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: