Subscription boxes are recurring deliveries of boxes of curated products. Typically, the products are niche-oriented and designed to offer value on top of retail products. An example of a subscription box is a recurring delivery of dog treats every month, depending on your dog’s preferences and their diet.
In order for your product to be a subscription box, at least a few of the following criteria must be met:
There are many advantages of having a subscription box business, including predictable revenues. You won’t have to worry about reaching your monthly target sales when you have recurring monthly revenue.
You’ll also be providing your customers with the convenience that allows them to enter their payment information just one time and keep buying from you each month. It’s the best of both worlds for your business and its customers.
Subscription boxes qualify as a continuity billing structure because the payment recurs each month. Essentially, customers will only have to enter their credit card information once, and the billing will occur automatically, along with delivery. Until the customer opts out of the subscription, both the billing cycle and deliveries will continue.
If you’re a company with a continuity or subscription-based business model, you’ll need a merchant account in order to accept credit card payments and have them automatically billed each month.
However, because chargebacks are common when it comes to subscription box merchant accounts, most banks will categorize your business as high-risk. You’ll also have to deal with a high volume of sales and possible fraud, which means banks will be hesitant to work with you.
While continuity billing will be a huge benefit of your business because you won’t have to worry about having customers come back and go through the payment process again, it could present some problems. Recurring payments can be seen as a disadvantage when you’re looking for merchant accounts since banks will see it as a risk.
For these reasons, you’ll require a high-risk merchant account.
Businesses considered high-risk would have more regulations to follow and restrictions that limit their resources. The reason for this is that banks and payment processors like Paypal and Square don’t allow payment processing for high-risk accounts.
While you may have more hoops to jump through, all hope is not lost. Businesses who are considered high risk need to know who the right merchant account providers are so that they can accept credit cards and recurring payments.
Getting a subscription box merchant account for your business is easy. All you have to do is work with a reputable continuity subscription merchant account payment processor provider, like High-Risk Pay. With the scale and framework to support your subscription-based business, we ensure the proper guidelines are followed to mitigate the risk of your business.