch potential chargebacks
Tips for Finding a Continuity Merchant Processor
Finding a reliable and reputable subscription payment services provider to partner with is important for building a business. Merchants that have built up a customer base of paying customers do not want to risk losing their merchant account due to their business type. Account termination will result in a loss of a substantial amount of time and money invested in building up the user base. This makes it all the more important for continuity merchants to spend time researching financial institutions before making a decision.
Below are some ideas for performing thorough research of prospective payment processors:
- Research the payment processor for any complaints or other concerns
- Make sure the processor has a higher threshold for chargebacks
- Ask for references from continuity merchants processing payments through them
As one of the leading high risk payment processors in the USA, Allied Payments is experienced with difficult to place merchant industries. A specialty of Allied includes the ability to accept continuity and recurring billing merchants in our high risk portfolio.
Start Your Continuity Payment Processing Today!
Merchants establishing a recurring billing merchant account with Allied Payments will be able to charge customers using regularly scheduled intervals without a concern. Our staff of continuity professionals will help merchants set up their billing programs through our high risk banking network. Ensuring that merchants have reliable and consistent payment services is our number one priority in the subscription merchant services industry.
Similar to the merchant accounts, the Allied Payment Gateway provides subscription and membership businesses with a reliable and secure way to accept higher risk payments. Our gateway is fully PCI Compliance and offers an integrated virtual terminal to merchants at no extra cost. This allows merchants the ability to expand their business by accepting mail orders and telephone orders without the need of any additional equipment.
Our team will work with merchants to help find the best solution to fit your companies needs without making any sacrifices. Our network of high risk financial institutions can provide the necessary credit card processing services required by continuity businesses. Through our fast application process, businesses can be accepting payments in as little as 24 hours.
For more information about our continuity and negative option billing payment processing services, contact the payment professionals at Allied Payments. We look forward to creating a long term relationship with all our partners in the continuity and recurring billing industries.