We are a new company and have developed an online service that we want to charge a monthly fee to use. So far, we have tried two merchant account providers and have been turned down because we are a new company with no trading history, and we want to use recurring payments.
It seems recurring payments is the real stumbling block because there is a high risk of chargebacks.
On top of the recurring payments the merchant account should work with a payment gateway that allows our website to host the credit card form on our page for example in an iframe or posting the cc details directly to the payment gateway, therefore reducing our PCI requirements.
Anyone else in a similar situation and managed to get a payment gateway and merchant account in the UK?
FYI we are currently applying to SagePay.
You have definitely identified the problem - it is the recurring payments. Because you are a start-up you have no trading history to refer to and so it is going to be very difficult to get a merchant account, and when you do you are likely to find that you will be penalized with high rates or retained balance or other conditions.
If you can find an alternative to recurring payments that would be your simplest solution. Could you invoice each month, or charge an annual administration charge with free access to your product? Remember you would not have to do this indefinitely, just until you have built a trading history and this is acceptable your service provider.
I work for Nochex and that is where I derive my experience / answer from.
Hope this helps, Peter
We managed to obtain a merchant account from FirstData that allows us to use recurring payments. We are using Realex as our payment gateway and they also store the credit card details and allow recurring payments via sending of tokens each month.
We had to provide extensive information including our business plan and had to challenge a rejection based on a misunderstanding. So even if they reject you find out why and argue. It also helps that Chris from FirstData was a real help and kept going back to the underwriters.
I hope this helps someone else in a similar situation to us.