Getting started with payment processing

If you are trying to set up a business, particularly an online business ("card not present" in industry jargon meaning you can't see the customer, card, or get a signature) with recurring revenue (meaning a stream of revenue like a subscription from each customer) and the delivery of value online such as education or ebook or software downloads (an "intangible product" in industry jargon meaning that there is no physical product shipped), you mind find that payment processors are not that eager to deal with you. Especially if you want your customers to pay you up front.

This is because of what can and has happened. Many nice little startups have come into being. They have a great new service which customers can have for just $250 per year. They sell maybe two hundred subscriptions over the first year meaning that they collect $250 from two hundred people. Assume, sadly, that they had expected to sell a thousand subscriptions and their business plan and financing (and costs) assumed revenue of $250,000 (a thousand customers) but instead sold $50,000 (two hundred). They might go out of business and there are two customers calling their bank and their credit card vendors trying to get a refund on their $250.

This has happened. A lot. So,, most vendors will not allow new startup companies to take payment for a year up front or even quarterly. They require you to take payment monthly. Oh, and they don't tell you this. They just look at your application to take payment for a year and say it was refused.

I think I applied and was refused by several vendors before someone told me that the next place that I applied to take credit cards, I should tell them that I was going to take payment monthly, not annually. I did and was accepted.