Tag: merchant account

Going From ClickBank To Your Own Info Product Merchant Account

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.

July 25, 2019
The Skinny On Why Supplement Merchant Accounts Are In Short Supply

The online pharma industry is currently undergoing a phase of rapid growth, yet approval of supplement merchant accounts has not kept pace. Thirty-nine percent of adults (18 and over) are either overweight or obese. Therefore, it’s no wonder we have seen the pharma and nutra industry (specifically the diet industry) experience such explosive growth. Individuals increasingly look towards diet supplements and other products to improve their health, as opposed to more traditional methods.

Despite increased demand for e-commerce-related merchant accounts in this sector, we have seen the majority of credit card processing applications get declined for being overly high risk. Regulatory issues, high chargeback rates, industry reputation and increasing instances of fraud are all obstacles to accepting online credit card payments.

Why supplement merchant accounts are a struggle

As just mentioned, several factors contribute to the growing difficulty of gaining approval for supplement merchant accounts. Pharmaceutical and nutraceutical goods sold online are wide-ranging. This includes wrinkle creams, dietary supplements in powder form, and libido-enhancing pills. But, unless you operate with a license according to the jurisdiction, convincing a payment provider to enable you to take Visa and MasterCard orders will be tough.

While pharma merchants are victims of general trends in credit card processing, like the increase in card not present (CNP) fraud, this industry has its own unique challenges.

1. Risk presented by fluctuating government policy

The ever-changing landscape of legislation surrounding nutraceuticals, nootropics, diet pills, erectile disfunction tablets, or other pioneering supplements is vast. Consequently, it’s difficult for payment processors to assess your long-term business prospects.

Your products (or one of their ingredients) that are your main source of revenue today could be illegal within a matter of months. This elevates your risk profile and reduces the likelihood of approval to process credit card orders from willing buyers.

2. Higher than usual chargebacks

This industry suffers from especially high chargeback rates, with online diet and skincare merchants struggling more than most. When customers buy diet supplements that fail, they will often issue a chargeback, because they didn’t receive the expected results. This practice is known as “friendly fraud”. Also, should people experience or see reports of bad side effects from the products they purchased, they will be inclined to cancel. It makes no difference if the item was shipped or not.

Any payment processor looking through your transaction history with a high level of chargebacks is going to rethink their relationship with your business due to the increased financial risk.

3. High Drop-Off Rates

In a similar manner to gym membership drop-offs, nutraceutical merchants who operate subscription-based models tend to witness high drop-off rates after the initial set of payments. This is more apparent with merchants who offer a discounted or free trial of their nutraceutical supplement.

This leads payment processors to deem your company high risk. With such high rates of declined orders, your business model’s long-term sustainability will be questioned.

4. Reputational Damage Caused by Fake Pharmacies

The internet is an unregulated platform, so almost anyone can set up a website that sells prescription drugs or supplements whilst claiming to have all of the necessary licenses. Not only have fake pharmacies created a global health threat by selling counterfeit and illegal drugs, they account for a huge slice of the industry’s terrible commercial reputation regarding chargebacks (see above).

Gain acceptance for payment processing even with a poor track record

There is no quick fix for a start-up or a company with poor processing history. Some high-risk merchant service providers advertise false slogans like: “get up and running within 24 hours”, “get access to low rates”, and “apply and get instant approval!”

Relationships with providers who make fake promises don’t last. Reliable service providers guide merchants through a vetting process. This ensures that the acquiring bank accepting your is secure and will pay you what you’re owed regularly. Whilst supporting documents and financial history may seem a pain to submit, these requests are aimed at reducing a bank’s liability. Also, if you find a seasoned merchant service provider, you will have the added bonus of improving your overall business.

1. Improve Processing history

First and foremost, providers that have your best interest will work with you to grow your processing history. They place particular emphasis on beating woeful chargeback ratios. Third-party tools that alert you to any fraud can be recommended. Additionally, a good provider will help you develop better fraud-prevention strategies to reduce ratios to acceptable levels.

Not only will you end up with more retained revenue and increased payment processing capacity, but you’ll also improve your business’ perception. This is especially crucial when presenting your company to players such as acquiring banks and suppliers.

2. Checks on Licenses and Agreements

Acquiring banks assess whether or not the correct licenses exist to sell your products. They determine whether the health claims associated with your products have any credence. This applies particularly to diet supplements and nootropics.

While this paperwork is necessary to accurately assess your risk, it’s another way to differentiate yourself from other vendors. Demonstrating a willingness to be compliant and commitment to great customer service as a means of combatting angry buyers is an excellent strategy. Taking this route reduces chargeback rates, fraud, and complaints.

3. Assess Products’ Viability

Many sellers assume that once approved for supplement merchant accounts that they have carte blanche to sell and market products however they see fit. During the screening process and after you start processing; be on the alert for products that may have their legal status changed in the near future. Products that seem innocuous to you, may be next on the list to be banned in not just one, but various countries. It’s important to keep abreast of the changes on the FDA website or other regulatory bodies in the countries you are marketing in.

Even the sale of powdered caffeine is heavily restricted within the biggest e-commerce market in the world, the United States. Future-proof your business by gradually transitioning your focus to more benign nutra products. For example, health supplements, vitamins and muscle building protein products are alternative introductory options, rather than diet pills with unrealistic results. The latter is unlikely to stay on the market for much longer due to either restricted or questionable ingredients.

There are other payment processing options

If accepting credit cards and increasing your monthly sales capacity is a struggle, there are alternative payment options. The first of which is an Automated Clearing House (ACH) processing.

ACH processing is great for facilitating payments between your customers and your bank. It won’t use any precious payment processing limits or force payment of high credit card fees. This way of processing payments bypasses credit card networks, saving you money in the process. Considering ACH is an automated system, it works well for subscription-based pharma merchants with periodic payments too.

If ACH isn’t a good fit for your company, offshore banking services remain an alternative option. Foreign banks tend to be much more liberal; therefore, consider this option if your domestic supplement merchant account applications hit a deadend. They also provide a range of benefits like subjecting your payments to lower taxes. Moreover, you can trade and settle in multiple currencies.

DirectPayNet works with several ACH and foreign merchant account providers. Therefore, contact a member of our team, if this is an attractive option.

Acquire a merchant account in one of the toughest processing industries

Landing a supplement merchant account isn’t easy. Nor should it be. The industry is rife with misinformation. Therefore, cautiously develop a range of legal and proven products or services with low chargeback and fraud ratios. Doing so makes you increasingly attractive to payment providers and simultaneously leap ahead of your competition.

DirectPayNet provides guidance on ironing out these common issues. In turn, you achieve the level of processing your company both needs and deserves.

So, if your online pharma business is drowning in regulatory measures, declined transactions, fraud and chargebacks contact our team to regain control today!

July 23, 2019
High-Ticket Merchant Account – Get Approved To Sell Items Over $1000
Over the years, we’ve seen high-risk companies get declined repeatedly for a merchant account, because they sell expensive items. Alternatively, approved business owners are given ridiculously low monthly credit card processing volumes. Selling high-ticket products can cause you to reach that limit fast. This limitation leaves cash in your consumers’ pockets when you can’t accept any more credit card payments for the month.

The main reason for these low approvals from acquiring banks stem from three core areas. The first is that the client’s industry has a reputation for high chargebacks (like travel or biz-op). The second issue is the steep price point of goods and services. And, the third challenge is when companies have little to no processing history. However, this does not have to be your reality.

We will demonstrate how to ultimately get approved for the type of high-ticket merchant account you need. Plus, we’ll take a look at improving order fulfillment and landing more payment processing channels to expand your business.

But first …

What is a high-ticket merchant account?

A high-ticket good or service is a higher-than-normal dollar amount you expect to charge for a single transaction. For example, low-risk merchants will charge $20, $50 or $150 per product. High-risk merchants will charge $300, $500, $1000 and even as high $10,000.

What is your highest ticket amount? This is a question asked on merchant account applications, as the service provider will set this figure as your highest allowable charge for one sale. The higher your single transaction limit, the more documentation you’ll need to provide. For instance, explaining what that product is and if there are any special terms, like whether a deposit is required. Also, your potential provider may question the financial stability of your company to handle these types of charges and the repercussions that could come with them.

Travel, educational conferences, and luxury goods and services are classified as high risk. When ticket sizes reach over $1000 in certain business categories, obtaining a merchant account seems impossible. Acquiring banks may differ at what price your product or service may be considered a high-ticket item, but anything at $1,000 and over is generally within this range.

So, how does it work?

Selling high-priced goods and services typically requires a high-ticket merchant account. This can be both business to consumer (B2C) or business to business (B2B). You’re considered a more reduced risk if your sales are primarily in a B2B setting, because of the limited potential for chargebacks and frauds.

However, in the B2C sector, the likely possibility for chargebacks and fraud are greater for big ticket items. Therefore, merchants in this category (e.g. vendors of designer shoes or travel services) are high risk.

The higher the ticket price, the higher the financial risk. That’s because one fraudulent $1,000 transaction for you could be 50 fraudulent transactions for a low-risk merchant selling $20 items. Therefore, your business carries a higher risk for the merchant account provider who will be liable for the transaction should you be unable to reimburse a chargeback.

Some examples of products and services that can fall in the high-risk category include:
- Sellers of high-end sneakers or shoes
- Top designer clothing brands and outlets
- Jewelry sellers
- Travel tours, booking sites and clubs
- Customized goods retailers
- Ticket vendors (e.g., corporate events and educational conferences)
- Premium beauty, health, and fitness products
- Other luxury goods
3 Reasons high-ticket products are considered high-risk

There are three key reasons why your business in any of the categories mentioned above will be deemed as high risk. These are high chargeback rates, the potential for fraud, and order fulfillment issues.

Chargebacks

The higher the ticket price, the greater the chargeback risk. As such, contingent liabilities for a chargeback on a $1,000 product will be significantly higher than a $50 payment especially when there is a dispute.

Fraud

High-ticket items are often “friendly fraud” targets. This occurs when a customer contacts their bank to dispute a legitimate purchase by claiming a myriad of different excuses. Reasons can range from damage during shipment or not as ordered. What is often the case in these instances, is that the consumers’ bank will side with their customer and initiate chargeback proceedings. Alternatively, it’s simply buyer’s remorse, and they want to reverse the purchase.

Other fraudulent activity that tends to target high-ticket e-commerce sites include cybercriminals using stolen credit cards. Fraudsters using this technique tend to focus on companies that sell luxury goods like high-end sneakers or electronics. They order items which are then shipped and delivered before the cardholder realizes the problem and moves to contact his or her bank to request a cancelation. Merchants are left out of pocket for the merchandise and sale amount.

Order fulfillment

If your business model means that you could have a potential problem in fulfilling orders, then this places you in a high-risk category. For example, let’s say you’re selling custom luxury carpets. You get 10 orders in one week for the same style in the amount of $3500. But, your buyers have learned that the same carpets have suddenly gone out of stock and are on back order. Therefore, they’ll have to wait an extra week for it to be delivered. Seven of those ten customers will not want to wait for the product, so they’ll ask for a refund.

Because of the ticket price of the item, they may be keen to get that money back. Some impatient customers may contact their local bank to issue a chargeback. Suddenly a gross sale of $35,000 may be instantly reduced to $10,500, because $24,500 is refunded (maybe more due to double refunds). Consequently, you’ve lost more money, because of transaction and chargeback fees, and other expenses. This is a high financial risk!

So, order fulfillment capability is a high priority area for high-ticket merchant accounts. Communicating with your customers if delays occur is of utmost importance.

The Importance of web and industry compliance

Another factor that will influence your approval for a high-ticket merchant account is your website and industry compliance.

Are you using appropriate security measures to safeguard your customers’ data and protect transactions via your website? Are your service providers (like your shopping cart, checkout page software and CRM systems) PCI compliant? Have you considered adding 3D secure on your checkout page? This can help mitigate fraud by adding 2-factor authentication on your orders. Read more about 3D secure.

You also need to investigate the certification and licensing requirements for your industry. For example, certification is especially important in luxury and high-ticket items where you need to prove the source of the items. If you’re selling designer sneakers, you must possess a certificate of authenticity for your product. Otherwise, banks won’t have any way of knowing whether your sneakers are real or fake.

Merchant account providers assess other business areas. This includes product delivery methods, the condition of your inventory and your overall order fulfillment processes.
Therefore, be knowledgeable about your industries’ requirements so you can be compliant with all regulations and requirements.

Instantly improve your chances of being approved for a high-ticket merchant account

You can’t change the industry in which you operate; therefore, a high-risk merchant account will be standard for your business. If your company products are high-end, then it’s wise to apply measures to help make your case for your merchant account approval. The following are a few strategies available when you operate a big-ticket business.
- Start with low-risk payment processing
  - You can adopt low-risk practices like using ACH processing. This will reduce the risk of fraud and high chargebacks, which can result in MATCH-listing. Moreover, it will produce strong processing history for when you apply for your next merchant account.
- Take deposits for high-priced items
  - Ask for a 10-50% deposit if omitting products priced at $1000 or more via your online store is not possible. Consider taking a partial deposit on your high-ticket items and allow the balance to be provided on delivery. This tactic will limit order fulfillment issues and chargebacks. This is especially useful when you provide custom designed products. If you opt for this route, then signature-on-delivery is a must.
- Do not offer free trials
  - Have you ever forgotten to cancel a free trial? If you never wanted the product you will then decide to ask for a refund. This scenario has played out for many merchants who require a credit card or other payment method to sign up for a free trial. This method is also quite popular for sellers of monthly subscriptions for luxury jewelry. It’s best to remove free trials from your website to limit the risk of chargebacks from this process.
- Start with lower-priced products and services
  - Some acquiring banks use $1,000 as the maximum for high-ticket items. You could consider pricing your items just below this marker. Then, when you have at least six months of processing under your belt to prove financial stability, you can start offering products at $1,000 and over.
- Have a track record of service or product delivery
  - As we’ve shown, when a high-ticket merchant applies for a merchant account, one of the areas looked at is order fulfillment. So, you should be able to demonstrate strong management of the shipping and delivery process and a good history of completing orders. This is also a good method if you already have a merchant account but need to apply for a higher monthly volume cap.
Let us help you secure a high-ticket merchant account

High-ticket merchants constantly face potential fraud, low transaction approval rates and poor order fulfillment. Therefore, you need a payment solution with robust features to prevent fraud and high chargeback rates.

Amateur merchants often sign with the first service provider that gives them the ability to process credit card orders. Instead of doing that, let’s talk!

DirectPayNet specializes in helping medium to large-sized high-risk merchants land the right payment solutions. For high-risk Europe and US-based businesses who are in good financial standing, let us help you find the right payment solutions partner.
July 16, 2019
Fraud & High Chargeback Rates Choking Your Company? Here’s How To Prevent It
High chargeback rates are a frustrating reality for many businesses today. These fees can add on a tremendous expense at the end of every payment period. Even if it isn’t your fault, you can end up paying a significant amount for them each year (ranging from $20 to $50 per chargeback). From friendly fraud to misunderstandings over transactions, if high chargeback rates are choking your high-risk business, know that you are not alone.

Right now, businesses are enduring an increasing in chargeback rates. These unexpected charges are a detrimental element of business that can cause a massive money drain and poor customer service reputation. For high-risk businesses, chargebacks are especially worrisome, which is why we’re going to look further into the matter and how you can prevent it.

Why are chargeback fees so high?

Many high-risk merchants start processing with alternative payment providers like Stripe and PayPal. The chargeback fees from these alternative providers can be as low as $20 USD. Therefore merchants are often shocked at the cost of fees after transitioning to a merchant account. It is important to note that PayPal and Stripe serve low-risk businesses, hence the reduced pricing. Your account may be frozen for investigation should you receive even a couple of chargebacks. Merchant account providers are more flexible at accommodating a business with higher fraud-to-sale ratios.

Types of Chargebacks

Merchant errors (system errors that arise from your customer service department) are the most common form of chargeback claims. Unauthorized card use is another popular cause for claims. This occurs when individuals claim they never authorized the transaction or that their card has been stolen. Finally, when you hear about friendly fraud it involves consumers claiming that may forget or regret their purchase and try to initiate a chargeback.

All three of these chargebacks are surely issues you have endured as a merchant.

Payment processors are liable for your risk

There is more financial and reputational liability with high-risk acquirers, so paying a penalty as high as $40 USD shouldn’t be a surprise. With a high-risk merchant account, for example, a $25 – $35 fee is applied every single time a customer calls their bank to issue a chargeback. That can add up quickly. If your chargeback-to-sale rate goes above 1%, your merchant account provider may request measures to mitigate risk. Ensure you have chargeback count as well as chargeback-to-sales dollar ratios under control. Payment providers now rely on both figures not just on the chargeback transaction count as was the case a few years ago.

Additionally, like anything credit-based, this chargeback percentage rate is also factored into new merchant account approvals. If your business is prone to high rates of 5% or 7%, this does not demonstrate you have fraud under control. A new payment provider will see your processing history and panic. Therefore, it will influence the fees and monthly costs you have to pay simply to get approved for a merchant account from an acquiring bank. High-risk merchants are subject to higher rates that will cover the disparity in the cost. Once your risk is under control, fees can be negotiated and more reasonable. It’s important to have six months of low chargeback levels.

Reversing chargebacks does not reduce your risk

In many cases, high-risk merchants often think that successfully disputed and reversed chargebacks will not count toward their fraud rate. This is wrong! Regardless of its outcome, once a chargeback has been filed it still counts towards their chargeback ratio. Visa and MasterCard enacted this policy; therefore, it is not under the control of your payment provider. A high chargeback rate could reflect poorly on your financial profile and result in a MATCH-list by Visa and MasterCard.

3 Tips for lowering high chargeback rates

Luckily, you can be proactive about high chargeback rates. Get out ahead of the fraud and fees before they get to you first:
1. 1. Prioritizing top-notch customer service is the most proactive thing you can do to keep your chargeback rate within reasonable levels. If you are customer-centric from the beginning, then you are already ensuring the buyers receive the experience they desire. Provide an email, phone number and mailing address so clients have multiple methods to contact and get their money back. Also, ensure that you have long opening hours and responses are within 24 hours to avoid customer frustration over delays.
  2. A clearly articulated, accessible, and detailed terms of service page right on your site limits liability. Therefore, avoid the fine-print angle and ensure everyone is aware of unexpected charges that could persuade a chargeback. Finding information about refunds on your website should not be challenging. Develop an easy to find refund policy on your website and clearly state the number of days for a client to get their money back. Equally important emphasize how many days it will take for the customer to receive that refund. Many people are impatient. Consequently, they call their banks asking for refunds and this is how you end up with a refund and a chargeback for the same transaction!
  3. Hire a chargeback management company. Always keep compelling evidence on hand at all times while simultaneously working with a third-party service that keeps you protected. They can alert you to suspicious transactions before they become a chargeback. Also, a payment provider will more likely keep your merchant account open if you can show a contract with a third-party service. These types of agreements work in your favor.
Take action against chargeback fraud today

As we have discussed, all fraud waged against your business cannot be prevented and not all chargebacks are your fault. They are part of operating a business today, especially if you sell supplements, rebill clients or offer free trials. Spend time identifying the source of your chargebacks. Business can become lucrative and protected with dedication to customer service, transparency, and bringing on outside expertise on your behalf.

Are you concerned about your high chargeback rates and need to take action before you lose your credit card processing? Feel free to reach our team for help.
July 11, 2019
MLM & Biz-Op Companies: How to Overcome Merchant Account Obstacles
Multi-level marketing (MLM) companies, business coaches and other business opportunity (biz-op) ventures all face issues with getting approval for a merchant account. Banks and other payment providers are weary to work with these high-risk models. This is thanks to reputational damage caused by a few dishonest operators in the industry. Therefore, many merchants in this niche fail, as they can’t get scalable payment processing services. Consequently, it causes serious cash flow issues.

But why exactly do MLM and other biz-op models suffer from such devastating reputational damage? We answer this question below.

Why does the biz-op industry garner such negative publicity?

Biz-op as an industry has received an exceptionally bad wrap over the last few decades after several MLM opportunities were exposed to be pyramid schemes. Since the structure of MLM companies is similar to that of pyramid schemes, sometimes banks and payment processors have difficulty distinguishing between honest operators and deceitful ones. But these reputational issues don’t begin and end with companies created with a multi-level structure.

Frauds and scams involving so-called “business gurus” who share questionable wisdom for thousands of dollars are frequently exposed in under-cover operations. With the cynicism and legal action surrounding this industry, it’s not surprising that entrepreneurs in this vertical are labelled high-risk merchants (even the good guys).

So how can you improve your chances of getting a business opportunity (biz-op) or MLM merchant account?

Some payment providers react differently to biz-op merchants

Broadly speaking biz-op merchants typically offer the same overall benefit to prospective customers – to become their own boss or assist with launching a company or franchise. The goal may be to sell products from home on a commission basis, or equally, pay an entrepreneur to learn how to launch a company in a certain industry. Regardless of the model, these ventures have the same goal: generate an independent source of wealth for everyone involved.

Despite having the same overall principles, payment providers identify some differences in how biz-op merchants earn their revenue. For instance, with an MLM opportunity, a provider sees customers may be expected to pay an upfront fee for stock or inventory of a product. After individuals below you in rank are paid for referring new members to your sales unit. This is big risk for buyers; therefore, it could run up large chargeback volumes and, in turn, may be unfavorable for processing solutions.

Alternatively, an acquiring bank may be more comfortable with business-coaching merchants that sell tickets to their live speaking engagements. Increasingly digital products like e-books or online courses that require a one-time fee for access are offered. This product type may be simpler to approve for a merchant account. Similar merchants may opt for a subscription model (customers make recurring payments for ongoing use of an online platform). Those users access a vast library of content to absorb and implement their own business. However, the further complicated your product is, the more challenging the screening process will be with your payment provider.

So what’s the best way to differentiate yourself to processors as a startup in this industry?

Improve your chances of getting a merchant account

There are a few ways to stand out from potentially insincere rivals if you’re suffering from the negative reputation surrounding your industry. For instance, don’t start off by selling an online coaching session or course at $10,000 a pop. Banks and payment processors will be worried about steep refunds and chargebacks. Also, you’re going to be considered as a very high-risk merchant with such a high ticket.

Start selling products with more affordable prices below $1,000, as it will lower risk levels and decrease the chances of fraud. You will also be a much more appealing prospect to payment solution providers. What’s more, offering steep discounts help to get clients through the door and develop a solid business reputation. You can then incrementally increase prices as word spreads about your amazing products and/or services.

Additionally, rather than launching with a rebilling model, explore selling products for a one-time fee to start. After trust is established with a payment provider for 60-90 days, they will be more inclined to accept subscription-based sales.

Operating in an industry with a bad reputation is just one of many factors that payment processors review when deciding whether or not to grant you a merchant account. Check out the full list of high-risk merchant criteria, to gain a better understanding of what to look out for, and how to better protect yourself.

Basic requirements for a biz-op merchant account

MLM and business coach merchants need several basic requirements in place before applying for credit card processing.
1. A fully operational website is mandatory and should include a blindingly obvious refund policy, and terms of service page that is detailed and unambiguous.
2. Evaluate your business opportunity products. Your offers should have clear descriptions. Also, do not publish unquantifiable sales claims about the benefits of using your products. If your product pages look like they’re basically a written infomercial, the chances of approval for payment processing are lower.
3. Publish proper contact details on your website. Real addresses, customer service telephone numbers and regularly monitored email addresses are all essential in proving to payment providers that your business is legitimate.
4. Make sure you have a business bank account with statements demonstrating there are sufficient funds to continue operating for the foreseeable future. Having processing history is also in your best interest. This will be a deciding factor for just how much monthly volume will be allowed. It will also establish how much reserves will be held. Furthermore, wait until you have some payment processing under your belt to be approved for a high ticket limit.
5. Finally, it’s vital that you respond to online reviews and complaints, as you are conducting your business in such a supposedly murky industry. Whether it’s the Better Business Bureau (BBB) or another community board, answer all inquiries good and bad. Your good reputation may make a difference. Merchant account providers look at online reputation to establish whether they will approve an MLM or other biz-op model.
Wrap Up

MLM, business coaching and other biz-op merchants all can provide valuable solutions to clients when delivered honestly. Reputational damage caused by previous scandals that have unfortunately tarred many merchants with the same brush might be hurting you. But, it’s not all doom and gloom!

It’s possible to still scale your business with a biz-op merchant account by delivering outstanding products and customer care whilst simultaneously reducing the risk for payment processors. Fortunately, we specialize in helping high-risk merchants with securing merchant accounts. If getting approval to accept credit card payments for your biz-op offer is a challenge, contact DirectPayNet today.
July 8, 2019