Subscriptions and CC processing - issues?

[justguy]

We have just been told by our CC processor that, after 4 years of being with them (and no issues), they now want 1/3 of our subscription credit card revenue held in reserve for future chargebacks in case we close the site.

Anyone else have experience with this?

Despite our being a B2B site, usually company CCs used, 5 years track history, profitable etc. this has become a non-negotiable issue.

[skyhawk133]

Sounds like it was somewhat of an automated message if you such a good track record. I would fight it and pursue another merchant account. I use paypal for my subscriptions.. i guess that is not much of a help :)

[Miklo]

Well, from your story, it sounds that you did not receive very many chargebacks in those 5 years. Normally, a credit card processor will keep a 5 or 10% rollover reserve to cover for this, unless you have many chargebacks.

Could you give us more details, like location of your business, business model and average price/order?

I certainly would not agree with 33% held in reserve! Try to negotiate, if they don't allow this, find another processor. You can always show them your processing history with the other processor to negotiate.

[justguy]

Hiya,

Yup - chargebacks are very low indeed. And usually reversed or the customer re-purchases (an act of course invisible to Worldpay, they still count the chargeback).

Based in the UK, subs are £99 per year usually charged on a company credit card. Other sales range from £70 to £10k.

Worldpay have totally refused to discuss the terms ; an account that handles over £1m in CC charges / year. Their rules have flagged us as a risk (business news site?) and no discussion will change their mind.

Their solution? Charge someone each month. Right ... let me charge the CC of an Fortune 100 FD a sub each month. Not exactly viable. Plus, despite only 1/2 the CC charges being related to subs, they have looked at the whole CC account as subs based and not accounted for the other sales being on different terms.

I used to rate WP very highly but their service is now shocking, regular downtime and charges that are gradually going up and up (especially for multi-currency transactions). I would tell anyone with reasonable volume to stay clear.

With 5 years of CC processing history showing low %age chargeback, they are still not interested.

And getting the standard merchant aco#*$! providers to call has proved a nightmare. It is like they do not even want your business.

Wish I was based in the US for this!

[Miklo]

I do know some processing companies that can set up a direct merchant account for you in Europe for the acceptance of Visa, MasterCard and American Express at a processing rate of 4.7% (standard rate).

If you can sticky mail me with your processing volume, I will tell you which company I have in mind for you. If you are processing more than 1 million/year, I am sure they can negotiate a better rate, probably around 3.5-4.0%. The application process will take 4-6 weeks. They will normally charge a 10% Rollover Reserve as a security.

Believe me, there are better options out there. The only difference with the well known names is that they don't spend their revenues in advertising online.