The incredible popularity of online dating sites and apps is both a blessing and a curse when applying for a dating merchant account for your dating business. On one hand superior technology has made the industry incredibly lucrative for business owners and merchant service providers alike. On the other hand, bad reputation and rampant fraud have resulted in some pushback from payment providers. The latter especially has made finding secure and reputable dating merchant accounts challenging.
There’s no denying the online dating industry is rife with chargebacks, bots and other issues associated with high-risk business. Even with the increased popularity of dating apps like Tinder and Bumble, processing payments can come with some drawbacks. Companies may be flagged for being high-risk simply because of their significant monthly volume of subscribers or revenue.
For the average user, these businesses are necessary for meeting someone special. But, to the owners, they are not just “any” company. If your online dating product is generating at least $10,000 in monthly revenue from your service, then this blog is for you. The time for a proper payment solution is now. Read on to learn how to manage the issues that create high risk for a dating merchant account to ensure you start scaling.
Industry trends show online dating is here to stay
A recent article, quoted Mandy Ginsberg’s thoughts on Tinder. Ginsburg is the CEO of Match Group. She said, “Tinder really was a category changer… people in their 20s really never used dating apps until Tinder.” In spite of saturation of the dating market, business models like gentlemen‘s and strip clubs are dying out. This is due to their lack of competition compared to the Internet. Younger generations want the convenience of meeting people via a scroll on their smartphones.
These dating apps have caused a shift; therefore, they are now one of the biggest clients of the payments industry. With so many users starved for connection, a dating merchant must diversify their memberships and payments to cater to more people. There are products by race, religion, sexual orientation, profession and income levels.
According to an article looking at current trends, 15% of people globally used dating apps in 2015. If the pattern continues, they estimate 20% of them will be willing to use these products by 2020. Additionally, the projected worth is anticipated to be $12 billion by 2020 and is seen as the next big thing by investors. This has major significance if you are in this widely successful and growth industry.
Scams keep your merchant account in the “high-risk” category
Behind the scenes some dating apps are rife with complaints, online scams, bots, and stories about catfishing and ghosting. Some even were used in frightening accounts of assault or violence occurring when meeting a perfect stranger. When this happens, customer reviews, news coverage and other types of negative media can place your merchant account in jeopardy with an acquiring bank. If your business is still in its infancy and has little to no processing history, this can result in a challenging time in obtaining a payment solution. Even if you have processing, statements with visibly high refunds and chargeback rates can turn off most payment providers.
Statistically, according to the Small Business Association (SBA), 30% of new businesses fail during the first 24 months of being open. Another 50% fail in the first five years and 66% within the first 10 years. A new business in the online dating market may give payment providers even more reason to be concerned about accepting you as a client.
For these reasons, and so many more, payment processors do not look upon dating merchants favorably. This is where DirectPayNet and our expertise in handling high-risk merchant accounts can ease profitability concerns long-term for business owners.
My merchant account receives a high number of chargebacks. What do I do?
If you own a business where chargebacks are as high as 5%, you need different preventative measures before it’s too late. In situations like these, providers like Stripe will not tolerate this type of risk. Top-earning businesses accept credit cards through merchant accounts, but must meet some conditions of their acquiring bank. This includes finding ways to lower their risk.
There are several ways to reduce fraud, but it’s a multi-pronged long-term process. For example, most merchants use affiliate marketing, but never examine partners with low conversions. Some businesses don’t limit memberships from specific regions. Some do not verify active members often enough to know if they are bots or real people.
Finally, we often discuss the benefits of ACH payments for desktop users. Some merchants can be lazy to allocate IT and marketing resources to include this payment method. And yet, e-check/ACH have proven to lower chargeback rates significantly.
Cryptocurrency (while not as popular as credit cards) is being used as a secure payment method. Many high-end dating apps that require users to earn certain income levels to qualify, will allow memberships to be paid in Bitcoin. While not a mainstream solution, crypto payments can add to your bottom line in a secure and chargeback-free way.
Our goal is to find the best solutions that work specifically with high-risk merchant accounts to ensure their payment process is simplified and uncomplicated.
5 ways to get approved for a dating merchant account
Below are recommendations that have helped DirectPayNet’s dating merchants get approved to accept credit card payments. They are great strategies for preventing fraud and combating risk:
- Use fraud analytics tools to block potential customers from countries with high fraud. Regions of the Middle East, Africa, Asia and South America are fraught with these issues. Check your stats to determine the percentage of fraud per country. If you see outliers, it’s best to block those countries to avoid further risk.
- Run quarterly affiliate program audits to weed out low-converting or fraudulent affiliates. Sometime if internal resources are not available to do this, it can help to outsource this to professionals. DirectPayNet is an expert at handling affiliate audits.
- Add authenticating measures like 3-Domain Secure Authentication second generation (3DS2) at the checkout page. What this does for customers of your product is it sends an SMS to their mobile number registered with the credit card company. As a result, no passwords are created or remembered and websites don’t redirect.
- Clearly display your business’ anti-fraud methods in your terms and conditions page, which should be linked directly from the checkout page and footer.
- Have a transparent refund policy page including number of days a return can be allowed. This is best displayed as a separate page and should be linked via the website footer.
There are undoubtedly many merchant service providers for online dating businesses. However, few truly understand the savvy marketing and payment needs, and unique challenges accepting credit cards in this industry. DirectPayNet aims to become a long-term provider for your company. You will have an advocate more likely to negotiate merchant reserves and volume caps, and keep your fees at a minimum.
Don’t take another “No” for an answer!
Contact DirectPayNet to help you find a reliable dating merchant account and increase your membership volume today! Call us at (800) 657-8272 or email us to get started.