Since PC Flowers & Gifts created the first internet-based affiliate marketing program in 1994, paying “publishers” (i.e. affiliates) for sales generated through on-site advertising has become a widely-used marketing technique. Top e-commerce companies such as Amazon and eBay use this method with tremendous success. Amazon was indeed the first to propel the idea to the prominence it enjoys today. When properly used, affiliate sales can be beneficial for both the merchant and the publisher. Passive incomes can be generated for the affiliate, while providing free, low-risk marketing for the merchant.
With all this positive history, it may seem as if your company cannot fail. However, failing to obtain a good merchant account might be a challenge.
Although affiliate marketing is well-established, it is also fraught with risk for credit card processing companies. Reasons for this can be the abundance of ways in which affiliates can game the system. E-mail and search engine spamming, false advertising, cookie stuffing, typosquatting, and other unethical techniques may cast a shadow over the industry at large. Eventually, this can lead to organizations that employ these black-hat affiliates to lawsuits. Also, this can undermine their financial integrity by decreasing the number of natural visitors to the website who would have made a purchase for which an affiliate would not have been paid.
These legal and financial risks for the industry at large often cause individual businesses to be classified as “high-risk” – regardless of whether or not it has any past negative history.
Fortunately, the unethical actions of others do not bar you from getting a merchant account, which is excellent news indeed since the goal of affiliate marketing is sales. Merchant accounts allow you to accept credit cards, debit cards, and ACH payments, so it’s essential that you not only secure an account, but one backed by a reputable company known for its excellent customer service and fair rates with no hidden fees. Even if you’ve been declined by the major merchant service providers, businesses such as E-Commerce 4 IM, who specialize in high-risk businesses and who are familiar with your industry. These companies have the experience and connections you need to sell your products online.
Credit card processing companies consider several factors when evaluating businesses that make extensive use of affiliate marketing. These include the length of time your company has been in business, your past credit history (including your business’ credit score), the amount of negative feedback your company has received, your marketing practices (since overstated promises and deceptive marketing are a primary reason for chargebacks), and your business’ overall financial health.
Financially healthy companies are always more likely to receive merchant accounts. A few ways you can contribute to the overall health of your business include:
Maxing out your available credit hurts your credit score. This is one of the key factors credit card processing companies consider when assessing the real risk your business presents. Ideally, you should only use 10-20% of your available credit and keep as much of the balance as possible on a single card.
Timely bill payment also goes a long way toward to developing a positive credit score. Doing this convinces payment gateways that you are a responsible business.
High-risk businesses are known for excessive chargebacks. Minimizing the number of contested credit card payments and bounced cards is essential.
When you appear to promise things you cannot deliver, customers often become angry or disillusioned with the product. No matter how many other beneficial results they may have obtained, they may demand a refund or charge back their card. This can happen if they did not achieve the same result you promised.
Although you cannot control everything your affiliates do, you can take active steps to ensure that your organization does not endorse questionable behavior. Before you approve any potential partner as an affiliate, make sure they agree to your marketing policies. These policies should prohibit unethical behavior and outline steps to penalize those who employ it.
The TMF (Terminated Merchant File) list is a database created to identify merchants who have been had their credit card processing accounts flagged for illicit activity, including money laundering, excessive chargebacks, fraud, identity theft, or illegal transactions. It is also accessed by Visa and American Express, so being on this list is the equivalent of being on a shared blacklist that is circulated among most major credit card companies. If you are not already on this list, keep your business dealings honest and avoid high chargeback rates. If you do end up on the list, contact your merchant services provider to find out why. Often, they can help you to fix your reputation if you are on the list erroneously.
Finally, when searching for a credit card processor, you should not only consider the state of your own business, but the state of your potential service provider’s. A good provider will never charge you hidden fees. They will also work with you to get you started, keep you supported, and help you grow. If you’re looking for such a company, we invite you to check out E-Commerce 4 IM. We can help you acquire an Affiliate Sales Merchant Account. With many years of experience with the “high-risk” credit card processing industry we are qualified to help you.