Continuity Subscription Merchant
March 16, 2023 | Merchants | Dustin
The continuity subscription merchant model is consistently growing. And the world continues to shift to purchasing more products and services online. As a result, there are subscription businesses emerging in industries everywhere. In turn, they offer their products services on a scheduled time basis. Some examples of this type of business include successful services such as Netflix, Dollar Shave Club, Ipsy, Spotify and Amazon Prime.
From the rate of growth and increasing popularity, it’s clear that subscription businesses are here to stay. Accordingly, it’s important that every business owner understands how a continuity/subscription merchant account works.
Payment Processing For Continuity Subscription Merchants
In order to choose one of the best payment gateways for your business, you first must determine if you are classified as high risk. Afterward, you can determine the particular payment providers that are able to work with your company.
Any company that sells subscription based products falls into this high risk category that’s been established by banks and payment processors. In order to mitigate the uncertain repercussions of high chargebacks and ongoing payment structures, these financial institutions separate low risk from high risk businesses in the way they are processed. To elaborate, the following list specifies the characteristics of businesses that are labeled as high risk:
- Large amounts of chargebacks
- Recurring billing methods
- Higher risk of fraud
- Bad credit score
- Greater reputational risk
- Increased security reserves
- Very high discount rates
- High ticket prices
Chargebacks And Subscription Merchant Accounts
The most common obstacle in this billing model is from consumers who file a chargeback against a subscription box merchant. For example, this can occur when members think the subscription box will include specific items. However, when they receive the box in the mail, they are disappointed when the membership ends up falling short. As a result, they might issue a “failure to deliver” chargeback. This factor may be enough of a reason for the bank to agree. Accordingly, you should be equipped with a trusted payment partner for your business.
Now that you know how to identify chargebacks, you can concentrate your time and attention on other parts of your business. Consider how you can develop ways to reduce the risks of excessive chargebacks. Get chargeback protection, and friendly fraud prevention tools with trusted providers. Or, enhance the user experience on your website, or integrate a subscription option to your billing model that automatically updates your customers when bills will be delivered.
Credit Card Processing For New Subscription Based Businesses
The licensing of products for a finite amount of time is becoming the standard way to sell software. Notably, Adobe completely changed their entire payment model to subscription-based in 2013. As a result, now the go-to payment model for software providers employs recurring billing, known as Software-As-A-Subscription (SaaS).
Other online industries that use recurring payment techniques range from ongoing tech support, marketing, website maintenance, and social media management, to name a few. In effect, industries that do not reside on the Internet have been adopting subscription models as well.
The automobile industry has even adopted continuity billing in their businesses. Pioneering this movement, Zipcar was one of the early players in this space. For $7 per month, members can reserve their vehicles on demand and only pay an hourly rate for each individual drive.
Subscription models can make air travel cheaper and faster for travelers. Not to mention, it can also consistently boost monthly revenue, making it more predictable. Leading the trend, Surf Air, founded in 2011, offers private air travel memberships. Their members receive unlimited flights on their private planes for $1,950 per month. Another company, FlyLine, focuses on saving subscribers money on tickets. FlyLine charges $49.99 per year for a basic subscription.
Gyms and fitness memberships are nothing new. However, the growth of at-home workout programs and connected equipment has taken over the industry. This is especially true in the midst of the current pandemic, which has forced consumers to stay home instead of going to the gym. In particular, Peloton is one of the most popular players in the growing subscription fitness space. At an affordable price, they charge $39 per month to access a library of workout-related content.
The time of owning physical copies of games is coming to an end. In accordance, game companies are shifting all possible products and services online and adopting subscription models. From XBox Game Pass t0 PlayStation Now to EA Access, you can now pay a relatively small amount each month to play hundreds of games.
Health & Wellness
Health care continues to evolve. The way doctors interact with patients is growing less in-person and more remote-based. Especially during Covid-19, telemedicine business has skyrocketed. Hence, the health industry has realized not all patient visits need to be in-person.
Moreover, a doctor doesn’t have to be present to accurately diagnose certain ailments. Now, healthcare facilities are less crowded and safer for those who need to visit a physical location.
The rapid pace at which legacy companies expand to include subscription and continuity billing into their business models should be an indicator to all entrepreneurs. Recurring billing is booming and there is a vast amount of opportunity waiting to be seized. Have you considered how your company can create a product or service that customers can subscribe to?
How To Get A Recurring Billing Merchant Account
Bottom line is this: businesses that are considered high risk have to know who the right processors are. Without a dependable institution to handle credit card payments, your company will have a difficult time earning consistent revenue. These high risk merchant account providers that are willing to process transactions for your subscription merchant business are offering payment solutions to those who qualify.
At PayKings, we focus on maintaining strong partnerships with acquiring banks, ecommerce companies, and other financial institutions. This allows us to more easily and quickly approve high risk merchants like subscription billing businesses. Apply for a merchant account with PayKings today and get secure payment processing and merchant services for your subscription based company.
March 16, 2023 | Merchants | Dustin