Free Trial Merchant Account & Payment Processing Solutions
Does your business offer a free or discounted trial that converts into a recurring subscription? Are you struggling to have a secure payment system for your business? If yes, then you need a dedicated trial offer merchant account for your business.
Traditional acquiring banks and low payment service providers consider free trial businesses under the high-risk category because of higher chargebacks and refund requests. If you work with a low-risk PSP, then your business may experience a sudden account shutdown or a funds freeze for almost 90-180 days. This can adversely impact the cash flow of your business.
QuadraPay connects your business with high-risk payment processing companies that truly understand free trial businesses and the risks associated with them. We provide early approval for trial offer merchant accounts.
Payment Gateway & Merchant Account for Free Trial Businesses
Businesses that are offering a free trial to their customers are considered a negative business model. In this business model, merchants provide free services or products initially.
Later, they charge the customer on a recurring basis. These types of business models are declared as high-risk businesses. It is because of the considerable chargebacks involved. Most of the acquiring banks or processors don’t want to touch these businesses and provide them with a free trial merchant account.
But don’t need to worry! We, at QuadraPay, have a solution for your free trial business model. We are specialised in providing merchants with high-risk accounts. It helps them to grow and expand their customer base.
Why Trial Offer Businesses Are Considered High Risk
All the acquiring banks and processors consider this free trial service model as a high-risk business. There are enormous disputes and chargeback issues. It is because the customer is sometimes unaware of their recurring membership.
They forget to cancel the services or products they are using for free. Once the monthly bill is generated, they get to know that they have been charged for the service that they had opted for free previously. Let us look over how the free trial business model works.
Merchants offer free services or products, or sometimes at a hugely discounted price, to their customers.
Customers avail themselves of the free or discounted service. They do so by filling in their credit card details on the merchant’s site.
- Merchants sometimes didn’t notify the customer about the renewal date.
- Merchants charge the customers with a recurring bill after the free trial ends.
- This auto-renewal of the service sometimes forces the customer to charge back.
Merchant Account Solutions for Free Trial & Recurring Billing Businesses
Are you also doing business that offers a free trial of products and services? If yes, then you might even be facing challenges to get a Merchant account. Well, QuadraPay has payment solutions for you. We help merchants with different types of payment solutions. For your industry type, you need a high-risk merchant account.
But to get one, you should have a good past processing history. It is needed because it shows that the customer is still using the service after the free trial period is over. It helps acquire a bank and a processor to build confidence that the company is able to sell the product after the free trial is over.
The history contains all the recurring bills of the customers who renew their services. If your company is able to provide free service or products even after the free trial is over, it becomes much easier for you to get a merchant account. If you have any queries, reach out to us at info@quadrapay.com.
What Is A Trial Offer Merchant Account?
A trial offer merchant account is a specialized payment processing solution for businesses that attract customers through trial-based models.
Business Models Supported by Trial Offer Merchant Accounts
- Free trials: Here, customers need to enter their card details to access any product or service. They are not charged at the beginning. But once the trial ends, they are charged automatically until the customer cancels it.
- Low-cost trials: The business charges a small fee from the customer to use any product or service. Once the trial period ends, the business charges the full amount of the product or service from the customer.
- Negative Options Billing: Here, the customer is charged automatically until they cancel the service. Such businesses need a negative option billing merchant account for managing payments securely.
- Continuity Billing: Here, the customer is charged automatically at regular intervals (weekly/monthly).
These business models are used in various industries like health and wellness, software, AI, NSFW, adult, apps, online courses, and coaching.
Why Banks Consider Trial Offer Merchant Accounts High Risk
High Chargeback Risk
Many customers sign up for free trials or low-cost trials, enter their credit card details, and forget about it. They identify it while checking their bank statements, contact the bank directly, and file for a chargeback.
For instance, a business processes thousands of subscriptions and accumulates almost 100 chargebacks in a month. This puts traditional acquiring banks at financial risk, and hence, they consider these businesses in a high-risk category and usually do not give approval for a free trial merchant account application.
Recurring Billing Increases Payment Risk
Recurring billing means customers are charged again and again, either weekly or monthly. It creates ongoing exposure for disputes. Customers could have signed up months ago for a free trial, and they may have forgotten about it.
They discovered it after 7 months while checking bank statements; they raised a dispute with the bank for all 7 months. The continuity risk makes it challenging for traditional acquiring banks and PSPs to manage such accounts.
What Acquiring Banks Actually Look For In A Free-Trial Merchant?
Payment Processing History
Acquiring banks check the payment processing history of the trial offer business for a period of at least 6-12 months. They usually prefer merchants who have low chargebacks, i.e., below 1 percent.
Refund & Cancellation Policy
Acquiring banks check how easy it is for customers to cancel the order or request a refund. Businesses need to provide a simple and visible cancellation process to the customers.
Pre-Billing Notifications
Prebilling communication prevents confusion and lowers disputes. Acquiring banks expect that businesses need to notify customers before charging them.
Businesses need to send reminders to customers through email and provide details like billing amount and date after the trial period is over. Trial offer businesses even need to send receipts after each transaction to the customer.
Clear Billing Descriptors
“Billing description” means the name that appears on the customer’s bank statement. Acquiring banks want the business name to appear clearly on the customers’ bank statements. If it does not appear clearly, then it can confuse customers, and they may file for chargebacks.
Monthly Processing Volume & Average Ticket Size
Acquiring banks assess how much a free trial business processes transactions monthly and check the average transaction size. A business that processes higher transaction values increases the financial risk of the acquiring banks. Hence, it carefully evaluates these factors, and based on them, it decides approval for trial offer merchant accounts and reserve percentages.
Compliance Requirements for Trial Offer Businesses
Transparent Checkout Disclosures
Trial offer businesses need to show various details before the customer makes a payment. It includes details like trial price, full subscription amount after the trial period is over, billing frequency, and how to cancel the product or service. All these details should appear on the checkout page. Clear disclosure of this information reduces confusion in customers and lowers disputes.
Customer Opt-In Confirmation
Once the customer signs up for the product or service, the business needs to send an email to the customer with various important details. The details include billing terms, cancellation instructions, and future charges. This email will act as evidence if the customer files a chargeback or raises a dispute in the future.
Pre-Renewal Billing Reminders
If a business offers a trial period longer than 7 days and then charges the customer, then it should send reminders before charging. The reminder should provide clear details like the amount to be charged, on which date, and how to cancel the product or service. This reminder enables customers to know when they will be charged for the product and service. It even gives enough time for the customer to cancel the product or service if they do not want it anymore.
Electronic Receipts for Every Transaction
Businesses need to send an electronic receipt after each payment. The receipt should include important details like billing date, amount charged, and cancellation procedures.
How QuadraPay Helps Prepare Your Merchant Account Application
Initial Assessment
QuadraPay reviews your free trial business model, billing setup, chargeback history, and many other things. If we find any structural issues, then we give suggestions to fix them.
Documentation Preparation
We help you organize all your documents properly, like processing history, website compliance, and company details, to improve the chances of trial offer merchant account application approval.
Acquirer Matching
We send the application to the acquirer who truly understands the free trial businesses and their risks, and this avoids unnecessary rejections.
Negotiation
You work directly with PSP to secure the best terms for the businesses. It includes negotiating lower rolling reserves and flexible contract conditions.
Ongoing Support
After approval, we provide integration support and rate review.
Trial Offer Merchant Account FAQs
Can a New Business Get a Trial Offer Merchant Account?
Yes, a trial offer merchant account can get approved without any history of payment processing. But acquiring banks will review the business model, expected translation volume, and compliance setup.
Can I Get Approved After Stripe or PayPal Closed My Account?
Yes, the approval may still be possible if the Stripe payment system has terminated the account. However, businesses need to clearly explain the reason for account termination and the steps taken to resolve the issues.
What Chargeback Ratio Do Banks Prefer?
Most acquiring banks want free trial businesses to have a chargeback rate below 1 percent.
How Long Does Trial Offer Merchant Account Approval Take?
The approval of a trial offer merchant account application takes almost 3-5 business days; however, the business needs to submit all the necessary documents to the acquiring bank for quick approval.
Apply for a Trial Offer Merchant Account
You require a trial offer payment processing solution if you are running a free trial and a negative-option billing business. You can connect with QuadraPay. We partner with the finest payment processing companies across the US, Australia, and the UK, and they provide early approval of trial offer merchant accounts.
