How to Start Merchant Account for Subscription and Membership?

With the increase in technology, the internet has become a very common thing, and it has opened a number of opportunities for business/entrepreneurs. These businesses can be product base as well as the information base, out of which most of them provide memberships, which assure its customers’ exclusive experience. However, it is not that easy to make this business enterprise work and even more difficult to make it profitable venture as it is way difficult to collect membership fee from customers online, which is done via credit card mostly.

Financial risk and reputation are always the main concern of any financial institutions. Any wrong practice can result in damaging the image of the business. Sites which offer memberships are regarded as high risk merchants, irrespective whether they practice illegal or shady things or not, due to which it becomes difficult for the business owner to find an institution willing to accept its application for merchant account and even more difficult to find an institute which will offer a reasonable terms on his account.

Why considered as “High-risk”

In the year 2010, the proprietors of many membership websites found their merchant account closed abruptly. The reason for this action was new guidelines released by MasterCard that put certain practices common to the membership site business model under much greater inquiry or analysis. Before MasterCard implemented new rules, many membership sites used techniques that were widely regarded as deceptive or even fraudulent. Not only MasterCard changed its policies, Visa had also issued similar guidelines. This resulted in conceding all the membership sites as high risk merchants.

The practice followed by Membership Sites

Let us discuss the points that make Membership sites as High risk merchant:

• Negative option enrollment: The customer makes a single payment for a product or service, but in doing so they are automatically signed up for a paid monthly subscription which they must actively cancel or opt out of to avoid being charged.
• Free trials: The customer or member is promised something for “free” (including “deferred billing” or “just pay for shipping!”), but the process of obtaining the “free” item or service results in them unknowingly being signed up for a paid membership or subscription.
• Burying terms in the fine print: The membership site makes the terms of its charges and refund policy difficult to find by hiding them in the middle of a lengthy user agreement, or in tiny text in some obscure corner of the website.

Affect on business

Your membership site may be entirely forthright and honest with its members about any charges to their cards, but being part of an industry with a reputation for deception makes it harder to obtain a membership site payment processing account – especially one with decent rates and conditions. Being the part of an industry with a reputation for precariousness makes it harder to secure an enlistment site portion taking care of record, especially one with respectable rates and conditions. Your best decision is to work with a charge card dealing with an association that has some skill in high peril shipper accounts

How Do You Select the Right Merchant Account?

If you have decided that you need to get a merchant account, you will need to consider which is right for you. Typically, acquiring banks do not directly provide accounts. Instead, they work with merchant service providers to act as middlemen.

Think about how many transactions you expect to be processing each month in the coming year. Also, think about what the average value of the transaction may be. Similarly, you will need to plan how customers will pay you.

Documents required to get a Merchant Account:

Personal Documents: Driving License and Personal Bank Statements for the recent 3 months

Business Documents: Article of Incorporation, Business Bank Statements for the recent 3 months, Processing Statements for the recent 3 months, Bank Letter or Void check, EIN - IRS, and a few supporting documents based on the business type.