Magazine Subscription Merchants and High Risk Transaction Processing
Due to the affordability and ease of access to magazine subscriptions, millions of Americans enjoy their favorite magazines by having them delivered right to their homes. Publishers fill their magazines with subscriptions inserts, encouraging readers to begin their subscriptions now, pay later. Usually, the bill for the subscription comes along with the first issue, and the high risk merchants who offer these publications have to put their trust in their customers that the obligation to pay for the magazines will be honored. This trust is not always well-placed, however, and these merchants often have to deal with a high rate of chargebacks as a portion of their customers become negligent on their subscription bills.
The high rate of chargebacks is just one of the reasons why the merchant accounts provided for magazine merchants’ transaction processing are labeled high risk. Another reason is that the advertising that these merchants do in order to market their products is often telemarketing or direct mail solicitation. When customers agree to order a subscription, they often use credit card information as a means of payment; and this credit card information has a chance of being a part of credit card or identity fraud unless the high risk merchant has strict security measures in place. Transaction processors who handle these high risk merchant accounts may institute the following policies:
• High per-transaction rates
• Security deposits
• Additional deposits intended for impending chargebacks
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