Fraud Prevention - PAYARC

How to Choose the Right Nutraceutical Merchant Account

Finding the perfect payment processor shouldn’t be the most challenging part of starting a business. For those in the health supplement industry, however, it can often be an obstacle that they aren’t prepared for. In fact, when it comes to choosing the right nutraceutical merchant account, the expert advice available is limited – or even conflicting.

Thankfully, there are payment processors with experience in this industry that understand the unique billing and processing challenges. Here are some of the proven tips for identifying and choosing the payment processor that can partner with you to grow your business goals:

Find a Nutraceutical Merchant Account Provider that Understands Your Business Model

There have been horror stories of businesses launching their online stores with Shopify or other large-name retail partners, only to find their websites shut down after two months. It’s always best to research ahead of time and ensure that your merchant account provider isn’t just familiar with nutraceuticals, they welcome the business.

Nutraceutical-friendly merchant partners should be sought from the start. Look for vendors that use language stating they are friendly to your business. Terms like “processing for free trial merchants,” “fraud prevention” and “lower chargebacks” may indicate that they are equipped to handle the special challenges that your industry faces. Seek out companies that mention nutraceuticals by name, if possible, and can handle unique business models, such as $1 subscription trials.

Know Your Customer

While most shoppers will prefer to buy via their computer or even a mobile payment gateway, there are still shoppers who feel comfortable placing orders by phone. Since nutraceuticals are largely sold via “card not present” transactions, it’s important to know if this also means that your transactions will be protected when made by mail, phone, or the internet. Be sure to lay out your business model before you apply to be sure you are accounting for all methods of purchase – and to ensure your chosen merchant account allows for all possibilities.

Seek out Help

Applying for a merchant account can be a daunting process. It’s a bit more complicated for those in nutraceuticals. Is the processing for applying considerably more cumbersome due to the nature of your business? Will you get paired with an account rep that understands your unique needs and can help you through the application with the best chances of being approved? Don’t be afraid to tell your account rep how your business works and what concerns you have about applying. This isn’t the time to hide things, and your application can go more smoothly when you have partnered fully with your rep.

Avoid Restrictions

Even if your chosen merchant account provider is well-versed in your industry, not every part of it may meet their regulations. Even those who offer a nutraceutical merchant account may have restrictions on how you can sell through their accounts. These restrictions may be set by federal, state, or local regulations, as well as any limitations imposed by each card company individually. Ask your account rep what their procedure is for communicating changes to these restrictions over time. If something was allowed to be sold through your account at the start of your contract, what happens if it is no longer allowed? Ensure your processor has a plan in place for setting you up to always be compliant.

Ask about Chargebacks

Chargebacks are the elephant in the room, but they shouldn’t be ignored. The right nutraceutical merchant account provider won’t be put off by your asking about them, and will instead have advice for ensuring your chargeback number are kept as low as possible. In addition to providing you with best practices and tools for communicating with customers, they should be able to tell you how to read statements and use reporting to spot trends in your chargebacks. An open door policy is key to having a good relationship with your merchant account rep. If you don’t feel that they are interested in communicating and helping you succeed, they are not the right choice for you.

Running a successful nutraceuticals business can be rewarding – even with its unique challenges. One way to make sure you meet growth goals and increase customer loyalty is through taking advantage of the services of a reputable payment processor, one that offers optimized payment options for a natural products e-commerce store. In addition to keeping transactions seamless, they should act as an educator and advocate along every step of your journey, helping your dispute chargebacks, get access to up-to-date transaction info, ensuring industry compliance, and planning for the future.

Payarc

November 15, 2021

Fraud Prevention, Security

payment-processing
Turning holiday returns to customers and avoid chargebacks
Merchants everywhere prepare this time of year for shops abuzz with gift givers and gift recipients bringing stuff back to a store — more elegantly called “returning goods.”

At the same time, folks who shopped online (or whose relatives and friends did) try to figure out how to return items: Clothing that doesn’t fit, goods damaged in shipping, or the book they’ve already read.

Dealing with holiday returns requires a lot of merchant focus and energy too. But what else fills merchant minds this time of year?

While celebrating a successful 2017 holiday season, merchants want to avoid chargebacks when they can — and experience a successful start to this retail year by attracting new and return customers.

There’s a way to accomplish it all in one go. Let’s take a look.

Holiday Season — Return Season — Chargeback Season

One follows the other, meaning there’s no rest for the weary eCommerce merchant. The months following annual winter holidays, dubbed “chargeback season” or “Returnuary” by clever merchants can indeed cost them dearly.

Yes, chargebacks may be a cost of doing business. But every merchant’s goal should be to avoid chargebacks and associated fees whenever possible.

Which is why helpful and clear return policies and well-trained staffs make a huge difference to your success. When returns are too difficult or time consuming, customers become frustrated. Inevitably, some will opt to file chargebacks so they can get their money back…

…And that means taking the money from you. Ouch.

Negative chargeback consequences include:
- Lost revenue;
- Lost operating costs (making sales and shipping products);
- Fines, fees, and penalties added by banks and card brands;
- Lost merchandise when either true or friendly fraudsters strike;
- Management challenges associated with lag time between purchases and refunds that skews revenue reporting.
Of course the worst penalty for an eCommerce merchant would be termination by the acquiring bank of a merchant account, needed to accept payment cards in the first place.

Cancellation occurs if a merchant’s chargeback rate is too high (greater than 3%). Card sales finished — the end of many an online business. So eCommerce merchants try to avoid chargebacks all the time, not least during holiday return seasons.

Procrastination Pushes Chargeback Season to Mid-Year

Online merchants can be forgiven for believing their 2017 holiday shopping season is done and dusted. But believe it or not, 5% of U.S. gift givers are still shopping, taking advantage of sales and gift cards they received.

Said Matthew Shay, NRF President and CEO, “Even though many consumers got a head start with holiday shopping early in the season, millions more are leaving their gift buying to the last minute and beyond.” The good news? Procrastinators represent more customers.

So it’s not too late to avoid chargebacks from first quarter sales — even if you need to replace the return policies in place prior to year-end. Just get to it! Update your website following best practices below.

For ideas, check out the U.S. News & World Report guide to standard and extended holiday return deadlines (and other details) for top retailers during the 2016-2017 holiday season. Benefit from seeing how the big guys do it. Who knows? Good ideas from others may help you avoid chargebacks too.

And be sure to continue monitoring new sales for potential fraud. Just because the holidays are over, bad guys haven’t stopped being bad.

Savvy Merchants Know Returns Present Opportunities — Delight Your Customers and Avoid Chargebacks

Be Prepared — good advice that isn’t just for Boy Scouts. Local retail stores and eCommerce businesses do best when they’re poised to process returns in ways that delight customers.

Be sure to have adequate numbers of trained staff on hand, specifically assigned to handle returns.

Publish a clear return policy. If certain items are excluded (like sale items), say so. Publish the policy and place it prominently throughout a store and near cash register(s). Print information on store receipts.

Publish the policy on your website. Include a page in the main navigation, repeated on product pages and throughout the checkout process. Consider requiring customer acknowledgement via a pop up checkbox before a transaction completes.

Include in the policy:
- Items that can (and cannot) be returned or exchanged
- Deadline for returns or exchanges (after purchase)
- The required condition, including original packaging (or not)
- How and when customers can make returns or exchanges
- Whether a receipt is required (or not)
- Who pays for return shipping (if applicable)
- How refunds will be issued (cash, payment card credit, store credit, and the like)
Creating a special holiday return policy helps customers who buy gifts several weeks before a holiday. By allowing returns for an extended period, everyone is covered — including gift recipients.

For example, allow returns up to 90 days from date of purchase, or by January 31st — whichever comes first. Be flexible, but clear; include information about what customers can expect.

If you wait to receive returned items, refunds may take some time. Say so up front. Above all, make returns easy for customers. Good advice at all times, it helps merchants avoid chargebacks year round.

Generate printable packing slips with return instructions, and anything else you believe will streamline the process for customers. Have them fill out a special form including email address. Promise to tell them when you receive their return, and when it will be processed.

Customers appreciate the courtesy — and you can piggyback new sales or discount opportunities in the email message you’ll send when their return arrives. Then stay in touch unless they opt out.

Wouldn’t it be great to convert every return into a new sale, and every gift recipient into a new customer?

Conclusion

When you’re in search of the eCommerce solution that both saves your money and gives you peace of mind, look no further than PayArc.

PayArc’s industry leading payment processing solution gives you all the tools you need to accept payments online, while lowering your risk to fraud and giving you some of the lowest rates in the industry.

We provide all-in-one eCommerce solutions including dozens of shopping cart integrations to choose from — fraud and risk tools — robust reporting tools — and PCI-DSS Level 1 protection.

PayArc helps take the headache out of credit card processing — so you can process with confidence. We want to act as your payments advisor and consultant, not only your processor.

You have a business to run. Our business is to help you run it better. Give us a shout today.

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Payarc

November 15, 2021

Fraud Prevention, Industry Insights

chargebacks
Midigator: Simplify Your Payment Disputes
Chargebacks are a huge problem that face merchants today. The incidence of friendly fraud is around 23% of all fraud claims, so disputing chargebacks can be a big benefit to your business. There are several services designed to help merchants manage their chargebacks, including Midigator: a user-friendly, effective software with many features to make disputes easy to keep track of. If you’re concerned about how chargebacks are affecting your business, consider monitoring them using Midigator.
- Intelligent Dispute Responses: This feature will generate a customized chargeback response that analyzes evidence relating to the chargeback and helps you build a package to win the dispute.
- Chargeback Prevention Alerts: When a customer disputes a transaction and the issuing bank sends an alert through the network, Midigator informs you of the chargeback and allows you to easily refund the customer, stop order fulfillment, and update order information. Once this has been done, the dispute is resolved and no chargeback occurs.
- In-Depth Analytics: With the analytics feature of Midigator, you can identify marketing strategies that produce more high-risk customers and discontinue them, while also zeroing in on strategies that produce loyal customers; determine the chargeback reason code that most often turns up in order to reduce friendly fraud; find out when in the subscription cycle customers are most likely to file a chargeback and remind them of your cancellation policy instead; learn which products are being charged back the most and reduce the risk by removing those items from your inventory; discover new markets overseas and see if the reward is higher than the risk and which price point is most likely to make customers charge back the purchase; and determine the preferences of different issuing banks to create the best strategy for winning a chargeback.
- Custom Notifications: Pick which metrics you want to monitor and receive email or dashboard notifications about them: Chargeback Ratio, Chargeback Count, Chargeback Dollar Amount, Total Sales, Transaction Counts,and Card Network Regulations.
- Real-Time Account Reporting: Midigator compiles your data for you to see in real time so you can make educated decisions about your business.
- DisputeFlow: Instead of manually downloading chargeback data from different portals, copying and pasting data into documents, struggling to understand submission expectations, and wasting time searching for response results, Midigator’s DisputeFlow feature receives all chargeback information in a single portal,builds dispute responses, sends packages with one-click submissions, and monitors detailed reporting and automatic results. This significantly cuts down on the time and frustration spent on fighting chargebacks.
Midigator is a unique software built for merchants, by merchants. If you want to prevent chargebacks and reduce payment processing risk, fight chargebacks and recover lost revenue,and automate tasks and streamline processes related to chargebacks, Midigator may be right for you. After all, your business depends on have the least chargebacks possible!

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Payarc

November 15, 2021

Fraud Prevention

chargebacks; fraud-prevention; payment-processing
Cash vs Credit: Should Your Business Go Cashless?
With nearly 80% of Americans preferring cards to cash and smartphone users paying via digital wallet, there seems to be a clear winner in the cash vs credit debate.

For online businesses, cashless payments are a foregone conclusion and even brick and brick-and-mortar stores see fewer bills, coins, and checks. But is it safe for your business to go completely cashless?

Taking online businesses out of the equation, traditional or hybrid online-offline businesses may have a cash vs credit dilemma. According to a 2016 consumer payments study, businesses in these categories have customers that prefer to pay by credit or debit card:
- Department stores
- Discount stores
- Dine-in restaurants
- Gas stations
- Supermarkets
Fast food chains and coffee shops still see a higher flow of cash sales.

The study indicates that the majority of consumers prefer to use credit or debit cards for larger purchases. It also noted that 73% of Americans use less cash now than ten years ago.

There are many upsides to shifting with the tide of consumers to a cashless model. Not only does it appeal to customers who no longer carry cash with them, but also offers better service, security, and easier financial reconciliation for your business.

Customer Appeal

Seven out of 10 Americans are reported to hold at least one credit card, from college students to baby boomers. Recent developments like EMV chips and contactless payments mean many banks are phasing older technology to keep up with the demand. And with 2.1 billion digital payment users expected by 2019, staying on top of cashless payments is no longer just a matter of innovation, but a necessity.

Better Service

Dealing with cash means slower customer service, whether that involves digging for change or counting out bills, and more room for employee error. Credit or debit cards or contactless payments allow businesses to check out more customers quicker, correctly, and more efficiently.

Improved Security

Cashless payment systems significantly reduce the risk of in-store theft and fraud. It promotes customers’ peace of mind, your employees’ safety, and your own business interests; for these reasons, not having to keep cash on premises can be a good thing.

Easier Reconciliation

From the employee hours it takes to manage your revenue and collect and store change to bank deposit fees and armored truck pickup costs, cash-carrying businesses have to pay for the privilege. Instead, you can free up your finances and reduce overhead with credit and debit cards, which are automatically reconciled and paid to your merchant account.

Overall, going cashless can improve the quality of business and help you meet customer service needs and scale quicker.

But before you take a stand on cash vs credit, it’s good to be aware of the potential drawbacks as well. These can include potentially alienating customers, the risks of card or digital fraud, and additional processing costs.

Disconnected Customers

Depending on your business sector and target market, you may end up alienating some of your customer base if you go cashless. Having a good understanding of how your customers pay, their preferences, and your industry standards will go a long way to helping you make an informed decision.

Processing Costs

Fees for processing credit and debit cards are usually between 2-3% of the transaction value. More customers with cards mean more fees. On the upside, consumers statistically buy more and make larger purchases with cards than cash. You can also look out for competitive payment processing prices.

Fraud Risks

Cashless systems are not completely secure and you will have to watch out for card fraud. Modern technology and fraud detection do help, but you are still responsible for sensitive customer data and PCI compliance.

Going Cashless

If you’re sure that cashless is the right choice for your business, here are a few tips to get you started:
1. Track customer payment methods to see how many pay cashless already
2. Consider the additional costs of going cashless
3. Get customer feedback on how their shopping experience would change without cash
4. Create a comprehensive communications strategy from signage and employee messages to online updates
5. Allow for a transition period so both staff and customers can get used to the change
Need some professional support?

PayArc global network provides merchants with the ability to scale their business in over 25 currencies. We offer credit and debit card transaction processing with low fees and discounts for select merchants. With PCI DSS protection and over 300 payment integrations, we aim to take the headache out of credit card processing.

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Payarc

November 15, 2021

Fraud Prevention, Industry Insights

payment-processing
MasterCard Reason Codes
No business is immune to chargebacks. Chargebacks occur when a customer disputes a transaction.

Customers may dispute transactions for a number of reasons, including non-delivery of products and services, miscommunication about a refund, misunderstanding of the amount of the charge, or a variety of other reasons.

Once you receive a chargeback, you will want to track the progress of your resolution process. You can do so easily with reason codes.

Here’s how reason codes make it easy for you to check the status of your disputes or chargebacks:

Mastercard Chargeback Reason Codes Demystified

MasterCard chargeback reason codes are a set of four digits beginning with the 48xx.

Mastercard Reason codes fall under four categories.

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Authorization

4807 – Warning Bulletin File

4808 – Authorization-Related Chargeback

4812 – Account Number Not On File

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Cardholder Dispute

4841 – Cancelled Recurring or Digital Goods Transactions

4853 – Cardholder Dispute

4854 – Cardholder Dispute – Not Elsewhere Classified

4855 – Goods or Services Not Provided

4859 – No Show/Addendum/ATM Dispute

4860 – Credit Not Processed

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Fraud

4837 – No Cardholder Authorization

4840 – Fraudulent Processing of Transactions

4849 – Questionable Merchant Activity

4863 – Cardholder Does Not Recognize/Potential Fraud

4870 – Chip Liability Shift

4871 – Chip/PIN Liability Shift – Lost/Stolen/Never Received Issue (NRI) Fraud

Point of Interactions Errors

4831 – Transaction Amount Differs

4834 – Point of Interaction Error

4842 – Late Presentment

4846 – Incorrect Currency Code

The only way to avoid chargeback disputes is to avoid chargebacks altogether.

Here are a few proven tips to prevent chargebacks:

Magnetic stripe technology can be easily compromised by the sophisticated hackers of today. Thankfully, chip technology is incredibly difficult to hack, which allows for a safer and more secure environment for your business and your customers.

When chip cards were globally adopted in 2015, important changes were also made in how liability is assigned for credit card fraud.

Mastercard Chargeback Prevention Tips:
- Process credit immediately
- Share the return or exchange policy before completing the checkout process
- Keep dissatisfied customers in the loop about the steps you are taking to resolve the dispute
- Obtain the customer’s signature for items picked up in store, work orders, etc
- Bill customers after products are shipped or service provided
Need Help with a Chargeback Dispute?

If your business has been subject to a Mastercard chargeback dispute, or if you have received an inquiry – you need to act fast.

Get in touch with us right away so we can help you successfully navigate a Mastercard transaction dispute with ease and confidence.
Payarc

September 19, 2021

Fraud Prevention
Visa Reason Codes
Visa reason codes are a string of numbers assigned to different explanations for chargebacks. All card brands have their own reason codes, and they’re meant to keep things organized when a dispute occurs. Visa has 4 categories for disputes: Fraud, Authorization, Processing Error, and Consumer Dispute.

Fraud Codes

Fraud is given the reason code 10. There are 5 fraud reasons:
- 10.1: EMV Liability Shift Counterfeit Fraud
- 10.2: EMV Liability Shift Non-Counterfeit Fraud
- 10.3: Other Fraud – Card Present Environment
- 10.4: Other Fraud – Card Absent Environment
- 10.5: Visa Fraud Monitoring Program
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Authorization Codes

Authorization is given the reason code 11. There are 3 authorization reasons:
- 11.1: Card Recovery Bulletin or Exception File
- 11.2: Declined Authorization
- 11.3: No Authorization
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Processing Errors

Processing Errors are given the reason code 12. There are 7 processing error reasons:
- 12.1: Late Presentment
- 12.2: Incorrect Transaction Code
- 12.3: Incorrect Currency
- 12.4: Incorrect Transaction Account Number
- 12.5: Incorrect Transaction Amount
- 12.6: Duplicate Processing or Paid by Other Means
- 12.7: Invalid Data
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Consumer Disputes

Consumer Disputes are given the reason code 13. There are 9 consumer dispute reasons:
- 13.1: Services Not Provided or Merchandise Not Received
- 13.2: Cancelled Recurring Transaction
- 13.3: Not as Described or Defective Merchandise/Services
- 13.4: Counterfeit Merchandise
- 13.5: Misrepresentation of the Purchased Good and/or Service
- 13.6: Credit Not Processed
- 13.7: Cancelled Merchandise/Services
- 13.8: Original Credit Transaction Not Accepted
- 13.9: Non-Receipt of Cash or Load Transaction Value at ATM
Payarc

September 14, 2021

Fraud Prevention
Chargeback Ratios
Whether you’re a high-risk or low-risk merchant – chargebacks apply to everyone. Not only do chargebacks harm your bottom line, but they can also negatively impact your standing with card associations.

What exactly are chargebacks?

Chargebacks happen when a customer disputes a transaction. Customers may dispute transactions for a number of reasons, including non-delivery of products and services, miscommunication about a refund, misunderstanding of the amount of the charge, or a variety of other reasons.

Whether you realize it or not, card associations are paying attention to your chargebacks! Specifically, they keep an eye on your chargeback ratio.

What is a chargeback ratio?

A chargeback ratio measures the ratio between the number of chargebacks to the number of transactions you have earned as a merchant.

Calculating Your Chargeback Ratio Is Easy

Simply divide the number of chargebacks by the number of transactions to determine your chargeback ratio. However, it’s important to note that there is an important distinction in how Mastercard and Visa calculate chargeback ratios.

How Visa Calculates Your Chargeback Ratio

Visa divides the number of chargebacks for the current month by the number of transactions for the current month.

How Mastercard Calculates Your Chargeback Ratio

Mastercard, on the other hand, divides the number of chargebacks for the current month by the number of transactions of the previous month.

Regardless of the card association, it’s crucial that you keep your chargeback ratios to a minimum so that your business stays off the “risk list”.

As a general rule of thumb, a chargeback ratio at 1% or above can potentially harm your business, so you will want to do everything you can to prevent chargebacks from occurring.

Here are a few proven ways you can prevent chargebacks:

Chargeback Prevention Tips that Work
- Process credit immediately
- If you have agreed to issue a refund to a customer, let them know when they will receive their refund.
- Be sure to clearly explain your refund or exchange policy before completing your customer’s order.
- Obtain the customer’s signature for items picked up in store, work orders, etc.
- You may want to consider billing customers only after products are shipped or service has been provided.
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Need 1-on-1 Help Navigating a Chargeback Issue?

When it comes to chargebacks, timing is critical.

We have extensive experience in helping businesses successfully navigate chargebacks.

Get in touch with us now for one-on-one help in resolving a current chargeback issue or to create a game plan to limit chargebacks in your business.

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Payarc

April 5, 2021

Fraud Prevention
Second Presentment

In commerce, presentment refers to furnishing a bill, note, or other document as for acceptance or payment. In most transactions, a merchant usually only needs to complete one form of presentment. However, if a transaction is disputed and results in a chargeback, the merchant must submit a second presentment (sometimes referred to as re-presentment) in order to prove that the transaction was valid.

Both MasterCard and Visa have rules regarding the second presentment part of their chargeback resolution process. The chargeback resolution process exists to collect evidence and determine in either the merchant’s or consumer’s favor. The rules are similar, as second presentment is a necessary step in proving whether or not a chargeback was valid.

When going through Visa’s process, this part is called “Dispute Submission.” When dealing with fraud & authorization issues, Visa will determine whether or not a charge was fraudulent based on the information they have. When dealing with consumer & processing errors, Visa will have issuing banks fill out an enhanced questionnaire, which counts as what we would call “second presentment.” This questionnaire aids Visa in determining the outcome of the chargeback resolution and, if sufficient evidence is presented to prove that the chargeback was invalid, can result in a judgment in your favor.

Second presentment in the MasterCard chargeback resolution process falls under “Cycle #2.” When the acquiring bank refutes the issuing bank’s first chargeback, the acquiring bank must present evidence that the transaction was valid and that the chargeback should not have been filed in the first place.

In order to present sufficient evidence that the transaction was valid, be sure to keep careful documentation of all transactions as proof. These documents can include things like a signed sales or delivery receipt or correspondence with the customer. Be aware of the timelines that Visa and MasterCard have set forth in their guides, to prevent violating the time limit for second presentment.

Payarc

March 23, 2021

Fraud Prevention
The $1 Trial Tips All Trial & Continuity Merchants Need
“Try one month for just $1!”

We’ve all seen these types of offers. Some of us have signed up for them ourselves. The benefit trial & continuity merchants offer is clear and concise: Try this product at a deep discount.

It’s a tempting offer — and an effective one. Many merchants offer free or $1 trial options to allow consumers a chance to try their subscription products at a lower risk. It’s a tried and true marketing tactic that has helped many businesses catapult their recurring revenue to new levels.

Unfortunately, “trial & continuity” merchants are part of the high risk segment.

With trial & continuity merchants, customers that sign up are agreeing to an automatic recurring subscription to goods or services. That means they must pay for the subscription service or proactively decline it before billing.

Having the ability to accept and process recurring credit card transactions is life blood to a business operating under the trial & continuity model. Because of the nature of the opt-in, this business model is also prone to increased chargebacks.

The very nature of this billing model and the accompanying terms and conditions for late cancellations make buyer’s remorse a tangible reality for these merchants. Buyer’s remorse leads to friendly fraud chargebacks, where a customers calls their issuing bank to claim they did not authorize the charge. In turn, a chargeback is initiated and the merchant ends up paying a steep price in fines, fees, and penalties.

Too many chargebacks can land a merchant on the card association’s chargeback monitoring programs, which come with additional fines and penalties. Beyond that, a merchant can easily have its merchant account terminated.

This type of billing model has been around for awhile, and many merchant banks and processors have lost their taste for it; some won’t even extend a merchant account to merchants that operate in this way.

So what is trial & continuity merchant to do?

Focus on the Future of the Subscription Business Model

Subscription-based businesses are only gaining momentum, and we all have millennials to thank for that. According to a recent survey by Vantiv and Socratic Technologies, 92% of millennials have active subscriptions. It makes sense, considering this generation was raised with the Internet in-hand. On-demand products are a crux of everyday life, and merchants have jumped on-board to serve this market with everything from food (30% of subscriptions), personal grooming (34% of subscriptions), and household items (29%). That doesn’t even account for service subscriptions like online dating, music, gym membership, and online video content.

While subscriptions make consumers’ lives easier and more convenient, the subscription-based billing model has ample benefits for merchants, too:
- Increased Customer Lifetime Value: The subscription-based billing model has consumer loyalty built-in. The customer simply clicks the “buy” button once, and they are opted in to receive their product monthly or quarterly with no additional action needed. As a regular customer, these consumers are easier to up- and cross-sell. The $1 free trial sweetens the deal and expands a merchants market so more people can try the goods at a discounted rate. Happy customers will pass word along to their friends.
- Savings Equals Expanded Customer Base: Offering a $1 trial option is a tremendous way to get more eyes on your product and more fingers on the “buy” button. But subscription services often offer unit discounts as part of the subscription package. This is enticing to consumers of all age ranges. Additionally, the ability to space out payments over time makes the cost more palatable for some. It’s easier to pay $50/month rather than $600 for the entire year. Marketing is integral to accurately communicating these benefits to consumers in a compelling way.
- Predictable Revenue: Subscription billing models mean recurring revenue and recurring revenue means predictable revenue. A regular cash flow helps small businesses and startups stay afloat and actually compete against their well-established counterparts.
Naturally, the next question is: “How do I streamline subscription payments for my $1 or free trial product?

The Holy Grail of Payment Processors for Trial & Continuity Merchants

First and foremost, trial & continuity merchants should find a payment processor that specializes in high risk merchant accounts. Beyond that, merchants should consider the following:
- Does the processor offer an intuitive dashboard to track subscriptions (including upsells, downgrades, and cancellations)?
- Does the gateway integrate easily with your sales system?
- Will they help you manage true and friendly fraud chargebacks and advise on strategy to minimize chargebacks?
- Are they able to minimize card declines and help reduce churn?
- Are they a cost-effective partner? Can you opt into customized processing fees based on a time-period (monthly/quarterly/annual) rather than per transaction?
- Can they help you manage and streamline multichannel payments (mobile, desktop, app)?
- Will they aid and respond promptly to any issues arising out of “$1 trials” including card declines and chargebacks?
- Do they offer next-day funding? Cash flow is king, so be sure you understand how funds will be transferred to your account.
Beyond customer relationship management, recurring billing capabilities, and multichannel payment acceptance, merchants should find a payment processor they trust. Working with a processor that also serves as an advisor can boost the bottom line.

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Trackbacks/Pingbacks
1. Optimizing Payments for Your Natural Products Ecommerce Store | PayArc – […] natural products eCommerce business models include sales and marketing strategies like trial offers and subscription services (with recurring billing)…
2. How to Position Your Subscription Box Business for Success | PayArc – […] subscription box business falls under the trial & continuity merchant category. These merchants operate under a recurring billing business…
Payarc

November 15, 2020

Fraud Prevention, Industry Insights

free-trial

Find a Nutraceutical Merchant Account Provider that Understands Your Business Model

Know Your Customer

Seek out Help

Avoid Restrictions

Ask about Chargebacks

Holiday Season — Return Season — Chargeback Season

Procrastination Pushes Chargeback Season to Mid-Year

Savvy Merchants Know Returns Present Opportunities — Delight Your Customers and Avoid Chargebacks

Conclusion

Customer Appeal

Better Service

Improved Security

Easier Reconciliation

Disconnected Customers

Processing Costs

Fraud Risks

Going Cashless

Need some professional support?

Mastercard Chargeback Reason Codes Demystified

Authorization

Cardholder Dispute

Fraud

Point of Interactions Errors

Mastercard Chargeback Prevention Tips:

Need Help with a Chargeback Dispute?

Fraud Codes

Authorization Codes

Processing Errors

Consumer Disputes

What exactly are chargebacks?

What is a chargeback ratio?

Calculating Your Chargeback Ratio Is Easy

How Visa Calculates Your Chargeback Ratio

How Mastercard Calculates Your Chargeback Ratio

Chargeback Prevention Tips that Work

Need 1-on-1 Help Navigating a Chargeback Issue?

Focus on the Future of the Subscription Business Model

The Holy Grail of Payment Processors for Trial & Continuity Merchants

Trackbacks/Pingbacks