Category: E-COMMERCE

5 Tips to Maximize Operational Efficiency for Your Online Store

As we approach year-end, many of you business owners are reflecting on the year to see what worked, what didn’t, and what can be optimized. This type of reflection is one of the best things you can do when gearing up for Q1 2022, because it’s coming up fast.

This type of year-end review or audit should be done regularly to make sure your business is operating as smooth as possible and potential revenue is at its maximum. So, today we’re focusing on a five principles to maximize operational efficiency for your online store. These optimizations, in particular, are easy to implement–no long business processes–and can get you 3-5% increase in revenue overnight.

1. Get an External Audit Done on Your Online Business

One of the best things you can do to maximize operation efficiency is to get an audit done. It’s a simple task that doesn’t get performed often enough by most businesses but can definitely add a lot of value.

The audit works best if you get someone that doesn’t know your business. So that could be a expert that you’ve never met or contacted before, or it could be someone you know and trust. As long as they aren’t familiar with your business, that’s never seen your funnel before, then the audit will come out with the best results.

This auditor should test everything about your funnel. Have them go through your checkout process, shipping, and anything else. Ask them to tell you what they see, what works well, and what confuses (e.g., copy; checkout flow) them so you can fix things.

These audits should be done at least once per year, so a year-end audit makes a lot of sense to be performed in December. But really audits should be done pretty often—at least as often as you update your funnel.

DirectPayNet also performs audits, if you’re interested in us performing one for you. We’ve always gotten great reviews from our top clients who have asked us to perform audits on their sites, so please get in touch if you’re interested.

2. Test Your Entire eCommerce Shipping Process to Maximize Efficiency

Shipping is part of your audit, yes, but it should also be performed outside of that and much more often. Once per month, you should have the shipping process tested especially when you sell to particularly large regions or different countries. For example, shipping to the east coast is not the same as to the west in the USA. Both of those areas should be tested. Or if you ship internationally, test out each region at least.

You need to test the entire process: from the moment the order is place to the moment the package arrives. What does the package look like on arrival? Is it damaged? Is there liquid on it? When the customer opens it, are they disappointed by the materials inside? Overwhelmed?

Then, you need to try and refund the purchase and perform some customer service on the order. See how well it’s handled, how long the process is, and the end result. This is a good opportunity to get the customer’s perspective on your team members, which can help you understand retention rates. Doesn’t matter if it’s customer service on social media or your own app, these are metrics you want to know and improve.

Getting supply chain and fulfillment right can greatly impact your ecommerce business and streamline deliveries while improving the customer experience. The number one outcome is a reduction in chargebacks. This past year has seen a lot of supply chain issues due to the pandemic, so it’s really important that you get your merchandising and inventory management system updated. Not only are you ensuring that your shipping and fulfillment partners are doing their job and getting your products out without damage, you’re also in tune with delivery time frames. When you can accurately inform customers about delivery dates, you’ll reduce chargebacks and refund requests.

3. Know Who Your Best Traffic Source Is

We don’t mean discover who they are, we mean get to know them better. You should already know who your best traffic source(s) are. Get in touch with them, have a call—a review. If your main sources are affiliates, get them on a face-to-face meeting where you review what you can for them that results with them promoting you more. What will it take? It’s not always more money. Sometimes it’s faster payouts or access to more creatives or special offers.

Once you get the engine running on your top traffic source, you’ll have more money to test other traffic sources and maximize those revue streams.

4. Check Your Reserves to Increase Operational Efficiency for Your Online Store

If you have a merchant account or you process credit cards, you’re using a payment processor. That processor could be holding reserves that you (and they) forgot about. This is common especially for high-risk merchants, meaning merchants who work with supplements or in the adult space or dropshippers. A lot of the time, these processors are holding maybe 10% that you aren’t seeing back.

Call up your processor and ask about the reserves. How much is being held? How often are they adding in? What’s the frequency of your payouts?

It’s so common that reserves go unnoticed. Money goes in and never comes out simply because merchants and payment processors aren’t paying any attention to them. This is even more true when you have multiple accounts open for omnichannel sales. We get it: it can be tough to keep track of it all.

If you’ve been consistent all year and things are going well with your processor, then it’s important to keep in constant communication with them. This is when it’s a good idea to call them up about the reserves. If your chargebacks are around 5%, then maybe you should hold off on that call (because this is the purpose of the reserve).

Reserves might never go away for your merchant account, but you can try to cap them. Another good solution is to request payouts if they aren’t coming often (or at all).

5.Add DCC to Your Checkout

Dynamic Currency Conversion (DCC) is such a good way to maximize operational efficiency for your online store when selling internationally. DCC is perfect for digital goods, but also works when shipping out physical products if you have a physical store too (digital is just simpler because there’s no shipping to take care of).

DCC is available with nearly every single payment processor. It doesn’t matter if you use 3rd-party processors like Stripe and PayPal or you have a merchant account of your own. Simply call them up and say, “I want DCC on my store” and they’ll turn it on for you.

When you add this feature, it shows customers the price of your products in their local currency in real-time which improves overall customer satisfaction. So if you’re running a US-based retail store and someone visits it from London, they’ll see prices in pounds. It automates the currency displayed based on which region the customer is visiting from. It’s hugely beneficial when selling internationally to countries who use the same monetary symbol. For example, USD, CAD, and AUD all use $ but each has a different value. It leads to chargebacks so often when someone buys a product thinking it’s denoted in their currency when it isn’t. They see the charge on their card statement and dispute it because it’s more than expected.

DCC will increase conversion rates considerably in your non-local markets. Best of all, it can be turned on in just a few hours and open up your store to a ton of new customers.

With these simple tricks to your store operations and payment processing, you can maximize efficiency and boost profits in just a few days.

These tips are meant to be fast solutions. They take just a few days—if that—to perform and you will be surprised at the results.

DirectPayNet is here to help you through this entire process. We help our clients obtain the proper payment processing they need for their store, industry, and region. But we also help our clients get more money back from their processors and giving them as much free cash flow as possible.

Contact us today to add 10% on your funnel with low-cost, fast tweaks we can help you make on your checkout and funnel.

December 28, 2021
High-Ticket Merchant Accounts: What They Are and Who They’re For

All businesses need a merchant account to facilitate accepting, processing, and transferring payments from customers. The same is true when selling high-ticket items: you need a merchant account to sell these products.

Maybe now you’re wondering what exactly a high-ticket product is and in what industries you see them. We’ll break this down for you below.

What Is a High-Ticket Product?

High-ticket products can, in general, be defined as products with a price tag over $1000. That isn’t the official number because there isn’t one. It’s more label for signifying expensive items in terms of merchant/processor/bank as opposed to business/customer. But any single product that costs over $1000 is definitely high-ticket, expensive, and risky.

It also depends on the processor. Some credit card processing companies have much lower thresholds, like $500 per item. Others have slightly higher thresholds. This is why it’s important for you to shop around for your payment processor. Don’t just accept the first one that agrees to do business with you if you’re selling high-ticket products because you’ll want one that comfortably accepts your pricing model.

High-ticket pricing also depends on the industry in which you sell. Some industries are meant to handle low-ticket items, so selling products at a much higher price is even riskier in those industries.

Industries That Use High-Ticket Merchant Accounts (with Examples)

In short, every industry can use high-ticket merchant accounts because it’s based more on the product sold rather than the industry that sells it. But industry does factor into your terms and conditions when applying for a merchant account due to the risk factor involved.

SaaS

The Software as a Service (SaaS) industry is mixed. These products are more than likely offered as under a subscription model. But many SaaS businesses offer expensive one-time purchase options for the few customers that prefer it.

As you might imagine, converting the value of a subscription (i.e., recurring revenue stream) into a single purchase is tough. It can’t be so overtly expensive that customers will never buy, but it also can’t be so cheap that they prefer to make a single transaction rather than subscribe. This is why the industry is mixed when it comes to high-ticket pricing. Some products can be relatively low on the spectrum and others can be incredibly high. It really depends on the product.

For example, Salesforce is one of the biggest SaaS products available to date. Shopify is considered a SaaS product, too, as well as Zoom. If you’re familiar with these companies and what they offer, you can paint yourself a pretty clear picture of how these can quickly convert from subscription to high-ticket.

Dropshipping

High-ticket pricing for dropshippers usually sits low on the spectrum. Dropshipping, by nature, is low cost and high volume. So dropping high-ticket items reverses that business model. Now the goal is low volume but high cost.

This industry is particularly risky when it comes to getting a high-ticket merchant account because credit card payment processors will expect an even bigger increase in the risk of chargebacks. However, with the right strategy and super targeted audience, all of that can be mitigated.

A good example of a high-ticket dropshipping product is high-end luxury goods. 24k diamond necklaces or handmade designer earrings are perfect examples of high-ticket sales items. It’s totally possible to sell products like these successfully with a dropshipping business model. Apply for the right high-ticket merchant account and you’ll be set.

Electronics like new computers and e-bikes are also great high-ticket dropshipping categories.

Healthcare

People are willing to spend when it comes to their health and wellness. The supplements industry is booming as well as telemedicine and healthcare, in general.

Typically for supplements and medicine, customers have more of a subscription to continue receiving the product every month or so. Another really popular method that customers prefer is to make payments monthly without subscribing. They’re willing to keep up with the service, but they don’t want it to be automatic.

What puts the healthcare industry in a high-ticket industry is the sale of medical devices as opposed to medicines. Medicine can be expensive, sure, but it’s rare to see pills reach in the $1000s. Medical devices, however, are incredibly expensive. These types of businesses need a high-ticket merchant account, whether they’re selling business-to-business or business-to-consumer, in order to handle the processing volume.

Why Is It Difficult to Get a High-Ticket Merchant Account?

Getting a merchant account is a time consuming process and being denied too many times can harm your approval rate with future applications. The fewer applications you submit, the better.

We’ve previously talked about technical ways you don’t have to obtain a high-risk merchant account to do business. But when it comes to high-ticket product sales, there really is a line drawn. Those alternatives simply will not work. They are too risky for those payment aggregators to handle comfortably. You’ll get your store shut down if you continue to use one—this is a warning.

High-Risk Industries

It doesn’t matter what business model you have or what industry your business resides in. Selling high-ticket items will also result in your business being labeled as high risk.

High-risk businesses are called so because of the risk that carries over to the credit card processor and acquiring bank. There’s a lot of fraud in these industries as well as high chargeback ratios. Banks and payment processors don’t like this type of risk. At the end of the day, they’re worried about who will be paying off those charges: you or them.

Reserves

One of the top ways high-ticket merchant service providers help to alleviate that risk when connecting you with processors and banks is by negotiating reserves.

A reserve is a pool of money that you deposit into each month (or transaction, or week) that secures funds in case you receive a chargeback and need to pay it. Processors will be relieved to know that there are real funds of yours to pull from and pay off that debt, so they’re more willing to work with you and approve your application.

Reserves may not be the most appealing to merchants, but if it gets you the merchant account you’re looking for then it’s well worth it. As you have stable, steady sales with a low refund and chargeback ratio, you can eventually negotiate out of using reserves or at least lowering the amount.

Fraud

When running an ecommerce store, all of your credit card and debit card transactions will be CNP (card not present). Automatically, that’s a risk for payment processing companies. When it comes to high-ticket items, though, there’s an even bigger risk of fraud. Processors don’t want to be frauded out of thousands of dollars—and neither do you. But it does happen, and that’s the unfortunate truth.

We don’t just mean cybercriminals, either. Friendly fraud is all too common for high-ticket purchases. Mitigation for any type of fraud, no matter the intent, is necessary when running high-ticket businesses. It’s also important to understand that credit cards are the leading payment type to be taken advantage of. For your store, it might be worthwhile to consider accepting echecks, ACH, and direct bank account transfer payment solutions.

Good news is you can mitigate that in a number of ways. First, if you work with a merchant services provider like DirectPayNet, you’ll get chargeback prevention and fraud protection. Second, you can adjust the checkout experience to enforce customer identity verification. Things like CVV, AVS, and 3DS can help you stop fraudsters from taking advantage of your store.

High-Risk Merchant Account Providers

Most business owners head over to their current bank or contact the processor they currently work with about opening up a new merchant account for their high-ticket item business only to get immediately rejected. Unfortunately, standard business bank are simply unwilling to open this account for you which often leaves entrepreneurs feeling stranded.

High-risk merchant account providers exist so you don’t have to go through that process of consistent denials. These companies, like DirectPayNet, work with banks and processors specifically for providing the ability to process credit card transactions to business that fall into that category.

You do have options. All you have to do is call.

Apply for High-Ticket Merchant Accounts and Get a Payment Gateway That Works

High-priced items mean high-risk business. Use a merchant account provider that specifically provides high-risk merchant accounts. With DirectPayNet, you get connected with processors and acquiring banks that serve your needs as well as fraud and chargeback protection. We’ll help you in the application process to raise your account approval odds as high as we can.

Contact DPN today to get a shopping cart for your high-ticket shop and start raking in the rewards. Whether you need a a payment gateway, virtual terminal, mobile payment processing solution, DirectPayNet has you covered.

December 24, 2021
The Future of Affiliate Marketing with Amber Spears

This is the second part of our interview with Amber Spears, cofounder of East 5th Avenue which is an affiliate marketing agency and provides training to those interested. Previously, we talked about what makes a good affiliate manager. You can click that link to read about it, and when you’re done come back here and get some insight into the future of the industry.

Amber gave us some gold nuggets of information during this interview. We learn from the past to make the affiliate marketing industry better in every way—from manager to partner to profit. Read on to find out what’s in store for 2022 and beyond.

How Effective is Affiliate Marketing and What’s Changed in the Industry?

We asked Amber about her vision on where affiliate marketing is headed. As you might expect from someone who owns an affiliate marketing company, she’s optimistic. However, she’s also an entrepreneur and willing to steer in new directions when the winds change.

The Future is Focused

Each year, affiliate marketing becomes more and more focused on building relationships. It’s no longer an email drop here and a social media post there, it’s a constant promotion. A partnership.

Relationship-based selling is the future for the industry. And just as much is inclusion. Or it might be more appropriate to say a lack of exclusion. Women, LGBTQ, non-white—people of all races and ages and genders and backgrounds are getting involved. This is happening on both sides of the relationship because it’s reflective of the real world. And with more types of people comes bigger as well as more defined demographics to target.

Partnership Marketing Gets Integrated

Affiliate marketing programs are effective. If it wasn’t, there wouldn’t be so many affiliate partners, affiliate programs, and initiatives. But you know what else is effective? Paid media marketing.

Paid media marketing is much more scalable than affiliate marketing. It has more reach to potential customers in new audiences, not just in your target audience, and for brand awareness. Its algorithms, like SEO (search engine optimization) are also going to continue to change and grow and adjust as the space becomes more competitive. But if you are running on 100% paid media, you’re in trouble. And if you’re running on 100% affiliate, you’re in trouble. The rug can be pulled from under you at any moment and you’ll lose everything you’ve built.

There’s a balance to reach, and that happens through integration. Partnership marketing, JV, referral, affiliate—it’s all the same thing—will soon be understood as a critical piece of the diversification of an online business’ traffic. That’s how successful affiliate marketing campaigns are. Today, it is critical to the success of a business who wants to continue being successful. It’s no longer an alternative form of marketing effort; it’s essential.

Maturity Meets the Marketing Industry

When it comes to affiliate partners, it used to be that they would promote as many affiliate products upfront because more promos meant more exposure meant more money. But we’ve realized that isn’t really the case and the industry is changing to match.

It’s no longer attractive for a partner to promote multiple products from multiple businesses. That method seems wishy-washy and untrustworthy. It devalues not only the trust that influencer has with their followers, but also the trust between them and you. This isn’t a quick ad promotion, this is a partnership. Influencer marketing is a partnership, an affiliate. That person represents your brand and they need to keep up that appearance until your partnership ends (but preferably longer).

Putting influencers aside, businesses are maturing as well. More and more companies are hiring in-house affiliate management teams. Businesses are recognizing the need to invest into their own people and making sure those people are well-supported. In this case, support isn’t just a slap on the back and a “good job”, it’s with good KPIs, score cards, giving them a coach to talk to regularly, and allowing them to join a place like Tribe Traffic. This is real support because it lets them know you value them through the gift of growth and responsibility. This is what gets conversion rates up at a cost-effective, low-risk rate that will build trust and drive sales. And it works whether you’re working with beginners or seasoned managers

In a way, business is going back to its roots. It used to be about building relationships and making things personal, then it flipped. And now it’s flipping back. The focus is becoming more about creating mutually beneficial deals, not just one-offs.

Attention: Those Who Are Nervous About Affiliate Marketing

Here’s a quick interjection for those of you that are nervous about using affiliate marketing: you don’t have to work with everyone.

Affiliate marketing is new territory for a lot of people, and it’s definitely a new industry in comparison to other marketing tactics. Using affiliate marketing doesn’t mean you have to go all-in, it’s not all or nothing. You can choose who you work with. In fact, it’s beneficial to have something like 10 (up to 30) affiliate partners who will drive volume up for you. These are affiliates you trust and know and can handle.

Start out small and really focus on the partnerships you create because you will see an increase in volume and traffic. Once you’re more comfortable, you can add on more.

What Are Some Best Practices for Ending 2021 and Starting 2022?

Now that we’re approaching the new year, here are some industry insights to get you prepped for 2022.

Make an End-of-Year Review for Your Top Partners

This isn’t for everyone, just your best affiliate sales partners that drive traffic and 90% of your volume. Take the time to go out and pull how much money you’ve made with each one, individually, since the beginning of your relationship. Then again for 2021.

Now get that person on a call and give them your review by thanking them, outlining the numbers, and then asking what it would take to do 25% more with you. These are your top performers, so the call is positive; it’s not a “you need to do better next year” type of call. And because these are your top performers, you should already be paying them top dollar. So, more money is on the table, of course, but find out what else might make them say “yes”. Is it more free time, custom assets, tested email copy, landing pages, more vertical integration—what is it that will push them to that 25%?

Make a Calendar for 2022

Right now, you should be outlining what it is you plan to do for the entire year of 2022. Plan out your digital marketing initiatives as well as the marketing channels you plan to use: ex., March is email marketing, May is content marketing/bloggers, July is masterclasses and tutorials, September is social media, etc. Not only the quality content in your affiliate marketing strategy, plan out your launches and meetings and reviews. Meetings are particularly important because your affiliates need to be involved in your marketing—they’re part of the plan. They need to feel integrated and like you have a real relationship with them. With this calendar, you can also get an idea of what your affiliate marketing spend will look like in the new year.

Take that calendar and present it to your top performers and ask them what their plan is. A lot of businesses plan as if they’re a silo, or self-contained. The reality is, these relationships go both ways: you want your partners to promote your products, and they want you to do the same. So by creating this calendar, presenting your ideas, and asking if they have any launches or promos happening on the dates you’ve selected. That way, you can both create a plan that benefits you both, one with no conflicts.

Here’s a caveat: a lot of startups, small business owners, and people like this don’t like getting on the phone. So if you can’t ring them and make this quick presentation, the best solution is to make a video. Film yourself thanking them, sharing their metrics, showcasing your plans/thoughts for the next year, asking for that 25%, and leaving it with a request for a 30-minute-tops phone call to settle everything when they can do it.

The Future of Affiliate Marketing Work Is Bright. Is Your eCommerce Affiliate Website Prepared?

A lot of information came out of this interview. Don’t get overwhelmed. If these approaches are appealing to you, then take one at a time. Focus on implementing just one thing Amber shared, get it right, and six months later you can start implementing something else.

Preparation for your affiliate site’s future also means making sure you have the right payment processor to handle your expected volume. And since affiliate marketing is a high-risk industry, that processor needs to work with high-risk businesses.

DirectPayNet has worked with credit card processors and acquiring banks for years to provide you a merchant account that helps you scale. Contact us now to get started.

December 15, 2021
Stripe Business Account Verification – Can You Bypass It?
The quick and easy answer is no, you cannot bypass verifying a Stripe business account. The longer answer is still no, but you can put it off. The better question to ask is, “why do I need to verify my Stripe account?”

Account verification isn’t something a merchant or individual can avoid. Whether you’re fast-tracking it by using a 3rd-party provider like Stripe.com or taking the long route with merchant accounts, verification will always be part of the process. So, why do you need to verify your Stripe business account? And why don’t they enforce this during the application process? Read on to find out.

The Stripe Account Verification Process

The process of verifying your account or identity on Stripe is not particularly difficult, but it might come as a surprise. Stripe doesn’t require verification upon application, rather they require it as you begin to process transactions. Applying for a merchant account through non-3rd-party processors is a more upfront about required documentation.

Why do you need to verify your Stripe business account?

The reason why you are required to verify a business account or even your identity as an individual goes beyond Stripe. All payment processors require account and identity verification because of the acquiring banks. The bank needs to verify the status of the company representative once transactions start being processed.

Why does Stripe wait so long to verify accounts?

The major attraction to credit card processors like Stripe (including PayPal and Square) is how easy it is to sign up. Whether you’re an established business, a startup, or an individual seller, you can go to the Stripe website, sign up, and have your account ready within minutes.

If the process was longer, it would seem less accessible. And that’s exactly what Stripe sells: accessibility. Does that make Stripe a better processor than others? Not at all. You trade comprehension for speed. When the time comes for the remaining process, like account authentication, merchants can be thrown off guard. And being unprepared can harm sales, as Stripe is notorious for freezing your ability to process transactions.

Another major piece of information that Stripe leaves out (or fails to require upfront, at least) is your business type. Stripe is not a good solution for high-risk businesses like sellers of supplement, subscriptions, CBD, and more. When registering, many users are not aware of the restriction and eventually get their stores shut down because of it.

How does verification differ between businesses and individuals?

The requirements for businesses and individuals overlap. The most important differentiator is providing the business’ registered tax information. That includes the Employer Identification Number (EIN), proof of business, business entity type, business address, and business contact information.

Where the two overlap is when submitting personal information. Even when you open an account as a business, the company representative (the person applying for the account) must submit their own information. That information includes the social security number (SSN), driver’s license or other photo ID, personal address, personal contact information, and even personal credit information.

The credit of your business is directly affected by your personal credit. If your score is too low, you have no credit, or you’re applying as a startup, then Stripe is likely to close your account. Thankfully, there are merchant accounts designed for startups and persons with zero/bad credit.

The verification is part of the Know your Customer (KYC) requirements set by the federal government to fit with anti-money laundering (AML) policies as well as ensuring a registrant is who they say they are.

Stripe does provide you with a Verifications page on your dashboard that displays the list of documents you can use for the verification process.

Where can these documents be uploaded?

You can upload the required documents through your dashboard. In fact, this is the only location where you can upload these documents. This way, Stripe can better protect your sensitive business and personal information.

What if you can’t prove ownership of your Stripe account?

This is where the Stripe verification process gets complicated. Merchants that have researched Stripe and want to avoid the verification process are stuck between a rock and a hard place. Merchants may want to avoid the process because they know their business is high-risk but need to use a 3rd-party to gain some processing history.

Whatever the reason may be, there’s no real way forward without consequences. At this point, Stripe will likely have paused your processing functionality. You can process for many a few days, but ultimately they will only wait a short amount of time before freezing your account. Either you need to submit verification documents or close your account and open a new one.

A third option is to contact Stripe customer support and speak with them about resuming account activity.

What’s the minimum documentation necessary for verification?

You can view the full list of minimum required documentation here. As an example, below is the minimum for ecommerce companies in the US with a full service agreement:
- Business Type
- Merchant Category Code
- URL
- Terms of Service
- External Bank Account
- Company Name, Address, Phone Number, and Tax ID
- Company Owners
- Representative Name, Date of Birth, Address, Email, Phone, Tax Info, and Relationship with Company
- Owner Name and Email
Stripe has also recently released Stripe Identity, which makes the identification process for businesses safer. It claims to host the verification process entirely within Stripe, helping users avoid fraud and prevent account takeovers.

With this release, it appears that Stripe understands how confusing and stressful their own verification process can be. Therefore, they’ve revamped the process to make it safer and more user-friendly.

When is the best time to verify?

In general, it’s best to verify your business at the very beginning. Stripe doesn’t make that entirely clear that it’s possible to perform this process upon opening your account simply by following the instructions with the Verifications page of your Stripe dashboard.

Using Stripe vs. Merchant Accounts

Stripe is the simplest and fastest way to setup a shopping cart and receive a working payment gateway for your site’s checkout. But depending on your business, you might be wasting time and resources using Stripe.

When you start to scale your business, Stripe puts a watchful eye on you. Scale too fast and your account gets frozen. Once you reach around $50k or more per month in transactions, Stripe will start asking for documents that would be required if you went through a merchant account provider.

In the end, you’ll have basically made a full merchant account application but with poor rates and a cap on your monthly sales volume. If you continue with Stripe and you want to scale further, you’ll have to open yet another Stripe account and swap to it once you reach that invisible cap (around $50k) to avoid frozen funds and account termination.

On the other hand, merchant accounts provided by high-risk merchant account providers like DirectPayNet provide you with flexible contracts and upfront verification processes. This way, there are no surprises that hold you back as your company grows. Merchant service providers can cater to high-risk sellers, sellers with bad credit, startups, and international sellers.

The application process might take longer, but you’ll have better rates, a personalized contract, and a payment gateway that’s just as user-friendly as Stripe’s. Whether it’s used on desktop, mobile devices, or mobile apps (Apple, Android), customer’s will also have the choice to use their preferred payment method with ease.

Considering Stripe as your payment solutions provider?

Stripe is a powerful payment processor used by millions around the world. They make it as easy as possible to get started with a Stripe API that can be integrated on nearly any website. We even promote using Stripe for some business owners to get transaction history and clout behind their business as a starting point. But we also want merchants to understand that opening a merchant account is a better long-term solution.

The right merchant account for you is one that caters to your business needs. Whether you need advanced chargeback prevention tools, fraud protection services, negotiable pricing, or more, merchant accounts are your way forward. And our API keys are just as easily implemented as Stripe’s, so there’s no tradeoff.

DirectPayNet will get you through the verification process with ease so you can open your new merchant account and start processing credit and debit card payments ASAP without halting scalability. Contact us today.
December 3, 2021
The FTC Lost Against AMG – What’s That Mean for Your Business?

By now, you’ve probably heard news about the AMG Capital Management, LLC v. FTC case. If not, we have a quick recap below. This isn’t a breaking news story or legal banter about regulatory changes and related directives or future directives. Rather, we’re looking at this case and how it potentially affects you, a merchant.

Over the past few months, the FTC has been sending notices to traditionally high-risk businesses across the states, regardless of whether they deal with loans or financial services. Should you be worried? Are you wondering what’s going to happen to your business? Do you even know or care about what’s going on? You should care, but you shouldn’t necessarily worry. Using some industry expertise, here’s a bit of insight into the matter.

Summing Up the AMG Capital Management, LLC v. Federal Trade Commission Case

If you haven’t been keeping up, the AMG case against the FTC was a big deal for several reasons. Here’s a quick summary to get you up to speed.

First, the case is regarding Scott Tucker and his businesses, which includes AMG Capital Management, LLC, about deceptive payday lending. So if you’ve been ignoring this case thinking it won’t affect you and your high-risk business is in the finance sector, then you should study up to fortify yourself against any potential downfalls.

Second, the complaint against the FTC is not just about a scammer wanting to run off with “their” money. It’s a real challenge to the FTC’s authority, which has previously been something of an unstoppable force when it came to punishing businesses in a monetary sense.

To go back just a few steps further, this case started because AMG was ordered to pay $1.27 billion for deceptive practices, but the FTC sought equitable monetary relief after the Ninth Circuit affirmed the District Court’s ruling in Washington, D.C. AMG wanted to check the FTC’s authority in making this move by taking it way up to the Supreme Court.

Historically, the FTC used Section 13b of the FTC Act (Federal Trade Commission Act; FTCA) conservatively, stating in a 2003 Policy Statement, that restitution and disgorgement are not “routine remedies for antitrust cases”. But then in 2012, they retracted that policy. In summary, the section focuses on prospective relief, not retrospective relief.

That’s exactly what the Supreme Court of the United States (SCOTUS) ruled, unanimously voting against the FTC commissioners. The US supreme court’s decision was that the FTC was using Section 13(b) in recent years to punish harmful businesses though the term “preliminary injunction” found in that section does not refer to monetary relief. Instead, the FTC’s ability is to seek injunctive relief like temporary restraining orders, administrative proceedings that aid preliminary injunctions, or even permanent injunctions in proper cases. And they often obtain billions of dollars in monetary remedies. We should note that there’s also Section 5(I) and Section 19 that provide equitable remedies including refunds and returns.

Obviously, scamming consumers during something as terrible as a pandemic is something no business owner should do. For that reason alone, the FTC’s enforcement actions are understandable. But, playing devil’s advocate a little, he FTC’s power and authority were abused regarding how businesses are punished. Sure, that punishment hastens the refund of money and property for consumers, but the argument we have now is if one agency should hold all of the power or if it should be broken up. Many consumers rely on such relief, but it’s also possible to obtain it through proper cases.

The argument is now politically charged: democrats want to undo federal court’s ruling through Consumer Protection and Recover Act; republicans want the FTC permanently stripped of this type of power. While Section 19 and 5(I) exist, they aren’t fast-acting enough to benefit consumers and prevent them from spiraling downward further into debt.

And consumer debt is no good thing for merchants (unless you’re a payday loan provider). You need consumers to have active credit cards, funds in their bank, and a willingness to spend freely to keep your online businesses running.

What You, as a Merchant, Can Expect in the Coming Months

You don’t need to be part of the political debate. That’s just a taste of what’s happening now regarding the case in terms of government officials. What you should do now is expect a big fat letter to show up in your mailbox from the FTC.

The FTC lost and they’re mad about it. To prove they’re still an all-powerful agency, businesses in high-risk industries have been receiving cease and desist orders in via snail mail. It feels more official and threatening that way.

Businesses that sell money-making opportunities have recently been targeted. This feels the most fitting, seeing that they lost against AMG, a company that handed out payday loans (i.e., dealt directly with consumer money). They want you to know they’ve got a watchful eye on you and your “scam” business.

But is your business actually a scam? Can your previous and current customers vouch for you through ratings and testimonials? Do you have a real product/service that works?

If the answer is yes, then you have nothing to worry about. Expect a letter, but don’t let it scare you.

The FTC Targets More High-Risk Industries

The same is happening for dietary supplement sellers. They’re on the hunt for businesses in high-risk industries because these industries are linked to higher fraud rates. That also makes a lot of sense. Why would they go for low-risk businesses?

Again, is your supplement business a scam? Are you honest with your products’ ingredients and expected outcomes? What do subscribers have to say about you?

Being bitter about losing a case and sending out threats is a childish reaction for an agency that’s been around since 1914. But there is some benefit to their actions. The letters they’ve been sending out haven’t been entirely empty threats. Those dietary supplement sellers were required to submit a response within 15 days.

The request weeds out sellers who aren’t operating up to legal par. Also, it’s not only coming from the FTC. It’s a join effort from them and the FDA. Supplement sellers need to be FDA-compliant in order to sell their goods. Part of that compliance involves adhering to the FTC’s strict outline for product descriptions and labeling. Essentially, supplement sellers cannot claim a product absolutely does something unless it’s gone through clinical trials and the drugs involved are approved. Sellers who make too grand of claims in the marketing are coming under fire.

Knowing this, now is the time to make sure you aren’t saying anything absolute. We aren’t guaranteeing that you’ll get a notice in the mail, but if you do, you want to be prepared to respond without panic.

Other industries might be next. This is speculation now, but we expect the coaching and advice (e.g., business, fortune-telling, non-therapy advice, etc.) industries to come under fire soon, too. These industries are particularly vulnerable to poor community reputation because the outcome of service is entirely dependent on how receptive the client is. In this age of COVID where government agencies are cracking down on scammers and fraudulent business practices, those are two industries that might want to be on the lookout.

None of this means that your business in particular will be notified, penalized, or shut down. If you’re operating legally and staying on the legal level, then there won’t be an issue and you can continue doing business as usual. We aren’t trying to scare you into panicking until the next FTC overhaul.

Securing a Merchant Account for High-Risk Businesses Can Help You Stay Out of the FTC’s Line of Fire

We prepare high-risk businesses every day with the information and tools they need to meet strict regulation through industry expertise and consultations. If you have a question, speak with our high-risk merchant account representatives to clarify any issues you have and, of course, get set up with payment processing built for your industry.

The FTC is ramping up to dole out civil penalties via the Penalty Offense Authority that hasn’t (yet) passed through congress, but it’s looking more and more likely. Afterall, lawmakers did slip in a civil penalty for COVID scammers into one of the more recent stimulus bills.

High-risk merchant accounts from DirectPayNet help mitigate chargebacks and fraud, which keeps you out of the line of fire from the FTC. If fraud is what they’re after most right now, then don’t give them any fuel for the fire. Speak with us today and sta

November 26, 2021