Monday, December 14, 2009

"How to use your Gift Card"

I often redeem my credit card reward (thank you Mr./Mrs. Merchant for paying a premium in Interchange, oh am I suppossed to thank my bank?) for a "debit" card. I just got one for $200 bucks. You gotta love the instruction manual that comes with it! Under "how to use your Gift Card", it states a number of things; 1) "...tell the merchant you'd like to sign a receipt", 2) "At a PIN pad, swipe your card (keep in mind they just called it a "Gift Card" that clearly says "Debit" on the front), ....choose "Credit" and sign your receipt. Luckily, it tells you, "Although it states "Debit" on the front of the card, your Gift Card does not come with a PIN." You gotta also love that there is a 6 page pamphlet of fine print that accompanies this thing.

How did we end up here?

And we wonder why PayPal is doing so well!!!!

Thursday, December 10, 2009

Best Practices for Subscription Based Merchants

it my be counter-intuitive, but making it easy for a customer to end their subscription may be the best method of growing your business...(it will clearly have a dramatic impact on reducing your chargebacks!)
Here are a few thoughts;
1) have a link clearly visible on your home page for Customer Service
2) make it easy for a customer to cancel their subscription, albeit nothing wrong with offering alternatives to cancelling but nonetheless, just deal with it if that is what they want
3) if the cancel requires human intervention, have those people available 7 days a week, if not 7x24, but preferably have it be self-service
4) process refunds promptly
5) communicate clearly and repeat the message that the credit will take 7-21 days to show up online and up to 2 billing cycles to show up in paper statements
Why do these things make sense?
1) in this connected world we live in, word of mouth references are profoundly important and someone saying, "I used X and it was great and when I was finished with their service and went to cancel it was a piece of cake..." is much more likely to win you the next customer and potentially even this one back later when their needs change
2) it will clearly save you money in operations cost, chargeback fees, etc.
3) you will sleep better at night and be doing your part to give the subscription based business world a better name.

Friday, December 4, 2009

Underwriting, what is that? & How does it impact subscription based merchants?

It is wonderful that new business is the engine of our economy. It also means that individuals who start these businesses often have gaps in their experiences. For example, one of the most common questions I get is - why does it take weeks to get approved for a credit card merchant account and why do they need copies of my personal tax returns, etc.?

Merchants need to understand that their credit card acquirer/processor is taking responsibility upstream for their viability. For old world face-to-face merchants selling physical goods this was less of an issue than it is for ecommerce merchants and especially those selling intangible goods and/or services. And, it is doubly true for those delivering those services over an extended period of time.

If you take a payment from a consumer for a 12 month subscription to a service, you get paid within 2-3 days. If for some reason, your business fails in month 6, and the consumer files a chargeback to get their money back, if your business is gone, it is the acquirer/processor who has to cover that cost.