Negative option billing isn’t very new to merchants. For quite some time now, sellers who have new products or services often consider giving them out for tree trial before customers can decide whether to make a purchase or not. It is an excellent way to attract interested consumers.
This is what happens; someone comes across your products and takes an interest in it. But since it’s something they have never interacted with before, they are not very ready to pay for it. So, you allow them to use it for free for a given period (commonly 14 days or 30 days) before making a decision. If at the end of the trial period they like the product, they can pay for the premium option from their credit cards. Otherwise, they are free to cancel their membership.
While this setup works very well for merchants and their customers, apparently it has some loopholes that authorities aren’t happy with. For instance, the Card Association (which includes major card processors such as MasterCard and Visa) came under intense criticism from Congress last year. According to Congress, merchants offering products such as weight loss supplements were using negative options billing to force consumers to buy their products.
For instance, some merchants would offer free trials, or heavily discounted initial offers to woo customer to sign up. Once a consumer signed up, they would be charged regularly without the chance to opt out. The major problem was that consumers sometimes didn’t even know what products they were signing up for and the seller didn’t offer enough information to help them make better decisions.
This resulted in numerous chargebacks as merchants refused to offer refunds or when customers couldn’t recognize the charges on their cards. The Card Association testified before Congress and soon called on merchant account providers to put an end to this trend. This is why most merchant banks currently don’t offer these services.
There is no denying that negative option billing carries a lot of risks, especially in the form of chargebacks. However, considering the potential benefits of such arrangements, barring merchants from opening a trial offer merchant account altogether would be uncalled for. This is why emerchantbroker.com now allows merchants wishing to engage in genuine negative options billing to open an account and proceed with business.
EMB is a reliable merchant account provider who has helped thousands of merchants like you before. There are no application fees to worry about and the rates are very competitive.