Info products are high risk and big business; therefore, securing an info product merchant account is a necessity!
Just do a search on Google for any problem and you will find a wealth of fee-based offers to solve it. This could be an e-book on raising credit scores, an online marketing course about Facebook ad hacks, tips and tricks on how to attract the same or opposite sex, or any other digital product or service that involves prospective buyers paying for a content-based product.
There are two big challenges with selling an info product. The first challenge is managing chargebacks and risk as digital products tend to fare higher in chargebacks. The second obstacle is landing and maintaining reliable payment processing. We will share some key fraud prevention strategies from some of the biggest industry players. You will also learn how to position your products and your business to get approved to accept credit card processing.
The info products market is saturated, but still ripe for profit
Info products (also known as digital content products) are now part of a very saturated market. Nearly anyone these days can rightly or wrongly classify themselves as an expert online. Consequently, it can be difficult to stand out in a sea of mostly mediocre online marketers. The advent of social media has made this even more possible. Many merchants flock to platforms like ClickBank as a one-stop shop to launch their info product.
One of the key factors all of our top info product merchants have in common is that they have credibility. Some have done this by building an audience, partnering with influencers, and targeting audiences via social media. Many start out as copywriters, bloggers, vloggers and affiliates. They develop a loyal audience and remain consistent by producing or writing a lot of digital content.
Consistency matters greatly in the online world. That means running an email campaign, posting a blog tutorial or putting out a video weekly, monthly or however often.
Position your info product the right way to get through the door
Newbie info product merchants sometimes show their inexperience in how they sell. For example, it helps to lessen the use of language like free trial to sell a digital product or service. Free trial is not always an attractive term to merchant account providers.
Some merchants advertise a free sign up. However, behind the scenes they may turn around and charge a small usage fee during a trial or after it is done. Trust us; removing misleading claims like this increases your chances of getting approved to process credit cards. You can also try to email your customers to get consent to charge them a subscription fee after their trial is over; this buys a lot of good faith from your customers and will likely increase your odds at getting approved for a merchant account.
If you need to charge a nominal fee to verify a user’s credit card, then change the language of your offer. For example you could say “Pay $1.99 for a 5-day trial!” This is much better than leading customers to believe they’re getting something for free, when they are not. Furthermore, payment providers see this kind of false claim as a red flag for future fraud and chargebacks.
The above scenarios are just a few examples, but the moral of the story is to keep it super simple. If your product makes sense to your prospective buyers, they will be less likely to request a refund or a chargeback in the future.
Prevent fraud and chargebacks before they start
Top info product merchants use multiple marketing methods to promote their offers. Many rely on affiliate traffic, which tends to be higher in refunds and chargebacks instead of merchant-driven traffic. Hence the reason they get serious about preventing fraud through third-party analytics, authentication tools and external chargeback management services like Ethoca and Verifi. In order to keep chargeback rates at an acceptable level you must be vigilant especially when there is no physical product.
Affiliates can send very valuable traffic, especially when you are trying to build an audience. Regular affiliate program audits are must. It’s also important to decide if the return on investment (ROI) of an affiliate partnership is really worth keeping them in the program. Look at the conversion rates of your affiliates to decide if it’s worth it despite the chargebacks and refunds coming from their traffic.
Also, consider the efficiency of your customer service, because it plays a major role in how your customers respond. Can your agents appease customers that want refunds? Do your customers receive the right information that won’t convince them to call their bank and change their mind about an order? Good customer service can make the difference between keeping and losing a sale. Your customers should be able to get in touch with you multiple ways such as email, phone, online and via chat if possible.
The power of consent
Consent is a powerful thing, and it is especially key for compliance in the digital products world. Many info product merchants usually sell an item for a one-time flat fee or convince their customer to subscribe to an offer. Both are great revenue streams, with the latter being good for ongoing income. Regardless of your billing method, you could be forgetting one crucial thing: a checkbox.
For this reason, always place a checkbox on your order page above your buy button. Merchants are required to get a customer to agree to the purchase, as well as the terms of that sale. It is important to include pricing details, so the customer understands what he is agreeing to. Additionally, payment providers do not like checkboxes that are pre-checked. This is considered a violation of credit card company regulations. So, you must have your client’s click the checkbox themselves which means they consent to the purchase. It not only is a good compliance practice, but down the road you will be less liable when it comes to chargeback disputes.
Startup info product merchants should explore ACH
Beginner info product merchants make some very big mistakes when they start selling their offer online. They sign up to Paypal, Stripe, ClickBank and other alternative payment providers to accept credit card orders, but then they don’t have a plan when their business starts scaling to levels over $20,000+ every month. The thought never occurs to them that they may one day get suspended and have no backups. Consequently, after a few chargebacks are incurred the merchant must cease operating, because they were either suspended, or worse, put on MATCH if chargebacks become excessive.
Providers such as Stripe and ClickBank may suspend your account until they investigate if your volume grows too quickly as they may be afraid of your chargeback liability. The reason for this is that they have one master merchant account for all merchants who sign up with them and they must manage the risk for their collective account. If you get your own merchant account, you have more control over what happens.
Any entrepreneur selling a digital product is high risk. Therefore, getting a merchant account without processing history will be a challenge. One way to overcome this obstacle is to implement ACH or e-check processing for 60 days.
ACH processing is growing
According to Digital Transactions magazine, ACH “went on a tear in the quarter ended June 30, notching its highest growth rate since 2008 thanks to double-digit growth for key categories like Internet payments and business-to-business transfers.”
Most merchants aren’t aware that the shopping carts (like Limelight CRM for example) have a built-in ACH option. Once you have evidence of sales activity and processing statements with low chargeback rates, then you can attempt to get credit card processing. ACH also allows for seamless recurring orders. Adding ACH alongside a credit card option on your order page, can lower payment costs as well as add up to 7% monthly revenue from customers who don’t have credit available.
Additionally, if you are a start-up e-commerce business that is applying for a merchant account, you shouldn’t be asking for a $50,000 monthly sales volume cap even if you are generating that amount each month. Ask for a lower sales volume. Doing so will get your foot in the door to be approved for credit card orders. After 60 days of successful processing, most banks will allow you to scale as they will be more comfortable with your business and risk profile.
Next steps for your info product merchant account
Consider pursuing a high-risk merchant account or ACH processing solution for your existing or new info product. There are a lot of merchant service providers out there, but few have experience navigating credit card compliance regulations, high chargebacks or strategies for managing volatile volume that comes with being a successful business.
If you need help today getting approved for an info product merchant account, contact DirectPayNet. We can assist with fraud prevention, compliance rules and other factors that influence your payments.