Subscription Merchant Account

Subscription Merchant Account

Many businesses operate using a recurring billing model, but these subscription merchant account services are becoming harder to come by. Many of these merchants have asked how to set up automatic payments for your business when there are so many restrictions surrounding these payments. The subscription billing model operates in a slightly different than businesses in the continuity merchant account industry, but have many of the same problems. While most payment processors will not accept a subscription billing model, there are companies like Allied Payments that can offer these services.

Merchants accepting recurring payments are aware of many of the problems that can arise in their business. Working with an experienced payment processor can help alleviate many of these problems that would otherwise persist and create additional problems and unnecessary costs. There are a number of precautions and safeguards for merchants and businesses to consider before entering customers into a subscription billing services agreement. Contact one of the recurring payment specialists at Allied Payments for help finding the proper payment solution to fit your subscription-based businesses' needs.

Recurring Payment Processing Options

Businesses using a billing model that requires a subscription billing service have a couple of payment options they can use. Depending on the type of product and the sales price one solution might work better than the other. The most common billing service include:

  • Credit Card Processing: One of the most common forms of online payment, accepting credit or debit cards is one of the easiest ways to start taking e-commerce payments. While rebilling can be a simple process, the ease for customers to cancel payments and clawback previous payments has been difficult for some subscription businesses.
  • Electronic Check Processing: The use of electronic check has filled much of the void left by the credit card industry. Merchants have begun to accept and fully utilize echecks as a low-cost way to accept payments. The limited liability, when compared to credit cards, have also made it a preferred means of rebilling customers.

The card associations have continually increased the restrictions and guidelines surrounding the subscription business model. These changes have only made it more difficult for merchants to grow their subscription businesses while navigating through the various regulations.

Many times these changes have resulted in merchants beginning to accept electronic checks as their preferred billing method. While viewed as less of a mainstream method for accepting payments, with some minimal training merchants have realized that accepting e checks is as simple and automatic as credit cards.

How to Accept Recurring Payments

In recent years, the restrictions placed upon merchants in the recurring payment processing industry can become increasingly stringent. The card association has required new guidelines for consent by the consumer when entering into a billing agreement. Here are a few of the requirements that merchants will need to do when accepting new customers for a subscription service using credit cards:

  • Expression of Consent: Merchants need to provide consumers the ability to express their consent for entering into the subscription agreement with the merchant. Most merchants have already had similar types of documentation as part of the sales process that informed customers to the billing cycles.
  • Improved Notifications: At the beginning of the subscription, the merchant will be required to provide the consumers with information about future billing. A receipt is required confirming the subscription, details the product(s) sold, start date and future billing cycles. Merchants will also have to send customers notifications prior to future billings.
  • Details Receipts: The receipts sent out to customers need to provide consumers with simple to understand information about their transaction. Merchants will have to inform customers clearly about trial periods and how to cancel before subscriptions start. Merchant swill have to provide customers with information on the current transaction and future billing information about upcoming payments. Providing customers with a simple to understand cancellation process is also required on receipts.
  • Enhanced Descriptors: Changes to the requirements of descriptors will require merchants to disclose the nature of their transaction. The descriptor must inform customers that the transaction is for a trial period. Future transactions at the end of the trial period do not require this and can reflect the company's name.
  • Easy Cancellation: Merchants are required to provide a simple means of cancelling their recurring billing services so customers can do it without trouble. Whether its by providing an online solution or another method, customers need to be given an easy way to opt-out on their own.

Consumer protection has been at the forefront of the payment card industry. While this is absolutely important, the does make the job for merchants more cumbersome. These new requirements for transactions have created additional costs for merchants that have otherwise operated their businesses without problems. Added requirements have hindered much of the billing practices by the subscription industry while consumer protection has made it easier for consumers to chargeback for services they agreed to before.

Merchants that have taken concern with the requirements for credit and debit card transactions have been opting to use alternative payment methods. One of the easiest to implement has been the use of electronic checks. Check processing services cater to the subscription-based industry, a reason why you see so many fitness gyms using this model. Accepting checks benefits merchants with lower fees, fewer restrictions and less recourse available to the customer. These differences have fueled many merchants to gladly make the change to electronic checks.

Finding the Best Recurring Payment System

Merchants and businesses that are looking for the best way to accept recurring payments need to ask some important questions before starting. The payment processor that a business works with can have an effect on the success of a business. Partnering with an unqualified company can create significant problems with billing and customer retention. Some of the most important pieces of information for merchants to look for include:

  • Tolerance for Subscription Businesses
  • Requirement for Subscription Businesses
  • Subcription Payment Gateway Software

Before applying, it's imperative for merchants to verify what industries the payment processor can work with. Many times this question is not asked and only after the merchant has started accepting payments does the payment processor reveal that recurring billing is not acceptable.

Once merchants find a payment processor willing to work with a subscription merchant, its also important to find out what they require. Some processors might require customers to sign a document confirming the subscription while others might allow it to be done electronically online without a signature. Knowing these terms can also help merchants make the best choice before signing up for payment processing services.

Another important check for merchants is to confirm that the payment gateway software provided can safely and securely handle recurring payments. With the rise in online fraud, being able to store customer card account information in the gateway is essential. Working with a payment gateway service that offers a solution that provides PCI Compliance protection is what all merchants will need going forward.

Start your Subscription Billing Services

Businesses in the recurring and subscription payment services industries need to have a reliable payment processor to grow their business with. Working with a payment services provider that can not provide longevity with their merchant account will end up costing the merchants significantly more in lost revenue. Working with an experienced processor like Allied Payments, merchants will not have to worry about their merchant account. Our secure payment gateway provides complete PCI Compliance and our banking partners specialize in recurring billing payment services.

Merchants with any questions, or ready to get started with our application process, feel free to reach out to our recurring billing payment processing team. Our representatives will be more than happy to help answer any merchant's question or to give an estimate of what we can save you over our competitors.