As an agent who offers a dozen payment processing solutions, I see several banks no longer accepting risk-free trials. Thus, it’s more important than ever to choose the right payment processor. Trial marketers will be put under heavy scrutiny when applying for a merchant account. This will significantly crimp the ability of some marketers to scale sales upwards. With a short trial period, it’s difficult to find banks to accept you. Once your chargebacks are over 1 percent the list gets slimmer.
Following are three important factors to keep in mind during your search.
Subscription, Continuity, and Risk-Free Trials
Many processors have stopped accepting applications for 14-day trials. Some payment processors won’t take 14-day trials, but will take 30-day risk-free trials. The issue is 14-day trials barely give consumers enough time to receive and experience the benefits of their purchase, before being rebilled. Other payment processors with take continuity offers of no risk free trial is involved.
Past Experience Matters
Do you have previous experience marketing a 14- or 30-day trial? If so, were you able to keep chargebacks under 1 percent or 3 percent? Does social media feedback say positive reviews about your product? Is your Better Business Bureau rating positive? If the answer to any of these questions is no, obtaining credit card processing can prove challenging. Payment processors still accepting risk-free trials want to see a marketer with a successful track record of having previously offering risk-free trials. Having a full-funded bank account and good credit isn’t enough to get approved anymore.
Your Bank Balance
Most merchants can apply for approximately twice (2X) their average monthly bank balance as a requested monthly processing volume. Rotate the bank balance in the account you’ll be using to apply for credit card processing. Merchants should pay for as many costs as they can from their bank account. Payment processors would rather see a monthly average of $38,000 in the bank with rotation of their funds versus $50,000 that sits untouched.
Here are some key terms you should be familiar with when considering risk-free trials.
Subscription - Several payment processors have pushed merchants into using subscription versus continuity programs. A subscription model automatically bills the consumer for a set period of time. Subscription is similar to continuity, but has an end date that usually cuts off after 12 months.
Continuity - The customer’s credit card gets billed regularly (usually once per month) until the consumer cancels the product or service.
14-/30-Day Risk-free trials - Offer consumers a discounted rate for their first order. In many cases, the consumer only pays the shipping and handling costs. Unless the customer cancels in time, he/she will be billed every 30 days for the product or service.
Types of Products - Skin care, ingestible items, and membership clubs are the most common items sold via risk-free trial.
Straight Sales & Easy Payments - Payment processors like to see straight sales (or one-time purchase). Knowing the consumer won’t be charged again and no additional items will be purchased brings payment processors comfort. Straight sales usually get quick approvals without hassle or requests for extra paperwork.
Types of Products - Blenders, cleaning products, cookware, exercise equipment, make-up.
Although trial offers haven’t met their demise just yet, finding a bank that will accept them is the most challenging part of the process. What's more, where you apply depends on your marketing background, funding, and the billing model that your product offers.
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Curtis Kleinman is Chief Operating Officer at Swipe Payment Solutions.