The digital age has changed the way we do pretty much everything — including the way we find a potential mate. Online dating is big business these days, with names like OKCupid and Tinder leading the way and setting the trends.
Setting up a dating site isn’t quite as complicated as it might seem. So dozens of providers have popped up on the scene hoping to spark meaningful connections and earn a few bucks along the way. The only problem is that dating sites fall into the high-risk merchant category, making merchant account acquisition a real pain.
Most dating sites make their profit off of membership. People sign up and pay a membership fee to access certain features, or to use the platform altogether. In order to pay for premium features or membership, customers must tender payment through digital, cashless methods.
This can include credit or debit cards, eChecks, or ACH payments. So in order to facilitate these payments, merchants should have a merchant account. Granted only to businesses, merchant accounts open the possibility of cashless payments to both on and offline merchants.
In-store, the merchant account comes into play when customers swipe their card through a point-of-sales terminal. Online, merchant accounts facilitate every kind of payment, including card-not-present transactions.
Without a merchant account, it would be impossible for a dating site merchant to accept payments for features and memberships. Unfortunately, businesses in this industry are commonly perceived as high risk, barring most of them from obtaining a merchant account with most conventional merchant service providers.
Banks and financial institutions calculate risk based on a number of factors. These include things like average transaction cost, business location, and whether or not you take international clients.
But more than just that, the specific industry you’re involved in can have an impact on your risk rating. Some industries like furniture, apparel, and groceries come with relatively low risk. However, merchants in industries like adult entertainment, software, and dating sites typically fall under the high-risk category.
The answer is chargebacks. Throughout the history of the dating site industry, banks and financial service providers have logged a uniquely high trend of chargebacks. These payment reversals happen without contest, and customers don’t really need a solid reason to initiate one.
For banks, chargebacks cost money. Even card issuers involved in the payment (like Visa and Mastercard) get slapped with expensive penalties when customers request to get their payments back. So naturally, banks would shy away from vendors with an increased risk of chargeback occurrence.
But what is it about the dating site industry that makes it uniquely predisposed to chargebacks?
The main reason why people join dating sites in the first place is obvious — they’re looking for love or at least some type of connection. However, most dating sites will indicate that the success of the relationships they initiate depends solely on the compatibility of the people involved.
Simply put, dating sites can only take you so far. Unfortunately, not every customer understands that. So when they fail to establish a connection that meets their expectations, they take it out on the merchant.
The bitterness turns into vengeance, and they end up filing for a chargeback to get their money out of the system. Sadly, it’s hardly ever the dating platform’s fault. But the occurrence is common enough to contribute to the industry’s risk rating.
Dating sites use every resource at their disposal to guarantee a safe, secure space for people to meet and mingle. But delinquents get creative with their methods. So some dating sites have had the unfortunate experience of serving as the unauthorized landscape for illicit activity.
Human trafficking, unregulated escort services, and similar occurrences may happen on dating sites. And without proper measures in place, the platform may become a breeding ground for illicit activity.
Generally, traditional banks and financial service providers avoid interaction where such illegal activity might take place. This protects the merchant acquirer from having to deal with litigation.
Most often, dating sites implement a subscription-based payment structure that charges saved card information on a recurring basis. This simply makes it easier for customers to continue using the services minus the need to make manual payments.
The problem here is that many people sign up initially only for a free trial with the intention to cancel the subscription before the first collection date. The problem is that many of the people who have this in mind fail to cancel before they’re billed.
As a result, they end up filing a chargeback to get their payment reversed. And since chargebacks get approved with no questions asked, dating sites ultimately take the brunt.
Traditional banks aren’t likely to send an approval letter your way. And in case they do, the contract you’ll get will probably sap any potential for growth and profit out of your venture.
Remember that banks have their own business to protect, and if that entails having to impose rigid terms on your high-risk merchant account, they’ll do it. At best, a high-risk merchant account under a conventional financial service provider might have you just at breakeven — or a little less.
So what’s the best alternative? We’ve got you covered.
Aside from guaranteeing placement with a trusted, reputable merchant account provider, Shark Processing also aims to streamline the whole application process. We give our clients VIP treatment that other providers tend to withhold simply because of high-risk ratings.
Our seamless, simple, three-step process gets you guaranteed placement in as little as 24 hours. Start accepting cashless payments with a full range of service features when you choose Shark Processing.
No need to waste your time applying for a high-risk dating sites merchant account under a conventional provider. Here at Shark Processing, we deliver fast results that are tailored to your needs.
Contact us to learn more or send in your pre-application form to get started on your high-risk merchant account today.