Direct marketing uses promotional materials to connect directly to consumers. These promotional materials may include phone calls, SMS messages, brochures, emails, or promotional letters.
It is a highly targeted form of marketing that present information to prospective buyers with a high likelihood of making a purchase.
We’ve all seen the infomercials for the next greatest workout video or the miracle vegetable chopper on television. It’s clear from the marketing that the goal is to compel the viewer to take action right away. In many cases, it is highly successful.
Here’s the rub – this type of direct response marketing has substantial challenges to surmount. Merchants in this arena may have a hard time obtaining a direct response merchant account because of the inherent nature of the business.
Let’s explore that more.
Direct Response Merchant Account – A High Risk Gamble for Bank
Direct response merchants are typically considered high risk by merchant banks and other payment service providers (PSPs). Prone to high numbers of chargeback fraud, having a direct response merchant account can be tricky.
Direct response merchants that operate online have even more challenges to address. The card-not-present (CNP) nature of payments for a direct response merchant account alone can contribute to increased chargeback fraud.
Direct response merchants often struggle to obtain a “regular” merchant account from banks. The best bet can be to work with a PSP that specializes in high risk merchants and that can tailor a direct response merchant account for your needs.
The Direct Path to a Direct Response Merchant Account
There are some thing direct response merchants can do to prepare when seeking out a merchant account. Take the following tips into consideration when embarking on the journey to obtain a direct response merchant account.
Understand How Your Customers Pay
As an online merchants, your customers may have a myriad of preferences when it comes to payment. Most will likely prefer to pay with debit or credit cards, while other may opt for alternative payment methods. You may want to conduct some market research to understand your target customer base and its preferred ways to pay.
Make note of the different types of payment methods you would like to offer to customers. It will be important to ensure you can offer these methods – and that you understand the associated processing fees with each. Quick, convenient payment can mean the difference between the life and death of your business.
Provide Adequate Documentation
It’s perfectly understandable to feel wary about revealing sensitive details about your business to a third party account provider. But withholding information could hurt your chances of getting a merchant account, especially considering the high-risk classification.
No account provider would be willing to facilitate a company that is seemingly trying to hide something. They want to get all personal and company details, including financial information- as genuine proof. So it would be in your best interest to prove that you’re trustworthy by submitting all the required application documents.
One of the primary challenges in the direct response business is chargebacks. The CNP nature of the business paired with offers that make it easy for customers to dispute charges make chargeback fraud a real problem for this segment of merchants.
While high risk merchant accounts are built for these types of challenges, it is in the best interest of the business to lower chargebacks fraud as much as possible. This can contribute to lower processing fees, as well as lower fines and fees associated with chargeback fraud. Improving customer service can substantially decrease chargeback fraud, so be sure to have solid refund policies and customer support procedures in place. Illustrating that you have a handle on this part of your business can also aid in getting favorable responses when applying for a direct response merchant account.
Utilize Fraud Prevention Tools
Customer service is just a start when it comes to minimizing chargeback fraud. Employing a suite of customized fraud prevention tools can go a long way in protecting your business – and your bottom line – from fraudsters lurking online.
The use of fraud prevention tools also shows banks that you are serious about protecting your customers’ sensitive payment information. Ensure that you are PCI compliant (a must before applying for a direct response merchant account) and layer on top of that with fraud prevention tools that are best suited for your business.
Work With an Experience Direct Response Merchant Account PSP
As a high-risk business, your biggest mistake would be approaching an account provider who doesn’t actually understand the entire framework of your operations. Even if you are able to score a direct response merchant account, mismanagement can lead to prompt termination. When that happens, it can be extremely difficult to find another merchant account option.
Working with a PSP that specializes in direct response merchant accounts can provide more than just a merchant account. A reliable PSP can help you manage and reduce chargebacks, ensure PCI compliance, optimize payment methods, and help you grow your business. What’s more, they can do it with reasonable processing fees that don’t break the bank.
At MerchACT, we can help high risk merchants obtain, manage, and optimize a direct response merchant account. We’ve worked in this space for over a decade, building a nuanced library of knowledge about the business model and inherent challenges.
Reach out today to talk to one of our specialists about how we can help you obtain a direct response merchant account that fits your business.