Subscription commerce has recently demonstrated significant growth, as consumers have embraced the convenience and efficiency that subscriptions deliver. Companies and shareholders love it too, because it ensures repeat customers on a regular basis, without the necessity and hassle of pitching and closing a new sale each time.
Some companies will replenish customers’ supply of a particular product, such as the Dollar Shave Club. Others attempt to delight and surprise their customers with a new and unique selection, such as Birchbox. But it is not a new phenomenon; magazine companies, nonprofits, and phone companies have long found great success using the subscription billing model.
Unfortunately, it can be complicated for subscription-based companies to obtain processing for a merchant account, and even once set up the overhead cost and efforts can be staggering. Subscription services are considered “high risk” processing accounts because they present an increased chance of chargebacks for the following three reasons:
Kosherfest is an annual trade show where the global kosher industry does business. From chain supermarkets to corner groceries, food service establishments to caterers, kosher decision makers gather to find opportunity at Kosherfest. Fidelity Payment Services has established a highly anticipated presence at the show, where they meet their kosher clientele to give them premiere payment advice from industry experts. This year, Fidelity plans to treat its visitors to a complimentary professional shoe shine at Booth 137.
More Kosherfest vendors are clients of Fidelity Payments for their payment needs than any other payments company. Food-related companies, in particular, have an innate nature to appreciate low prices, value, and service. We are proud to be the payment processor of choice for so many Kosherfest participants.
If you’re processing credit cards, you’ve most likely heard of PCI compliance. What is it and how do you become compliant? We’ll walk you through it.
What is PCI?
The Payment Card Industry Security Standard is a set of guidelines that protect merchant and cardholder security. If a merchant intends to accept card payments, the data must be hosted securely with an approved provider.
Summer camps, snow removal and vacation services are only active for a small portion of the year. They require the ability to accept payments during those few months, but most processors will charge them a monthly fee or have the merchant reapply each year. Is there a better option?
Come the seasonal merchant account, which is custom-made for this purpose. There is no need to pay unnecessary fees or waste time on the application process each year. Credit checks, which potentially lower one’s credit score, do not have to performed each year. Additionally, if a merchant had credit problems during the year, it could prevent the merchant account from being opened entirely, or force them to get set up with a more expensive service. Unfortunately, past processing history does not entitle a merchant to the same service in the future. A seasonal account prevents these issues entirely.
The seasonal account allows a merchant to “press pause” on their account as opposed to a “hard stop”. This way, the account is ready whenever the business needs it and all that needs to be done is send the processor a re-opening letter.
However, there are several things to keep in mind:
An article by American Express offers some solid advice on precautions retailers should take to prevent losing business if unscrupulous customers claim they never received delivered orders.
Small businesses are generally hit hard by chargeback fraud. Aaron Press, Director, Payments & eCommerce for LexisNexis said, “We do know that small merchants invest less in fraud protection and are more likely to be defrauded because they have fewer ways to catch things in the process, And fraudsters know this.”
If your business receives too many chargebacks, aside from losing valuable, you can potentially damage your standing with the processing bank. If the chargebacks continue, you may even lose your merchant account and face difficulties finding another service provider.
Here are some tips on how to avoid chargebacks altogether:
According to PCI standards, a merchant may never store lists with customer’s card data on any medium which is not PCI compliant. Word documents and spreadsheets, even if they have a strong password, are not PCI compliant, and thus may never be used to store lists with card info. Even if you create a custom program with many levels of security, it is still not PCI compliant.
(The exception to this regulation would be to store the info of one card on a piece of paper. However, multiple numbers are never allowed, even on paper)