Why is it so difficult to obtain a merchant account for your tech support business?
If you are not one of the big, well known, mega tech support companies, you might wonder why nobody will give you the opportunity to prove that you run a legitimate business, why all of your merchant applications are rejected. The answer is simple: over the past 5-6 years there has been a huge increase in the number of tech support “scams” worldwide.
These are the typical scams:
- someone pretending to be from Microsoft will call a person at home and attempt to convince the “customer” that there is some kind of problem with their computer, and request remote access to the computer to fix the problem. If the unsuspecting customer gives the phony Microsoft “agent” access to the computer, the scammer will actually create a problem on the computer and charge the customer to fix the problem.
- a scamming company will put malware on websites which freeze people’s computers. If a person visits a website which has the malware installed, the person’s computer will freeze up, and there will be a popup message stating that the person must call a phone number to get the problem fixed. The person is charged by the scamming company to fix the malware problem the scamming company created.
Due to the huge number of these types of scams, all tech support merchants have now been grouped together as scammers, and you are considered guilty until proven innocent.
Of course, if nobody will provide you with a merchant account, how is it possible to prove you are running a legitimate business?
Why is it so difficult to maintain a merchant account in good standing for your tech support business?
If you are fortunate enough to obtain a merchant account for a tech support business, your battle is only just beginning.
Typically, merchant account providers will not tolerate chargeback levels above 2%. Some will not even tolerate chargeback levels above 1%. You may be doing everything right, getting signed contracts from your customers, using 3D Secure, recording telephone calls – yet you still find it impossible to keep chargebacks under 2%. In fact, most tech support merchants find it impossible to keep chargebacks under 5%.
In many cases, the high chargeback levels attributed to a tech support merchant is not the fault of the merchant – it is caused by unscrupulous Card Issuers flagging tech support merchants and instigating unwarranted chargebacks.
The bank which provides your customer with his/her credit card is referred to as a Card Issuer.
Card Issuers are often an adversary of the merchant. In some cases, this is taken to extremes by problem Card Issuers which abuse the fraud and chargeback process. Every merchant category is identified with its own distinct product/service category code, referred to as an “MCC” (merchant category code).
Some problem Card Issuers engage in severe prejudice against tech support merchants simply based on the tech support MCC assigned to the merchant.
These problem Card Issuers will flag transactions based on the tech support MCC, proactively contact your customer, fear monger the customer by telling them the transaction is “likely fraudulent”, and force the cardholder to agree to a false claim of fraud chargeback on the transaction.
In some cases they will actually instigate the false claim of fraud without even speaking to the cardholder, or despite the emphatic disagreement by the cardholder.
Of course, this is extremely unfair to tech support merchants, beyond the merchant’s control, and makes a complete mockery of the actual chargeback process. Nobody seems to be willing to stand up and take action against this type of Card Issuer abuse, and this makes it very difficult for a tech support merchant to maintain low chargeback levels.
What Options are out there for a Tech Support Merchant?
All tech support merchants, other than huge established companies, are immediately classified as “high risk”. Options are extremely limited for tech support merchants. Learn more about High Risk Merchants.
Can Cascadia Pay help Tech Support Merchants?
Yes, we have an option which is customized for tech support merchants. However, it may not be suitable for all tech support merchants.
Our Tech Support Option - The Good News:
- We are able to tolerate chargeback levels up to 10%
- Docusign customer confirmation and secure payment link via email are integrated and included with our solution
- There is no cap on monthly volume
- The solution is proven, reliable and trustworthy – you will be paid, your money will not be stolen
Our Tech Support Option – The Bad News:
- The fees are high – discount fee is 12% and there is also a 10% rolling reserve
- The hold on payments is at least 7 days, up to 14 days, depending on the merchant
We prefer to be honest and up front when advising our tech support clients. This solution may not be for you.
However, if you can accommodate the higher fees and longer payment hold, you will have a reliable merchant account, you will have a far higher chargeback threshold, and you will be paid on time.
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