All-in-one business platforms make it easy to deliver services, but you're giving away your data and paying more than you should for payment processing.

Merchant accounts are highly sought after by freelancers and consultants. But, many contact us because they unsure of how to secure a flexible payment solution. Some examples of consultancy services we’ve encountered include online legal services, finance experts, IT consultants and many others. They all want to sell their expertise virtually, but aren’t satisfied by PayPal or Stripe.

The rise of the gig economy continues unabated. In the US alone, there are 57 million freelancers. But these freelance positions are much more than driving for Uber. For example, high-level executives are taking the leap from high-paid positions. Now they often deliver their expertise on a freelance basis. They assemble packages and subscriptions and use payment processing directly on their website or portal. And, the products range from online education courses to virtual coaching billed at a high price per hour. Merchant services for consultants help by offering a greater range of payment options to clients. They allow you to take a deposit to begin providing services immediately instead of waiting for a wire or check. Also, you see more transaction-level data that will help you assess your business for scaling in the future.

This article will outline why these components are so critical. So, if you’re a freelancer or business consultant, listen up! What we’re about to tell you could be a total game-changer.

 

Why consultants and freelancers need merchant services

As mentioned, freelancing and consultancy are broad in nature. Many of those contained within this industry run fully-fledged one-person businesses. This is particularly the case for companies that leverage technology. Today it’s possible to deliver services at a fraction of the cost of traditionally-formed businesses.

For example, domestic and offshore company formation is a fundamental service that many companies need. It’s also a service that one specialized consultant can deliver. All an individual needs are a dozen clients a month, and a business formation service provider is born.

The same is true of web development consultants. Graphic design freelancers and online bookkeepers also fit this model. What may start out as a side hustle, may escalate into a lucrative one-person business. But those who manage to scale need to diversify their payment options for many reasons.

 

The more payment methods offered, the better

Firstly, diversifying payment processing allows a freelancer or consultant to increase their client base. This is achieved by attracting business from those who only have a few methods of payment available to them. Next, receivables from those clients already on the books will increase. That’s because faster and easier payment methods such as ACH and e-check are available.

Furthermore, the bottom line will increase. Freelancers can shift away from low-risk processing options such as PayPal, by securing individual merchant accounts. Enabling a more robust payment channel, along with tighter fraud and chargeback controls as well as competitive rates.

Freelance copywriters selling content marketing packages can benefit. So can consultants with front-facing clients like IT specialists. Opt for processing from a less rigid payment supplier that is quick to add merchants to MATCH-list should a misunderstanding arise. Providers familiar with high-risk orders and business models will be more tolerant. You can sell more in a single transaction (like $1000 instead of $150). The higher the ticket the less likely issues such as freezing funds or account closures will arise in merchant accounts compared to if you are using services like PayPal or Stripe. Higher transactions with the right traffic and volume via a high-risk provider can see increases like from a $15,000 to $50,000 cap per month.

What freelancers and consultants should do to transition to merchant accounts

Obtaining new payment processing options requires some work upfront. But the pros outweigh the cons. Freelancers looking to add new payment methods will need at least A to C, but having all of the following can be a big benefit:

A. Incorporated business (preferably after being pre-approved for a merchant account)

B. Business bank account with a positive balance

C. A local director who is a resident and authorized signer of the company

D. Processing statements for the business (3 to 6 months) or business bank statements showing some trade and cashflow

E. A working website with terms and conditions, and easily identifiable contact information displayed

F. Hard copies of service agreements with clients and other pertinent business contracts (such as licensing agreements)

When securing merchant accounts or merchant services, a whole host of new payment processing options become available. But what are they exactly?

 

What payment options are available to freelance and consultancy business owners?

As a high-risk merchant, securing multiple payment options helps to build up processing history. Those with several months’ worth of trouble-free history can apply for sales limit increases and scale their business. When a merchant selling high-ticket consultancy services begins processing with PayPal, the high transaction amounts may result in unnecessary scrutiny and slow growth.

With that in mind what payment processing options are available to freelance business owners and consultants?

 

1. Merchant Account

Merchant accounts gives freelancers and consultants the opportunity to accept debit and credit cards from clients online. This method allows both full and partial payments (like deposits or installments). This payment method also gives business owners access to transaction-level data. We know there are a lot of hosted all-in-one business solution platforms to help you sell courses and virtual services. You may not be collecting all your real-time data on customers and orders. With your own checkout page and a shopping cart or CRM you see more information on the back end. You can also connect to a merchant account that will provide even more transaction details. This includes more in-depth details on fraud. Business owners can tightly control fraudulent transactions. Stopping potential chargeback situations in their tracks.

 

2. Virtual Terminals (MOTO)

Virtual terminals allow merchants to process mail order/telephone order (MOTO) payments. Clients provide their card details and the merchant takes the pre-agreed amount by entering those details into the virtual terminal. This offers another way for clients to make a card-not-present (CNP) transaction. It also allows you to capture a deposit quickly so you can start providing services without delay or worry that you won’t get paid!

 

3. Automated Clearing House and e-Check Processing

Not all clients have a business debit or credit card. They also may not feel like using cards to pay for a service. As a result, many high-risk merchants are turning to adding ACH and e-check payments. All merchants need is a client’s bank account details, which they input securely into an online order form at checkout. A client can then confirm the amount and authorize payment. Alternatively, they can issue an e-check. This shows a virtual display of the check and the payable amount. It then uses the ACH network to arrive in the merchant’s account.

By offering multiple payment options to clients, high-risk merchants can increase conversions. They can also lower risks of fraud, and stay in control of troublesome chargebacks.

 

Did you know ACH and e-check processing doesn’t just benefit freelance and consulting businesses? Check out this list of high-risk business verticals where these payments are helping merchants to scale!

 

Best practices for freelancers and consultants

New payment processing options help to drive up profits. However, high-risk merchants need to take effective measures to protect themselves. Threats such as fraud and chargebacks can derail company growth. In some cases, resulting in merchant account terminations.

Here’s a list of best practices when it comes to taking payments from clients:

Split payments for high-ticket items:

High prices represent a high risk to acquiring banks. Lower those risk levels by splitting up large payments into instalments. For example, with a large consulting project, charging a 50% up-front deposit and 50% upon delivery may help to reduce the chance of a chargeback.

 

Keep detailed records:

Detailed record-keeping makes all the difference when it comes to merchant account applications. Signed service agreements, records of all invoices, and clear terms and conditions of sale will help in your bid to secure additional processing.

 

Make use of anti-fraud tools:

It’s in the interest of all payment providers to keep fraud levels to a minimum. Thus, those institutions involved often provide high-risk merchants with high-level anti-fraud technology. Making use of those tools will lower fraud. It will also ensure you retain the ability process card-not-present (CNP) payments. Maintain a negative database of clients who have previously filed a chargeback or a refund for no reason. Add simple velocity checks to minimize the number of bad transactions that a customer can potentially attempt within your merchant account.

 

Take manual measures for MOTO payments:

MOTO payments can bypass sophisticated anti-fraud technology. Thus, you need to take your own precautions. When taking payments over the phone, manually enter client information into the Address Verification Service (AVS) fields. This way you can confirm they are who they say they are. Another action is to take the CVV/CV2 number from the card. In fact, make these fields of information mandatory for most MOTO and non-MOTO transactions. Those with stolen details are unlikely to have this information. If they have it on hand, they are much more likely to be in physical possession of the card. Reducing fraud risks.

 

Review transactions in your merchant account portal:

A very effective method to combat fraud is to periodically review transaction logs. Sometimes human intervention can spot a bad trend in your transactions. By logging into your payment portal you can flag suspicious activity. Not only can you report suspected fraud, but you can spot payments that may need refunding before they turn into chargebacks.

 

Provide clear and easy-to-follow cancellation policies:

This is especially true for PR, social media, marketing and similar consultants working on a subscription/retainer basis. Impatient clients who no longer need your services will contact their card issuer to initiate a chargeback. Especially if they can’t easily find out how to cancel. Avoid this fate by informing and educating your customer with clear refund/cancellation policies. Provide a phone number, email and website with cancellation info to ensure your customers can easily reach out to you.

 

This list of best practices is by no means exhaustive. However, if you follow these tips you will drastically increase your chances of retaining your merchant services. Contact us and we can help you put measures in place to fraud proof your business.

 

Take your freelance or consulting business to the next level by diversifying payments

Some freelancers and consultants scale quickly in the initial phase of their business. But they soon plateau when they hit limits on their basic payment capabilities. By opting for merchant services business owners can continue to scale. Better still, they can increase conversions and reduce fraud risks. Consultants that fail to take advantage of these payment processing capabilities will be left behind by their counterparts.

When you run a “one-man-band” it can be difficult to understand your options. Which is why you need expert advice to reach the next level. Here at DirectPayNet, we specialize in securing merchant services for high-risk merchants, including freelancers and consultants of all industry types.

 

Contact our team to help you secure payment processing options like merchant accounts, ACH, e-check, MOTO and more today.