Continuity Subscription Merchants

Mar 7, 2023 | Payments

Continuity subscription merchants realize the importance of ongoing revenue to grow their businesses. This billing model allows companies to have a secure and consistent customer base that they can count on. However, there are challenges when it comes to passively processing financial transactions like this.

For instance, many banks do not consider subscription merchants or a recurring payment structure a traditional category. Due to the high sales volume and risk of fraud, banks limit and vet subscription merchant accounts. Therefore, businesses and entrepreneurs using this strategy must partner with a top continuity subscription merchant processor to find an efficient and secure way to ensure their ongoing transactions.

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What is Subscription Billing?

Subscription billing is a method of paying for a product or service regularly. For example, if you have a company that sells subscription boxes, a customer pays for an item regularly.

Subscription Boxes

The subscription box sales model has gained popularity over the past decade. Customers sign up for an arrangement of their favorite goods and get them delivered on a monthly basis. This is an excellent way for merchants to keep business consistent.

What is Continuity Billing?

Continuity Billing is when a customer is automatically charged for a product or service after giving their billing information. This may be part of a free trial or advertising offer. Many people forget to cancel after their free trial expires and receive a charge without knowing.

Getting A Continuity Billing Merchant Account

If a business wants to use continuity subscription merchants, the first requirement is a subscription merchant account that accepts credit cards. Businesses can miss out on many opportunities if they are not using recurring payments.

However, it is essential to note that acquiring an account through standard means may be challenging. This is often due to the risk of customers claiming chargebacks.

Chargebacks mean that the customer asks for their payment back. Although they are very common in any business, however, in subscription businesses, they historically happen more frequently.

A standard rule for the number of chargebacks allowed is 2% of all transactions. However, this percentage is steadily decreasing due to the number of resources they take up. If your business exceeds this, your account may be in jeopardy.

How to Cancel a Continuity Subscription Merchant

Go to your payment gateway and find the customers currently subscribed to continuity billing. This should be a separate menu item in your application. Under the continuity or subscription billing section, you’ll see a list of all individuals with their weekly, monthly, or yearly payments. To opt them out, go to each one individually and select the option to cancel ongoing payments.

Each online payment gateway has a different interface. It may also vary from the mobile application to the web view. Canceling continuity is specific to which gateway you are using, so if you need further guidance, go to your current gateway’s customer service department. Alternatively, you can contact the Signature Payments team to learn about our continuity subscription options. Find out about our low fees and streamlined new gateway technology.

The Challenge Behind Continuity Merchant Accounts

The price models of subscription businesses make them risky for traditional banking systems.

In this model, the customer’s credit card will be charged with recurring payments unless they cancel the subscription. Therefore, continuity subscription merchants need to make their charges aware to the customer and keep them informed of ongoing transactions before they become an issue.

However, the problem with chargebacks always stands. It is possible that a customer wins a chargeback claim due to a minor technicality on their part. Sometimes, when many customers claim chargebacks, the bank may lose money. So, continuity subscription merchants will always be considered a risk for banks.

Mitigating the Issues for Subscription-Based

Businesses

Subscription-based businesses must partner with a reputable continuity subscription merchant. A reliable merchant account provider will thoroughly understand this type of business model and financial institution. Additionally, some services help you make the most of continuity billing and reduce chargebacks altogether.

Marketing Subscription Billing

Continuity subscription merchants use a different style of marketing. They need to stay top-of-mind. Unconventionally, this awareness is not to complete the initial sale but to show value every month. Customers are billed repeatedly unless they cancel their subscriptions. So, customers can defer this service for single-month billing, free trial offers, or other types of charges that would not incur automatic renewals. Showing benefits to provide value otherwise is critical.

Continuity Subscription Accounts – How they Work?

In the subscription business and payment model, consumers are charged continuously until they opt for or unsubscribe. Any business can use this model to provide or deliver items or services that must be refilled or restocked monthly. The most common examples include subscription boxes and software services. For such businesses, a recurring model for a payment gateway is efficient and convenient.

But some merchant services misuse the trust of the customers. They hope the customer will forget about the subscription and automate payments after offering a free trial or a freebie. Such scams result in excessive chargebacks.

Bottom Line

The biggest issue a business may face is to have the merchant account suspended even though it was not their fault. Dependable merchant account providers like Signature Payments have established partnerships to help reduce the risk of chargebacks.

This way, subscription-based businesses can focus on growing business rather than dealing with the issues associated with continuity billing.