Some people are surprised that tech support businesses are considered high risk. But when you factor in the ease of scamming consumers, high chargebacks, and over-the-phone or internet transactions, it makes more sense.
Fortunately, legitimate tech support businesses can still secure merchant accounts to accept credit cards. You’ll just need to work with a “high risk” credit card processor that permits tech support businesses.
- Types of Tech Support
- Why is tech support considered high risk?
- Mitigating Risk for Card-Not-Present Transactions
- Merchant Accounts for Tech Support Businesses
- Rates and Fees for Tech Support
Types of Tech Support
For the purposes of credit card processing, tech support generally refers to any business that offers assistance with computers or software. This includes setting up computers and routers, installing or removing software, virus removal, remote tech support, internet connection issues, email issues, general troubleshooting, etc.
Scammers often use the “virus removal” angle, claiming to customers that their computer is infected. The scammer tells the customer they can remove the virus for a sum of money, but often there was no virus or the scammer planted it themselves.
Why is tech support considered high risk?
There are many reasons that an industry may be considered high risk, and that’s true of tech support. There’s a higher risk of chargebacks, riskier card-not-present transactions are common due to remote service, and it’s an easy industry for scammers to pose as legitimate businesses.
Regarding chargebacks, industries that provide a service instead of a tangible product often face higher chargebacks, as customers may not agree that the service was performed as they expected. Services are also a common target of “friendly fraud,” where a customer authorizes a charge and then later claims it was not authorized.
Card-not-present transactions are always considered riskier than card-present transactions, simply because there’s no way to prove a customer really had the card in those online transactions.
As for scammers, you may not think tech support scams would be a lucrative business, but the Federal Trade Commission estimates that consumers were scammed out of almost $25 million in 2015 and 2016 by tech support-related scammers. That’s an issue for credit card processors, which may be on the hook when chargebacks roll in and the scam company disappears or is shut down. Additionally, companies that willfully assist scam businesses can face legal action from government agencies. An Industry publication called Payments Journal wrote an article in July of 2018 explaining the headaches tech support scammers have caused for credit card processors.
The prevalence of IT-related scams and the possibility of expensive repercussions has some processors deciding they’d rather not get involved in tech support processing and makes it a “high risk” business for the ones that do.
Mitigating Risk for Card-Not-Present Transactions
If it’s possible to take cards in person, that’s always a good idea. It will be lower cost and safer. However, for some businesses, that’s just not an option. If that’s the case for your tech support business, you can take steps to minimize the risk of accepting transactions online or over the phone.
- Make your contact info easily findable
Customers may contact your company first, giving you a chance to resolve the problem instead of dealing with a chargeback.
- Use Address Verification Service (AVS)
AVS compares the customer’s address with the billing address on file with the credit card company. You can choose to decline transactions with AVS mismatches, or require additional information from the customer to cut down on your risk of accepting a fraudulent payment.
- Consider implementing 3DSecure technology
3DSecure requires enhanced authorization for online transactions and reduces your liability in the event of a chargeback
Read more about credit card processing chargebacks.
Merchant Account for Tech Support Businesses
Getting a merchant account for a tech support business doesn’t have to be a difficult process. You’ll save yourself time and frustration if you seek out a processor that can support high risk, specifically tech support/IT services.
Keep in mind that a lot of the “flat rate” companies that you hear about do not process for tech support or other high risk businesses. This includes companies like Stripe and Square. When you try to sign up with a flat rate company that doesn’t support high risk, you may initially be approved due to the same-day applications, but when the processor eventually reviews your account, they will close it.
It’s never a good idea to try to skirt a processor’s requirements and supported industries. Instead, be upfront with processors about the nature of your business. This will help you find the right fit for a smooth processing experience.
Finding a Processor
When looking for a credit card processor for a tech support business, you’ll first want to narrow down a list of companies that explicitly offer services to high risk businesses. Fortunately, processors that can support high risk will usually state it clearly. If not, you can always ask the sales rep directly before proceeding to a full application.
Once you’ve confirmed that the processor can offer accounts for tech support businesses, you can compare quotes from multiple companies and ask about any equipment you’ll need to purchase.
You’ll also want to ask the processor about any restrictions on your account, such as ACH delays, rolling reserves, or processing volume caps. Restrictions can happen with any merchant account, but are more common with high risk accounts.
Different processors require different documents in support of your merchant account application. In general, you should expect to provide a valid ID, recent bank statements, and recent processing statements (if you’re already processing.) You may also need to provide your social security number and agree to a personal credit check.
While no single factor affects whether you’ll be approved for a merchant account, there are things you can do to help your chances. Bank accounts with funds to cover chargebacks can help secure accounts, as this indicates to underwriting that you have access to cash. Having good credit may also be a positive sign in your favor.
Rates and Fees for Tech Support
Unfortunately, high risk accounts come with higher rates for credit card processing. Many factors affect your final rate, so high risk processors typically don’t publish rates online.
In order to better understand the rates and fees you’re quoted, be sure to check out our guide to credit card processing. While the actual costs you pay will be higher, it will be helpful to have a good understanding of the components of cost so you can more effectively evaluate quotes from different processing companies.
Which company do you use for your tech support merchant account? Let us know in the comments!