Some merchant account options for trial offers still exist, but it’s tough

Negative option billing, trial, free trial, free to pay offers – these are all terms for a method of marketing that has come under fire.  Many businesses use the trial model, but it is most prominent in the dietary supplement, internet marketing, skin care and software industries. Although placement can be challenging, there are still merchant account recommendations to be made for some industries, plus payment gateways, chargeback mitigation, and other B2B services that are available to high-risk merchants selling via the trial model.

Unfortunately, for a supplement, skin care, coaching or internet marketing businesses there really is no stable, decent trial based merchant account available.

For software companies and for “pay shipping only” tangible product companies with no automatic recurring billing there are still places to process. Contact us anytime for help or advice.

Trial merchant accounts are limited to credit card processors that:

  1. Want and understand the business model and therefore can, and are willing to, mitigate their risks
  2. Do not already have so many trial merchant on board already that the risk profile of their portfolio is out of balance. This can mean, at times placement is challenging. At other times, finding a trial-friendly processor can be much more straightforward. If you would like to run a trial offer, please reach out to us anytime for help.

Contact us if you need a referral to a trial friendly merchant account provider and would like to pick our brain about which providers are still open to working with quality trial merchants. We know the major players in the industry and try hard to keep up with current underwriting practices.

What is a “trial” in terms of e-commerce?

Our primary definition of negative option billing is “any billing practice where the merchant offers a product or service at a discounted rate or “free” and gathers credit card data at the time to automatically bill the customer should they not call to cancel or return the product.” A perpetual automatic recurring billing program generally accompanies this.

Here is an example: a merchant sells a business opportunity training program (biz op) consisting of weekly training videos that teach you how to make money online. To get you to “try out” their monthly service, they offer the first month’s training for only $1 (a classic $1 trial). If you like the service, you “simply do nothing, and you will be automatically billed the following month” the full cost of the service.

This is where the term “negative option” comes in. Customers get billed (the option to purchase) not by taking a positive action like choosing to purchase the full price product the next month, but instead, they get billed for not acting/not actively canceling (negative option). This practice is also common in the nutra, or nutritional supplement world, where the first month is offered as “a free trial”, or “pay shipping and handling only” and unless you call to cancel within a short window of time you are billed automatically. After initial billing, customers are billed the following month for a new shipment and each month after that unless they cancel. Many merchants have used this model to take advantage of consumers, poorly disclose terms, gather payment information, and the automatically bill customers who were not expecting future charges. Compounding the ethical issue is the fact that some merchants do a terrible job of answering customer service calls, canceling orders, or even providing a quality product in the first place.

It does not take a stretch of the imagination to realize that this marketing model should be very clearly disclosed, all the legal ramifications should be researched with an attorney, and the cancellation and billing process should be clear, organized, accessible, and efficient to avoid major problems. Processors are now more than ever concerned with the chargebacks and risk associated with this model, and those that still allow this practice, therefore, are extremely cautious of which merchant accounts they place.

Here is a helpful link to some High-risk preliminary questions that you should be prepared to answer honestly and clearly if you are looking for a negative option merchant account through any provider.

We offer some terrific products for folks in the trial billing world. Our offers and recommendations include the NMI payment gateway which allows you to manage multiple merchant accounts through one login (routing your high-risk products to their high risk, high-cost merchant accounts, and your low-risk products to low risk, low-cost merchant accounts automatically for example). We also offer world class chargeback prevention and mitigation tools through a combination of Verifi and Ethoca, two leaders in chargeback prevention.

Please contact us, or call us anytime for a gateway set-up, a chargeback mitigation program, or even an insiders scoop as to which credit card processors are accepting negative option merchants. Regardless of your situation, we are always happy to help with some insight and friendly advice.