Over the years, people have become more and more willing to shell out large sums to get their hands on the latest software. So much so that today, the global software industry stands at a whopping $430 billion USD. And according to experts, it will continue to grow exponentially over the course of the foreseeable future.
However, despite the obvious success of most software companies, banks generally categorize them as high-risk. The reason? A historic tendency for chargebacks that cost money for merchants, banks, and card issuers alike.
Unless you’re selling your software in-store, you’re going to need a merchant account. The entire purpose of a high-risk software merchant account is that it allows merchants to accept cashless payments.
These specialized bank accounts facilitate digital payments from credit cards, debit cards, eChecks, and ACH payments. Without a merchant account, businesses would limit their available payment options to just cash, PayPal, direct-to-bank transfers, and the like.
So yes, even without a merchant account, you probably won’t be entirely restricted to just cash. But it pays to remember that most consumers prefer paying with a card — about 70% of them. And because customers cling fervently to their payment preferences, failing to offer the methods they prefer can impede your sales.
Merchant accounts come into play both on and offline, and allow businesses to accept even card-not-present transactions that occur in the absence of a physical card (like when you punch in card information through an online payment gateway.)
Since most software companies operate online, a merchant account makes an obvious necessity. The only problem is that most traditional banks perceive software companies as high-risk, barring them from accessing merchant account services.
You would think that businesses raking in cash would have a good reputation with banks and financial service providers, but the opposite stands true. Banks are conservative by nature and avoid embarking on partnerships with businesses that could cost them money.
Tagged ‘high-risk merchants’, these businesses present an increased risk of fraud and chargebacks. Banks avoid them because chargebacks cost money — and lots of it.
So in cases when a high-risk merchant manages to land a merchant account with a traditional provider, they get hit with exorbitant fees and tight contract terms to mitigate their potential risk.
But what is it about software merchants specifically that makes them high risk? Here are a few reasons:
Most software merchants offer their products online. In the form of mobile applications, computer programs, video games, and more, software merchants thrive on the internet because of the unlimited reach that it provides.
The problem with operating solely online is that it limits these merchants to purely cashless payments. Specifically, it increases the chances of card-not-present transactions.
While it can be convenient in that they allow customers to make card payments without having to swipe a physical card in a terminal, there’s the chance of fraud. Anyone can take someone else’s card information and use it for an online transaction.
And when the actual cardholder discovers the transaction on their statement, they’re going to want to reverse the unauthorized payment by way of a chargeback.
We can’t all be tech-savvy. Some people still struggle with software and have difficulties working with new downloads despite extensive instructions and streamlined installation procedures.
When people can’t install specific software, or when they just can’t seem to figure out how it works, they can initiate a chargeback to get their money back. This becomes a common outcome for people in the older demographics who might not be too keen on tinkering with technology.
Even with all of the hurdles in the way, it’s possible for software merchants to obtain a high-risk merchant account. In fact, even traditional banks and financial service providers may serve an approval for high-risk software merchants, albeit with loads of strings attached.
For starters, banks will want to protect their best interest, and that means mitigating the risk they decide to take on. For high-risk software merchants, that means agreeing to harsh contract terms, tight payout schedules, steep penalties, and various requirements like a rolling reserve that could restrict access to revenue.
On top of that, the application process for a high-risk merchant account with a conservative financial service provider can be taxing and tiring. These banks will call for dozens of documents and may have you waiting long periods of time to get any response.
That’s why for high-risk software merchants, traditional banks and financial institutions shouldn’t be the first choice. Whatever your industry and no matter your risk, Shark Processing offers streamlined solutions that deliver guaranteed results.
Say goodbye to long waits, unanswered emails, insane documentary requirements, and constant rejection — here, we guarantee your placement. At Shark Processing, we make it our vision to provide all merchants with a fair chance at cashless convenience, regardless of the risk.
We work with hard-to-place merchants across every industry imaginable in order to provide high-risk merchant accounts that open the doors to new payment possibilities. But more than just payment diversity, we also make sure to advocate for your business to win you flexible contracts, easy payout terms, and low fees and charges.
At Shark Processing, high-risk merchants don’t need to risk anything. We offer our services for free, and we guarantee placement for merchants with even the highest risk ratings.
Enjoy streamlined services, fast responses, and effective solutions that put your business’s growth and success front and center. Contact us to find out more about our high-risk software merchant account solutions, or send in your pre-application form to jump-start the process.