The Tech Support Industry
One of the fastest-growing sectors of the technology industry is tech support. According to Comptia.org, the world’s leading technology association, the global information technology industry is expected to reach $5.2 trillion in 2020. The United States is projected to account for $1.7 trillion, or 32%, of that market.
With so much resting on technology, it’s no wonder that tech support is a growth industry. According to the same study, IT and Telecom services account for 47% of the global market and 50% of the US market.
Opportunities abound for entrepreneurs seeking to establish businesses in the tech support sector. This requires the ability to conduct business and process credit card payments online.
Unfortunately, a great many banks and traditional financial institutions are reluctant to partner with tech support businesses. For a variety of reasons, they avoid such firms and tend to label them “high-risk.”
The “High-Risk” Label
Processing credit card payments online represents a risk to both the business conducting the transaction and the payment processor itself. For the payment processor, it is a question of assessing relative risk.
Along with the enormous growth of the tech support industry has come a commensurate growth in tech support fraud. The sheer volume of online IT-related transactions makes it a natural habitat for a variety of online scams. Over the years, scammers, hiding in the shadows under the guise of tech support have conned people out of both personal information and a great deal of money.
Common cons include scammers sending pop-up messages that warn users about computer problems. The “techs” then call to help users detect viruses or malware on that person’s personal computer. The user then pays a large fee to enroll in a subscription plan to diagnose and protect him from non-existent problems. According to the Federal Trade Commission, consumers lost $24.6 million from tech-support scams in 2015 and 2016. The average consumer loses about $280 per scam.
Banks and traditional financial institutions want no part of this. Therefore, legitimate tech support businesses that wish to accept credit card transactions need to turn to a high-risk merchant account provider like SecureGlobalPay.
SecureGlobalPay specializes in providing high-risk merchants in the tech support field with the highest quality customer service. SecureGlobalPay provides clients with state-of-the-art chargeback management tools, payment gateway options and fraud filters.
Apply now and be approved to begin processing online payments in as little as 24 hours.
Merchant accounts for all tech support businesses
SecureGlobalPay offers merchant accounts to all types of businesses in the tech support industry, including those that offer remote services. Our clients specialize in a variety of areas:
- Mac or PC security services
- Hardware and router configuration
- Browser and email support
- PC optimization
Our experts at SecureGlobalPay work with new and existing clients of all sizes. We do not disqualify merchants that have been rejected or terminated by another credit processor and are open to working with those with a history of bad credit or high chargebacks.
Applying for a tech support merchant account
Fill out SecureGlobalPay secure online application to begin the process. Be sure to have these following items available as supporting docs for your application:
NOTE: Your chargeback ratio must be under 2%
Online merchants must have a secure, well-established, functioning website.
Although an application does not guarantee approval, successful applicants can begin processing online payments in as little as 24 hours.
Raising processing volumes
Due to the high-risk nature of the tech support sector, merchants can sometimes find themselves constrained by obstacles imposed by nervous banks and financial institutions.
Although the market is rich and opportunities for transactions abound, many tech support merchants will find their online business subjected to a monthly credit card processing volume cap. This limits the number of transactions a merchant can process monthly. Once the limit is reached, the merchant is essentially shut down until the next calendar month. Start-ups in this industry often end up with a cap of around $40,000.
The good news is that fast-growing merchants can request new caps in as little as three months. The caveat is that the tech support merchant must demonstrate that they have low chargeback ratios, that their bills are paid, and that they have some cash in the bank. Providing proof of best practices can convince processors to consider raising monthly volume caps.
The merchant account application process
The goal of processors and underwriters in the application process is to verify that applicants are running legitimate, reputable businesses. During their review, they assess risk by looking for any indications that a merchant is running an illegitimate operation.
Underwriters consider a variety of factors:
- credit scores
- credit card processing history
- bank statements
- merchant website
Having a website with privacy and refund policies prominently displayed will increase a merchant’s likelihood of approval. Merchants should also take care to ensure they have a positive bank balance and no outstanding bills or recent history of late payments. Keeping your history or chargebacks low will also improve your chances of approval.
To prepare for the application review, merchants should take care of outstanding bills and debts and have a substantial sum of money in the bank. It is also best to have the principal in the business with the best credit history apply for the account.
The goal is to show processors and underwriters that your business does not pose an undue risk. Taking these steps improves your likelihood of approval with fewer restrictions, such as volume processing caps or a mandatory rolling reserve.
Tech support businesses and chargebacks
The tech support is characterized by a high volume of chargebacks.
Chargebacks occur when credit card transactions are disputed by a customer. One of the best ways to avoid this is by providing experienced, attentive customer service to clients. Well-run businesses lead to fewer chargebacks. Superior customer service can cut that number in half.
In general, when customers make a purchase from a tech support business, they are getting a service not a product. The lack of a physical item can make some customers feel like a purchase was intangible. Sometimes they can even forget they ordered the service and greet its appearance on their credit card statement with surprise.
One problem tech support businesses face is lack of a strong brand. Smaller, less-established businesses simply do not have name recognition. A lack of business know-how and lack of customer service puts them at a deficit. Merchants may not know that larger companies offer refunds and other incentives to keep customers satisfied and reduce credit card disputes.
Client communication can help avoid this problem. Follow up your transactions with e-mailed receipts. Make sure any correspondence you provide includes contact information, a break-down of purchases and an indication of how it will be labeled on the credit card statement. A customer survey can also be a good way to follow up with a client and keep the transaction fresh in their minds.
Chargebacks – whether won or lost – contribute to a merchant’s total chargeback ratios. The key is to enroll in chargeback alert programs, fight transaction disputes, and offer refunds to dissatisfied customers.
The chargeback challenge
A flawed business model leads to excessive chargebacks. Chargebacks are caused by customer dissatisfaction, a lack of customer service and insufficient fraud or chargeback mitigation plans.
Merchants with excessive chargeback ratios in turn affect their payment processing and sponsoring bank. Whenever a merchant exceeds a 2% chargeback ratio, the processor faces potential fines from credit companies like Visa or MasterCard. These can total thousands of dollars per merchant. A business with high chargebacks becomes a financial burden for a credit card processor, ultimately resulting in termination of the merchant account.
Credit card processors can terminate a Tech Support merchant account if they have a greater than 3% chargeback ratio. Once terminated, merchants accounts can be very difficult to regain.
Many chargebacks are due to customers not remembering or failing to recognize transactions on their credit card statements. As noted above, ensuring that contact information and refund policies are clearly listed on all merchant correspondence can help avoid this problem by keeping the transaction fresh in the customer’s mind.
Sending e-mailed receipts, reminders and surveys are time-consuming but more cost-effective than a chargeback.
SecureGlobalPay assists the process by offering custom services like Chargeback Suite. SecureGlobalPay has created an elite alert and prevention system for high-risk merchants, including tech support businesses, by partnering with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca alert system.
CDRN operates with banks and card issuers, enabling merchants an opportunity to resolve credit card transaction disputes. Using this top-notch alert and prevention system, merchants achieve the greatest rate of chargeback resolutions. Enabling an alert system can trim up to 25% off a merchant’s chargeback ratio. Actively pursuing chargebacks helps tech support companies from losing revenue and keeps their merchant accounts in good standing.
Additionally, remote tech support merchants often accept MO/TO (mail order/telephone order) payments or e-commerce payments via their websites. In both payment types, the customer’s credit card information is entered through a payment gateway or virtual terminal. Use ACH (Automated Clearing House) payment processing as well as other check solutions to deduct funds directly from a customer’s bank account.
Unlike credit card transactions, no interchange fees are involved in ACH transactions. This saves both time and money by avoiding the need for the merchant and customer to exchange check numbers or documents. A customer must provide a preauthorization via written, verbal, or electronic permission for a business to process the check.
The check is converted into an ACH transaction and is submitted to the merchant’s payment processor through a payment gateway via a batch file transaction. The merchant’s check processor then sends the ACH transaction to the customer’s bank so the approved funds can be debited from the checking account. ACH payments take up to seven days to clear.
Advantages of ACH
ACH payment processing is rapidly evolving and gaining in popularity. ACH allows for automatic recurring billing and payments and is connected to banks around the globe. It is rapidly replacing credit cards.
Categories for Tech Support Merchant Accounts
The United States and other countries, including the United Kingdom, assign four-digit numerical codes, known as Standard Industrial Classification (SIC) codes, to business establishments. These codes aim to identify the primary purpose of businesses.
Businesses that sell products and services related to the tech support industry fall into one of these codes:
- 7379: Computer Related Services, Not Elsewhere Categorized
- 8748: Business Consulting Services
- 7389: Business Services, Not Elsewhere Categorized
Visit the United States Department of Labor to view a complete SIC list.
The six-digit codes, known as NAICS, are used by federal statistical agencies to classify businesses by type. The codes are used to collect, analyze, and publish statistical information about similar types of businesses and the way they impact the U.S. economy.
Most remote technical support businesses use these two NAICS codes:
- 541519: Other Computer Related Services
- 541618: Other Management Consulting Services
Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.