Subscription and Annual Membership Merchant Account
The internet has opened up a wealth of business opportunities for entrepreneurs in recent decades, including membership websites. Whether a merchant is offering products or information, the exclusive nature of a membership site promises customers a uniquely rewarding experience. However, like many online enterprises that carve out new business niches (or that fill existing niches in new ways), the membership site industry has experienced some bumps as it finds its feet. As a result, it can be a bit challenging for merchants starting up a membership site to do the very thing that makes the venture profitable: collect membership fees from customers via a credit card processing account.
Most traditional financial institutions are, by their very nature, cautious – both of financial risk and of danger to their reputations. If they have concerns that certain business practices common in a certain industry might prove “brand damaging,” they’re far more likely to cut loose any merchant in that field than examine in depth whether an individual client is engaged in shady business practices. In 2010, the proprietors of many membership websites found their merchant accounts abruptly closed. The reason for this was that MasterCard had released new guidelines that put certain practices common to the membership site business model under much greater scrutiny. Now, membership sites are regarded as “high risk” merchants whether they engage in these activities or not. This makes it hard for a business owner to find an institution willing to accept his application for a membership site merchant account in the first place, and even harder to find one that will offer him reasonable terms on his account.