Credit Card Processing for Continuity Subscription Merchants

Travis Credit Union reveals in a recent study that 59% of Americans prefer to pay with debit cards or with credit cards only instead of using cash. 52% of the respondents say that this is because of convenience, mainly. It can be more convenient for merchants too, especially with a continuity subscription business model.

While convenient, continuity subscriptions are not without challenges if you do not have the right business model and credit card processing solutions to help you.

Keep reading this article and it will explain everything you want to know about a continuity subscription. It begins now!

What Is Continuity Subscription Business Model?

There are major benefits to this model. It is a recurring payment system, where a consumer will sign up for a subscription option at one time, adding his or her credit card details.

From then on, the user will incur a charge weekly, monthly, or annually, depending on the cadence per the details of the subscription they agreed to. Usually, after a period, a customer can renew a subscription.

Benefits of a Continuity Subscription

It offers a steady stream of revenue for a business, and customers have the convenience of automatically paying. This helps keep customers in the future.

Further, your company could make a better prediction of revenue, while also decreasing the costs of customer acquisition. Plus, subscriptions may attract even more customers.

If the consumer is unaware, that they signed up for a subscription, they can get aggravated when they see the charges the next month. This becomes the challenging part.

Challenges of Credit Card Processing for Continuity Subscription

While they offer benefits, on the one hand, your business also runs a higher risk of chargebacks.

Because of the high risk of chargebacks, your credit card processing solutions provider may decide to freeze your assets or close your account. In the event this would happen, it would make processing future transactions impossible.

A merchant who offers continuity subscriptions can be a target for billing scams .

Here are some more disadvantages that come along with a subscription business model and solutions to overcome these challenges.

Increasing Competition

No doubt that this is a popular business model, which also means you have competition. With more competitors offering subscriptions, you risk losing a valued customer. Don’t let this discourage you, it just means you need more than a subscription to set you apart.

You need a unique brand identity and value proposition to make your company stand out from the pack. Customers prefer working with merchants who have impeccable customer service. The human connection is important, even if billing is automatic.

Make sure that you answer your customer concerns quickly and with courtesy.

High Cancellation Rates

When you first embark on a brand new business venture, customer retention is critical. This is no different, even in a continuity subscription business model.

When beginning a subscription-based company , consider that you will have customer turnover. Once you do that, you will want to consider how you will avoid high cancellation rates.

There are many ways to keep your customers. Great customer service and offering new products is a good starting point.

Make it easy for customers to cancel, too. When you make it difficult, they will only resent you and give negative feedback to anyone who will listen. This will affect your ability to attract new customers.

To avoid this, you want a transparent cancellation policy.

Uncertain Revenue

Continuity subscription business models help with building a steady revenue stream, but that is over time. In the startup phase, it is still uncertain. You may question if subscriptions were a good idea.

Stay positive. Get through the storms. When you see a reliable income, the challenges will have been worth the while.

Ensure that you have a solid investment strategy before you launch. Upon building a loyal customer base, you will be in a solid position to grow and thrive.

Avoiding Your Sign-Up Agreement

When there is no commitment, it is much easier for a customer to agree to a one-time purchase. If unsatisfied, they can return their purchase and get their money back.

Things are not so simple with a contract, though, which is why customers can fear signing a service agreement. Customers are hesitant to commit if they are unsure they will receive value. The last thing a customer wants is to be stuck in a contract they are not happy with.

Therefore, merchants typically offer a free trial with no commitment to continue, making it simple to cancel.

Provide New Value

Customers today get bored quickly. As the merchant, you must consistently prove value, or your customers will leave.

Overcome this hurdle. Continue adding new and interesting products that are a part of your business model.

For example, Netflix changes the movies and shows they offer to stay relevant to their viewers.

Credit Card Processing Solutions

Financial institutions and traditional banks may turn up their nose to a merchant who offers subscription billing, recurring billing, and automatic payments because they are at high risk of chargebacks .

One way that you, as the merchant, can avoid it is to make sure customers are aware and remember that they have signed up for a subscription, using a recurring billing cycle. If they forget, try not to reverse the charges. Rather, let your customers know you will stop billing them in the future.

If your customer does not clearly understand the terms they agreed to, they may try to dispute the charge directly through their credit card company, not you. It is better for you, the merchant, to inform your customers of how to cancel billing or request a refund easily by contacting you, not their credit card company.

Stricter Requirements

Some financial institutions have tightened loose ends with their requirement regarding the free trial continuity business model. You need credit card processing solutions that give you multiple payment options besides a robust payment gateway.

Continuity Subscription Business Model

If you are concerned with how to process credit cards for a continuity subscription, there is no need to worry anymore. Zen Payments has been helping high-risk merchant accounts be successful for the past 15 years.

We are confident in our services. Zen Payments will provide you with the best credit card processing solutions. Don’t let chargebacks and the label of “high risk” weigh you down any longer.

Let’s get started on a solution now.