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Obtaining a Software and E-Book Merchant Account

Scheduling a ride, downloading the new best seller to read while sitting on a train, ordering takeout while walking home, or turning a print into a high-quality digital image has never been easier. Technological advancements and app development has made these possible at a touch of a tablet or a smartphone. The genesis of smart devices has set the app development market on fire, leading to an explosion of independent programmers working hard to come up with the next big thing.

More than 30,000 new apps, on average, are submitted to the iTunes App store every month and by mid-2016, a combined nearly 200 billion apps had been downloaded from the Apple App store and Google Play worldwide, according to Statista.

Since developers make money through advertisements, sponsorships, and in-app transactions and paid subscriptions and upgrades, many apps are free to download. However, many programmers earn the most money when they offer something so revolutionary that users make in-app transactions or pay for upgraded versions of the applications. Also, as devices – virtual reality devices, connected cars, and game consoles –  continue to advance and evolve, the app development field is expected to become increasing more attractive.

Though cutting-edge software and must-read e-books may have great long-term revenue potential, many banks do whatever they can not to work with them. Traditional financial institutions consider them very high risk because they handle large volumes of transactions and are exposed to much more credit card and friendly fraud and chargebacks. When banks turn software and e-book merchants away, they can’t efficiently accept credit card transactions. To do so, an e-commerce business must apply to a high-risk merchant provider, like SecureGlobalPay, to obtain a software and e-book merchant account. A merchant account allows e-commerce businesses to accept and process large volumes of transactions. Choosing the wrong credit card processor can result in frozen accounts, data security breaches, and irregular payment schedules.

In addition to its experience, top-notch customer service, and a reputation for offering fair pricing for customized payment solutions, SecureGlobalPay specializes in high-risk software and e-book merchant accounts for businesses of all sizes. SecureGlobalPay also assists startups, as well as those that have cemented their names in the industry.

Additionally, SecureGlobalPay offers chargeback management tools, payment gateways, and fraud filters, as well as support, tools, and the expertise needed to process credit card payments successfully for software and e-book merchants. Apply online today and get approved in as little as 24 hours.

Why software and e-book businesses need merchant accounts

E-book authors, especially, may see the numerous e-publishing platforms available and think they are the simplest, most convenient options for listing and selling their content. From a marketing view, it may make some sense. These platforms may seem like the best way to attract a bigger audience however, a more innovative approach is to obtain a merchant account.

When an e-commerce business works with SecureGlobalPay, it provides every necessary merchant-account related services, such as a secure payment gateway and a shopping cart system that provides the details of each order and the price.

What’s needed to get a software and e-book merchant account

SecureGlobalPay prides itself on making the software and e-book merchant account process simple and easy. After filling out SecureGlobalPay’s quick online application, merchants need to provide some standard paperwork to underwriters and processors for review.

Along with an application, the below documents must be submitted to processors:

  • A valid, government-issued ID, such as a driver’s license or passport
  • A bank letter or a pre-printed voided check
  • A secure, working website
  • Three months of the most recent bank statements
  • Three months of the most recent processing statements, if applicable
  • A SSN (Social Security Number) or EIN (Employer Identification Number)
  • A chargeback ratio below 2%

Though no approval is guaranteed, SecureGlobalPay does promise a fair process. Get started by applying today. Eligible merchants can get approved in 24 to 48 hours.

Understanding what happens during the underwriting process

When underwriters review software and e-book merchant account applications, they want to find that businesses follow a solid business model, which reduces the likelihood of potential chargebacks. Chargebacks are when credit-card brands, such as Visa or MasterCard, demand a retailer refunds any losses due to disputed or fraudulent or disputed transactions. Underwriters also check to ensure merchants are complying with any necessary rules and regulations.

A merchant’s risk is determined by several factors, including:

  • Credit scores
  • Credit card processing history
  • Bank statements
  • Websites

When reviewed, underwriters want to confirm that merchants have no negative bank account balances, outstanding bills, or a previously terminated merchant account. A history of high chargeback ratios also increases a merchant’s risk, which is the likelihood that a processor and its sponsor bank will be left responsible for a merchant’s unpaid debts.

During the review of their websites, underwriters want to see that it has a secure (SSL), as well as easy-to-understand, prominently-displayed privacy and refund policies. Those don’t owe any money and, instead, have some savings are in better shape than merchants that don’t. Most importantly, merchant accounts are more likely to get approved when the business stakeholder with the best credit history submits the application.

Additionally, since software and e-book merchants process a greater number of transactions, it is best to give the most accurate estimates for transaction volumes during the application process. If a software and e-book merchant account is approved, knowing the chances for higher volumes may prevent processors from becoming suspicious of transaction activity and quickly suspending or shutting down merchant accounts.

By preparing for the review, software and e-book merchants are more likely to get approved for merchant accounts without restrictions, such as caps on processing volumes and higher rolling reserves.

Get higher volumes for software and e-book merchant accounts

It is not rare for high-risk businesses to get approved for merchant accounts with monthly caps on credit card processing volumes. This means merchants are limited as to the number of credit card transactions they can accept each month. Once a merchant reaches that cap that month, it can no longer take credit cards as a form of payment. This essentially shuts down an e-commerce store until the next month.

Fortunately, software and e-book merchants that can prove they can operate with low chargeback ratios and no unpaid bills, can get their caps lifted eventually. In as few as three months, they can request new processing volume caps in as few as three months.

More transactions, more problems, like chargebacks

Any business that deals exclusively or more often in online sales as opposed to face-to-face transactions are vulnerable to chargebacks. In the software and e-book industry, where single merchants handle numerous transactions in a day, the chargeback probability also ticks up.

Merchants that sell a large volume of goods or services, such as software and e-book merchants, are targeted by cybercriminals. Criminals know that merchants are likely to pay less attention to every purchase since they handle so many on a regular basis. Due to the sheer volume of daily business, sometimes it takes a while before merchants and customers catch on to the fraud. Whatever the circumstances are surrounding the fraudulent transactions, the business, its processor, and its sponsor bank are left on the hook for refunding costumers. The result here is higher credit card transactions disputes, which can become potential chargebacks.

Many customers end up receiving a software product or an electronic book, aren’t impressed with it, and, then, decides it wasn’t worth the money and wants their money back. This is called friendly fraud. These patrons basically want to use a product or service without paying.

These businesses also are considered higher risk because some merchants are just running scams. Banks are never sure a software or e-book merchant will follow through and deliver electronic books or a software programs once customers have paid.

Cracking the code on chargebacks

Failing to deliver a product and fraud are the most common reasons for chargebacks in the software and e-book industry, making customer support critical. No business wants to get hit with excessive chargebacks simply because customer support representatives didn’t respond promptly, offered unfair prices, or didn’t provide proven, trusted delivery options. Due to the nature of these sales, the delivery process should be as automated as possible for e-books and software. The best option is to have an electronic item delivered automatically to a customer after a payment has been received.

To prove to customers that merchants are running reputable, trustworthy businesses, they provide patrons with itemized receipts that include the amount of the purchases, the exact way the business name will appear on credit card transactions, and a customer support number.

Since many chargebacks occur within four days of purchases, merchants should stay connected with customers to ensure their satisfaction for at least one week after transactions have been completed. This is especially helpful with software businesses that bill customers monthly for recurring services, such as the continued use of an upgraded app or program. Good ways to stay connected include:

  • Sending an email thanking a customer for a purchase
  • Sending a final copy of an itemized receipt
  • Asking customers to submit customer satisfaction surveys
  • Sending a reminder of the recurring charge about a week before it occurs

Taking these small, yet important steps show customers they are appreciated and that software and e-book merchants want to ensure they are pleased with their purchases. Happy customers become long-term customers.

 

How to figure a software and e-book merchant chargeback ratios

A merchant’s chargeback ratio is calculated by the number of chargebacks divided by the number of monthly transactions. For example, a merchant with 300 transactions and 12 chargebacks in a month would have a 4% chargeback. The dollar amount of a chargeback doesn’t matter; it doesn’t impact the ratio.

Categories to use in the software and e-book industry

Standard Industrial Classification (SIC) codes are four-digit numerical codes given to business establishments by the United States and other countries. The codes aim to identify businesses’ primary purposes.

Typically, the following SIC codes are used:

  • 2731: Books: Publishing, or Publishing and Printing
  • 2741: Miscellaneous Publishing
  • 5045: Computers and Computer Peripheral Equipment and Software

Visit the United States Department of Labor to view a complete SIC list.

Northern American Classification System (NAICS) are categories of six-digit codes used by federal statistical agencies to classify establishments. The information is used to collect, analyze, and publish statistical information about similar types of businesses and the way they impact the economy in the U.S.

The following NAICS codes often are used for software and electronic book businesses:

  • 334614: Software and Other Prerecorded Compact Disc, Tape, and Record Reproducing
  • 511130: Book Publishers
  • 511210 Software Publishers
  • 511190: All Other Publishers
  • 519130: Internet Publishing and Broadcasting
  • 519190: All Other Information Services
  • 454111: Electronic Shopping, Internet Retail Sales

Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.

Merchant Accounts For E-Books & Software

As the world moves towards going paperless, software and e-books are a growing product offered by online companies. Businesses that provide software and e-books have enormous profit potential, but unfortunately are also likely to fail. The businesses high volume of transactions, coupled with the accompanying chargeback rates,make this business model high risk and difficult to approve for traditional banking institutions.

Startups and small software companies without the track record of industry giants such as Amazon, are at a massive disadvantage as they explore their options for electronic payment solutions.

Get your e-books and software merchant account with eMerchantBroker.
We support your electronic payment processing as long as you maintain less than a 3% chargeback rate.

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