Tech support is a high demand industry worldwide. With the right technical background and rapid expansion in the sector, setting up in business and obtaining clients is relatively low risk.
So . . why does the card payments processing industry reject applications – and why is it considered high risk for payment gateways?
How the payment processing companies assess the tech support industry
Bear in mind that acquiring banks and card processors try and avoid the risk of losses, at all costs. While that may seem like stating the obvious, you might wonder how it applies to processing credit card payments to your tech support business.
It all comes down to what happens when payments go wrong leading to a potential fall-out that could cost card processing companies substantial sums of money.
Why the tech support industry is considered high risk for payment gateways
There are two main issues with tech support applications that may cause banks to decline:
Fraud – The number one risk presented by the industry due to the number of scammers who have operated under the guise of being a “tech support business”.
High chargeback ratios – Any legitimately disgruntled customer can choose to demand a chargeback for an item that appears on a credit card statement. At best, that raises financial costs for the card payment processing service for your tech support business because of the time and hassle involved in handling the complaint and issuing a refund.
For the merchant’s sake, It’s much more preferable for customers to complain directly to the merchant and sort things out amicably. But human nature dictates that an angry customer will take the shortest route to getting a refund. That’s a chargeback request direct to the customers credit card issuing bank while leaving merchant last to find out about it in many cases.
The worst case scenario for the acquiring bank and card processing service is when a chargeback is issued but the tech support business, the merchant, has gone bust or ceased trading for some reason. Then the entire amount comes off the bank’s bottom line.
What underwriters want to see when you apply for a tech support payment gateway
Acquiring banks and card processing companies vet each application individually. They are looking at potential risks and examine several aspects of the business – and sometimes the applicant too in the case of startups.
Essentially, they want to see a well-run business with good liquidity, steady profitability and a reassuring payment processing history. That’s not something that a startup can demonstrate and therefore they will likely inspect the applicant’s personal credit history and financial status.
What you need to apply for a tech support payment gateway
Underwriters always look for certain documentation like proof of ID and some credit history. To apply successfully, you should have these items available for inspection:
- Three months worth of bank statements and financial records
- Most recent P&L and Balance Sheet
- A track record of card processing with close to zero chargebacks (if available)
- Government issued ID, such as a driver’s license or Passport
- Social security number or EIN from the IRS
- Voided check as proof of a business bank account
Other information may be requested after you submit your application.
What has given tech support a bad name in the payment processing industry?
Tech support is a critical function in keeping huge enterprise computer systems and networks running in business and government.
The cloud would not be possible without the dedicated commitment of hundreds of thousands of hardware engineers, software engineers and skilled technicians. Microsoft’s Azure and Amazon Web Services could not have come into being without them.
Every year, thousands of tech support startups succeed because of the insatiable demand. Remote support is especially cost effective when it can be carried out from countries where wages, even for highly skilled technicians, are lower than in the US.
The blackspot in this booming tech support industry is the consumer devices market. Specifically, fraudulent exploitation of the ignorance of non-technical owners of laptops, desktops, tablets, smartphones and other end-user computing devices.
The Federal Trade Commission (FTC) protects American consumers. Its Consumer Sentinel Network is the first port of call for victims of fraud. In 2018 alone, it received 143,000 complaints about scams perpetrated by so-called tech support companies.
What type of fraud has been reported in the tech support industry?
The most commonly reported scam is where a user receives an unsolicited phone call from an individual claiming to be from a large company like Microsoft, or even “from Windows”.
This individual then goes on to claim that their computer has reported a fault and that it can easily be fixed for a “small fee”.
In other similar scenarios, it can be a pop-up that appears on-screen instead of a phone call. Gross overpricing is commonplace and, while not constituting fraud, leads to chargebacks.
While these examples seem too simplistic and ridiculous to be true, they prey on fear and the lack of even basic technical know-how amongst the average user. Older people in the 60+ age group are particularly susceptible.
This is just an overview. Fuller facts and more detailed information can be found here in the FTC report.
$55 million is the reported amount that people lost out to these scams, with $400 being the median amount paid by individuals.
The impact of chargebacks on credit card issuers and card payment companies
Fortunately for consumers, the law obliges credit card issuers to trigger an immediate chargeback at the request of a customer. That can be for any reason whatsoever – not just for fraud.
When a merchant, the tech support company in this case, does not have funds to meet the refund, or perhaps has folded its tent, then the card processing company carries the loss.
Chargebacks, for any reason whatsoever, are the single biggest reason why even highly legitimate businesses can have their merchant accounts terminated. When the chargeback ratio creeps above 1% of all card transactions, it waves red flags about that particular company’s business model.
Tech support companies should protect their payment gateways and merchant accounts
For legitimate services, it’s not enough to merely obtain a high risk tech support payment gateway and merchant account. They must keep a close eye on chargebacks, assess how and why each occurrence happened, and draw lessons to ensure a recurrence cannot take place.
They key to minimizing or even eliminating chargebacks for tech support companies is good old-fashioned customer support.
The stereotype of a technically brilliant support engineer is of a great brain but perhaps not so acute personal skills. However true that may or not be, putting some simple customer support processes and actions in place can head off trouble long before the customer reaches for the phone to demand a chargeback.
How to get a tech support payment gateway for your business
Tech support is not the only sector that is considered high risk by acquiring banks and the card processing industry. All payment service providers have their own internal rules and guidelines for assessing risk and their own list of what industries are considered high risk. There are about 60 in total on the high risk industries list.
In response, specialist payment processing providers have sprung up to meet the challenges of handling credit card payments for these businesses. No one provider covers all the high risk industries. Instead, each of them specializes in one or more and gets to understand it inside out.
We at SecureGlobalPay have built relationships with an extensive network of these banks and service providers, both in the US and overseas. We know which ones welcome applications from your tech support business.
Your next step
Start today. Click here for our online application form. Usually we are able to get back to you with a status update within 4-5 days.
If you prefer, speak with one of our high risk tech support payment gateway specialists at 1-800-419-1772. They will be more than happy to explain the process and what you can expect.