All You Need to Know About Continuity Subscription Merchant Services
The subscription economy is booming. More businesses than ever are moving to continuity subscription models — offering products or services through recurring billing plans. Convinience for customers, predictable revenue for businesses — a win-win situation.
However, managing these subscription payments isn’t always straightforward, especially if you are a high-risk business.
In this guide, we’ll explain how continuity subscriptions work, challenges you might face, and the best practices for implementing and managing them effectively.
QUICK TAKEAWAYS
- Continuity subscriptions offer convenience to consumers and predictable revenue to businesses.
- Common continuity subscription examples include vitamins, streaming services, beauty products, SaaS platforms, and subscription boxes.
- Subscription merchants often face challenges like high-risk classification, frequent chargebacks, compliance hurdles, and balancing customer retention with easy cancellations.
- SecureGlobalPay is a specialized merchant service provider with expertise in continuity subscriptions and high-risk payment processing. We will help you manage risk, billing complexity, and compliance.
What is a continuity subscription?
A continuity subscription is a business model where customers receive products or services on a recurring basis — typically monthly or quarterly — and are billed automatically until they choose to cancel.
Here are some common examples of continuity subscriptions:
- Vitamins and supplements: Monthly delivery of vitamins or dietary supplements to ensure a consistent supply.
- Streaming services: Platforms like Netflix or Spotify provide ongoing entertainment billed monthly.
- Cosmetics and beauty products: Subscription boxes offering a constant flow of beauty samples and personalized products.
- Meal kits: Regular delivery of ingredients and recipes, like HelloFresh or Blue Apron.
- Software-as-a-Service (SaaS): Continuous access to software platforms billed monthly or yearly (e.g., Adobe Creative Cloud, Salesforce).
- Magazine subscriptions: Content automatically delivered to your inbox monthly or quarterly.
Customers like continuity subscriptions because they do not need to repeatedly reorder essentials or renew their services manually. And subscribers often receive discounts or special offers compared to one-time purchases.
However, there are potential drawbacks. Automatic billing can catch consumers off guard if they forget about upcoming charges. Additionally, if you make it challenging to cancel a subscription — accidentally or intentionally — you will have to deal with frustrated customers and dissatisfaction.
What is a continuity subscription merchant?
A continuity subscription merchant is any business that sells products or services using a recurring billing model. It is a model that works across many different industries, including health products, software, digital media, food services, and more.
Challenges for these merchants
Operating a continuity subscription business has clear advantages, but it also comes with unique challenges, particularly regarding payment processing. Some of those are:
- High-risk industry classification: Many payment processors consider continuity subscriptions high-risk due to frequent billing and cancellation disputes. This means you will most likely need a high-risk merchant account.
- Chargebacks and refunds: Customers may dispute recurring charges, leading to higher chargeback rates, which can result in additional fees (at best) or account suspension (at worst).
- Compliance with laws and regulations: Merchants must comply with consumer protection laws, card brand rules (like Mastercard), and regulations regarding transparent billing practices (like the Negative Option Rule).
- Customer retention vs. customer dissatisfaction: Balancing the convenience of automatic billing with ease of cancellation is critical. Poorly managed subscription models can lead to unhappy customers and negative reviews.
To reduce the number of chargebacks and disputes, make sure the cancelation process is simple and your customer support is fast.
Getting a continuity subscription merchant account
We probably don’t have to tell you, but selecting the right merchant service provider is essential to running a successful continuity subscription business. Here’s what to look for:
- Experience with recurring billing: Choose a provider that actively works with continuity subscription businesses, as they’ll understand your specific needs and risks. If you are classified as high-risk, look for specialized high-risk merchant services providers like SecureGlobalPay.
- Modern payment gateway: Your provider should offer a robust payment gateway that seamlessly integrates with your recurring billing and invoicing software. It should also have fraud prevention features like transaction monitoring, secure data handling, and built-in compliance safeguards.
- Transparent pricing structure: Look for clear fees with no hidden charges or setup/cancelation fees. This will make it much easier to forecast your payment processing expenses.
- Reliable customer support: You will want a partner who can resolve issues quickly and provide advice on managing disputes and chargebacks.
SecureGlobalPay offers specialized continuity subscription merchant accounts to simplify and secure recurring payments. We can set you up with multiple accounts on a single payment gateway to handle peak seasons and match your payment processing demands.
How continuity subscription models typically work
If you ever subscribed for anything, you should have an idea of how this works. Here’s a quick rundown:
- Free trials followed by paid billing cycles: Many continuity subscriptions start with a free or discounted trial to attract customers. Once the trial ends, billing automatically switches to regular pricing, charged to the customer’s card.
- Recurring billing mechanisms: Subscription services rely on automated payment systems that charge customers regularly, typically monthly or annually.
- Automatic renewals: Subscriptions renew automatically unless customers explicitly cancel.
- Subscription changes and cancellation: Clear communication is key. Subscription terms should be clearly explained upfront. Renewal notifications, reminders about upcoming charges, and straightforward cancellation processes help maintain customer trust and reduce chargebacks.
If you want to dive deeper into best practices, we invite you to read our guide on subscription payment processing.
Steps for implementing continuity subscription processing
Implementing continuity subscription processing involves several key steps to ensure a smooth and efficient system for both businesses and customers.
Above is a custom graphic from our recurring billing guide to illustrate this process, so we won’t dive into individual steps here.
Get reliable subscription continuity merchant services from SecureGlobalPay
SecureGlobalPay makes payment processing simpler and safer for your subscription-based business. Our solutions are built to meet the unique needs and challenges of recurring billing.
With SecureGlobalPay, you get:
- Specialized merchant accounts: Accounts designed specifically for subscription businesses, even those classified as high-risk.
- Automated billing solutions: Easy setup for recurring billing, automatic renewals, and secure payment management, helping you avoid unnecessary disruptions.
- Robust fraud protection: Advanced security tools to reduce chargebacks and protect your business from fraudulent transactions.
- Compliance assistance: Guidance on compliance with laws, card-brand regulations, and industry standards. We will make sure your subscription model operates smoothly and legally.
- Transparent pricing and reliable support: No hidden fees with clear billing practices. An experienced account manager who will answer your questions and concerns promptly.
Our goal is to simplify payment processing for merchants. With SecureGlobalPay, you get all the tools you need in one place. Partner with us to scale your subscription business with peace of mind.
Contact us to learn more or apply for a merchant account to get started.
Continuity Subscription FAQ
Cancellation processes differ by merchant. You can usually cancel a subscription by logging into your subscription account and downgrading to a free account or canceling the service altogether. You can also contact their customer support, but before that, check the merchant’s terms or FAQ page for detailed steps.
Not all continuity subscription merchants are automatically high-risk, but many payment processors classify them as such due to frequent chargebacks, disputes, and automatic billing cycles.
A continuity fee refers to the regular charges customers pay for ongoing subscription services or product deliveries after initial trial or promotional periods have ended.
A recurring subscription fee is the regular payment automatically charged to customers, typically monthly or annually, for continuous access to a service or subscription boxes.
Direct marketing continuity refers to subscription services promoted through direct marketing tactics — like online ads, TV commercials, mailers, or telemarketing — where customers sign up for automatic recurring billing and product deliveries.
