There's no question 2020 was a boon for the subscription economy. Between consumers' increasing demand for convenience, coupled with stay home ordinances, subscription services have become more popular than ever. But do subscription businesses have the best subscription merchant account to meet their newly found demand?
The subscription model has expanded into entirely new markets and garnered widespread consumer acceptance. Research performed just halfway through the pandemic found that in July alone 182 million consumers subscribed to at least one subscription service. And these consumers plan on maintaining their subscription conveniences when life is back to normal.
It's clear that society is rethinking the way they shop and what they view as convenience. And as such, more and more consumers have turned to wanting their products delivered on a regular basis.
Merchants want a merchant account that can handle the increase in demand while keeping their customer's data secure. As more businesses move into the subscription services, we’ve seen more requests for specialized subscription merchant accounts than ever before.
And it's no wonder. The subscription model gives a whole new meaning to “returning customer”. Now they’re not just a customer that will buy from you again at some point. They’re a returning customer, every single month like clockwork. This ongoing contact allows businesses to engage with customers on a more regular basis.
Businesses also enjoy greater ROI of Customer Acquisition Costs since the longer a customer stays with the service, the greater value they are. And of course, predictable recurring revenue can't be overstated.
There are many benefits of a subscription based business model, but there are also a few challenges.
Subscription Services often require high-risk continuity merchant services.
While subscription services are booming and fill an important customer demand, the business model can be a high risk for payment processors.
Acquiring banks do not consider subscription services a traditional business model. Subscription services have a long and torrid history of high sales volume accompanied by high instances of chargebacks and fraud.
In the past, companies would hide recurring payment terms from customers at sign-up. The terms and conditions would be difficult to find on the order forms. They would charge late cancellation fees. Consumers who felt buyer’s remorse would have a difficult time figuring out how to cancel. All of this led to excessive chargebacks.
Today, the majority of subscription companies have better business practices, better customer service, and practice transparency. However, the industry as a whole is still subject to increased fraud and high incidence of chargebacks.
How to secure a reliable subscription merchant account.
Merchants must proactively manage chargebacks and fraud to secure a reliable subscription merchant account.
Reducing chargebacks is a 2 sided project. First, merchants must implement best business practices to reduce the chance a customer will file a chargeback in the first place.
There are a few very simple ways to be transparent with your customers to support their needs and build trust:
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- Your checkout page should clearly state all recurring payment terms before completion of purchase.
- Cancellation terms and refund policies should be clearly disclosed and easy for customers to find on your website.
- Also display your customer service phone number and all applicable contact information prominently on your website.
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Utilize robust chargeback management software.
No matter how hard you try, you're going to incur some chargebacks. Whether due to true fraud or friendly fraud, chargebacks are inevitable. Merchants must also utilize robust chargeback management software to handle the filings they do get.
Subscription merchants will want to monitor and address processes before they become a problem. Chargeback management systems are in place to notify you of chargebacks at an early stage in the process. This gives you the chance to handle them before they're finalized.
It can also alert merchants if their overall chargeback numbers are starting to get too high. This allows merchants to address the problem before it becomes an issue with their Acquiring Bank.
You definitely don't want to wait until the acquiring bank has to send you a notice that you've exceeded your chargeback threshold. Excessive chargebacks can result in getting your merchant account shut down. You want to catch it before it becomes a bigger problem for you.
By having these processes in place, merchants can address the reason for an excess in chargebacks. Then take that knowledge to implement strategies to help reduce the incidences. By implementing best practices and being proactive, merchants can do a lot to keep their chargebacks in check.
Prioritize security and implement processes to keep their site secure.
PCI Compliance is the foundation of cardholder data security. Make sure you comply with all PCI Data Security Standards and are completing your annual PCI compliance.
Thoroughly examine your company’s security infrastructure. If you are storing or transmitting cardholder data, be sure you know how to properly manage that data. Cardholder data includes anything that is personally identifiable. This means you must properly manage information such as name, email address, residence, even IP address.
A simple step you can take is to make sure all your software and hardware security updates and patches are up to date. These updates will ensure that a device or application has the recommended requirements to meet security standards.
Once you’ve examined your own processes, it's time to vet your partners. Don’t just assume that third party software meets current security standards. Talk to and monitor your third-party software, shipping and payment partners to ensure they also meet security standards.
Extensive high-risk experience is your top priority for a subscription merchant account provider.
An experienced high risk merchant service provider has invested in the framework needed to serve high-risk merchants effectively. They’ve partnered with acquiring banks equipped to handle subscription-style businesses. They’ll be invested in in-depth underwriting practices that help lessen risk associated with subscription services.
Scalability is one of the most important things to consider when vetting a subscription merchant account provider. Your business model is a wild animal compared to most. Subscribers, and therefore transactions, can multiply exponentially. Your needs today are not going to be the same as what your needs will be in the future. Your processor must be able to scale with you.
Merchant Service Providers experienced in subscription services understand this. It's important for you to understand what, if any ,your monthly processing limits are and how they affect your merchant account. You also need to know how quickly and easily any limits can be manipulated to meet your current and future needs.
CRM software is an integral part of a successful subscription based business.
It shouldn't matter if you're using a CRM such as Hubspot, Fresh Sales, Less annoying CRM, Apptivo or more growth focused or enterprise level like Insightly, Sales Creatio, or Pipedrive. You must have a subscription merchant account provider who can integrate with your CRM.
Obviously, the payment gateway they offer is 100% secure and PCI Compliant. But you also want to make sure they have cutting edge solutions to help you manage chargebacks and mitigate fraud. Subscription merchants must demand a high risk payment gateway with the feature rich tool set their business needs.
Chargeback management and fraud prevention programs are highly effective at assisting merchants in addressing these issues before they happen. They can have a huge impact on your bottom line, the reliability of your merchant account, and the overall success of your business.
Bankcard International Group is a credible, service-oriented, and experienced high risk merchant account provider.
At Bankcard International Group, we're dedicated to providing high-risk merchant services the way they were meant to be: “Legitimate, Dependable, and Service Oriented”.
You deserve a Merchant Service Provider that cares about your success as much as you do. And as a subscription model merchant, you're going to need customer service you can count on.
We’ve been serving the high-risk industry for over 20 years. And we’ve worked hard to create a team founded on proven solutions.
Stellar customer service is just one of the reasons we stand out from our competition. YOU are our customer. We believe that all of our clients deserve honesty and respect at all times. Every client has a dedicated merchant account advisor. When you have a problem, your customer service number is your advisor’s number.
When our clients need help after office hours, we provide 100% domestic customer service for emergencies.
It's because of this dedication that we can promise long-term reliability of our high-risk merchant accounts.
If you want the most transparent and dependable subscription merchant account available, call us today.
It's time you “Experience The B.I.G. Difference!”
