It’s hard to overstate the importance of great customer support.
In its 2018 Customer Service Expectations Survey, Gladly reported that 68% of respondents would “pay more for products and services from a company with a strong record of good customer service.” Furthermore, “92% of respondents would “switch to another company after 3 (or fewer) bad experiences.”
But just because support is crucial doesn’t mean it’s easy to operate in the industry. With tech support in particular, it can be difficult to obtain the processing capabilities necessary for running your business. That’s because tech support is considered “high risk” by most payment processors, and generally requires a reliable high risk merchant account provider to get started.
If you’re reading this article, you’re in luck. Motile has solutions for 95.7% of high risk merchants. In fact, we specialize in tech support merchants and can offer a wide swath of payment options – ranging from completely free credit card processing to robust ACH processing services and more. Keep reading to learn about the 4 key steps that will help you land a merchant account for a tech support company sooner rather than later.
Four Steps to Landing Your Processing Solution
Step 1: Intimately Understand Your Industry
The first step to landing a high risk merchant account for tech support is making sure you’ve got a good handle on the basics of the your industry. So, let’s get started by taking a look at some trends and stats in the section below.
The world of tech support is a booming one, and it’s also constantly changing.
For instance, Capterra’s article on 2018 tech support trends noted in particular the rise of messenger apps. These apps are quickly grabbing up a notable share of customer support requests — so much so that by 2019, apps will outgrow and pass traditional social media requests in usage.
There’s also the cloud. More and more, companies are recognizing the value of cloud-based applications and are moving their services in that direction. According to Spiceworks’ 2018 State of the Industry report, one of the top drivers for moving to the cloud was reducing the support burden on IT staff.
Additionally, new tech tools that utilize artificial intelligence, augmented reality, and machine learning will play a dominant role in the upcoming years. A fun example from the world of AR is Porsche’s Tech Live Look, which allows tech support to beam screenshots and instructions to smart glasses worn by service technicians.
Steady growth is on the horizon for the tech industry as a whole. But the real winners in tech support will be the ones who stay on their toes when it comes to recognizing and implementing new disruptive technology.
Tech Support: Industry Breakdown & Statistics
Tech support is often treated as a subcategory of the larger information technology (IT) industry in research reports. Relevant studies would sometimes sprinkle in stats specific to tech support, but they didn’t consistently adhere to that subcategory.
The following section reflects this point, and pairs a number of broader IT stats and ones specific to the tech support industry.
- The Computing Technology Industry Association (CompTIA), a longtime advocate for information technology companies, projected that the global IT industry will crack $4.8 trillion in revenue in 2018. This is a 5% growth rate year over year.
- The U.S. is the biggest tech market in the world, claiming a 31% share.
- Tech support, as a subcategory of IT services, makes up 31% of the overall IT industry.
- In 2017, there were 733,210 jobs in the IT support specialist category, accounting for 13.7% of total tech jobs in the U.S. From 2016 to 2017, the number of jobs in the IT support specialist category increased 2.2%.
- Citing Gartner, CompTIA states that “about 1 in 3 SMBs report spending more than $100,000 annually, [and] SMBs account for about 44% of IT spending globally.”
- Revenue: $439 billion
- Annual growth 2013-18: 3.3%
- Employment: 2.2 million
- Businesses: 479,536
Corporate profit and the number of businesses in this industry are both projected to continue increasing through 2023.
- Revenue: $24 billion
- Annual growth 2013-18: 2.9%
- Employment: 488,879
- Businesses: 26,104
Corporate profits are projected to increase through 2023, but IBISWorld notes three threats to long-term growth:
- continued reliance on offshoring,
- improvements in automation technology, and
- increasing market saturation.
- Revenue: $10.5 billion
- Annual growth 2013-18: 4.3%
- Employment: 252,614
- Businesses: 2,736
Continued moderate growth is projected, thanks to increased consumer spending, government support, and the ongoing shift toward a service economy.
As noted above, the tech support industry is highly fragmented, and market share is low and flat. Rather than seeing a small number of giants dominate the market, you’ll find literally thousands and thousands of companies out there competing for their own share (which can be excellent for newcomers).
Many of these companies focus entirely on providing tech support to other businesses (B2B). Below are a few examples of such managed service providers:
Large corporations often spearhead their own internal tech support departments. Below are a few examples of such, and you’ll probably find them a bit more recognizable:
Businesses in the tech support industry use the following North American Industry Classification System (NAICS) codes:
- 541519: Other Computer Related Services
- 541618: Other Management Consulting Services
They also use the following Standard Industrial Classification (SIC) codes:
- 7379: Computer Related Services, Not Elsewhere Classified
- 7389: Business Services, Not Elsewhere Classified
- 8748: Business Consulting Services, Not Elsewhere Classified
Step 2: Familiarize Yourself with Tech Support Laws
U.S. Federal Laws
In the United States, the Federal Trade Commission monitors consumer complaints about the tech support industry. Complaints regarding tech support scams are actually the second most common type of complaint the FTC receives, after debt collection complaints.
Obviously, scamming consumers can land you in hot water with the federal government, yet for some reason this is still a common occurrence in the IT world. It is, without question, a key reason that tech support is considered high risk by banks.
Here is a list of some of the federal regulations that tech support merchants should be aware of:
- Section 5 of the Federal Trade Commission Act — 15 U.S.C. §45
- The Telemarketing and Consumer Fraud and Abuse Prevention Act — 15 U.S.C. § 601
- The Telephone Consumer Protection Act — 47 U.S.C. §227
- The Electronic Funds Transfer Act — 15 U.S.C §1693
- The Electronic Signatures in Global and National Commerce Act — 15 U.S.C. §7001
U.S. State and Local Laws
When it comes to states and local governments, there are likely additional rules that will apply in the realm of consumer privacy, credit, lending, finance, banking, and other areas. Your best bet is to work with an attorney to ensure you’re in compliance with all regulations.
For what it’s worth, at the end of 2015 Washington state sued a major tech support company called iYogi for violating its Consumer Protection Act and Computer Spyware Statute. The state won, and iYogi was essentially forced to shut down in 2018.
The General Data Protection Regulation (GDPR)
Finally, if you serve customers in the European Union, you are also subject to the General Data Protection Regulation (GDPR), which took effect in May 2018. The regulation replaces the 1995 Data Protection Directive and provides consumers with much more power regarding the use and storage of their personal data by companies.
It doesn’t matter where in the world your company is located — if your customers are located in the EU, then you must comply with the GDPR.
Step 3: Know the Challenges Facing Your Business & How to Overcome Them
Challenge #1: Chargebacks
Chargebacks occur when a customer disputes a transaction on their account for whatever reason, and requests a reversal from their issuing bank. It’s a common problem with high risk merchants, including those in the tech support space.
Most payment processors will see a big red flag if your chargeback ratio goes over 1%, and before you know it, your merchant account has been closed. Chargebacks can be a huge hindrance for the growth and stability of your business.
- Keep a careful record of all transactions.
- Always send out email receipts to create a trail.
- Ensure your billing descriptor is clear on customers’ credit card statements.
- Offer refunds, as this is always better than incurring chargebacks.
- Work with a payment processor that offers a chargeback alert program.
Challenge #2: Market saturation
The tech support market is saturated, and new players will be faced with the challenge of differentiating themselves in a very crowded industry, not to mention the challenge of landing a merchant account for tech support.
- Provide top-notch service that leaves customers feeling like you’re going above and beyond.
- Attract people to your brand by making self-help content available online. Why? Because “on average, for every customer who opens a support ticket, four customers will choose self-service options.”
- Expand your expertise to cover the latest technology, like wearables, the Internet of Things, machine learning apps, artificial intelligence, augmented reality, and virtual reality.
Challenge #3: Scammers
Unfortunately, scams are a common problem in the tech support industry. Their pervasiveness tarnishes the reputation of other honest tech support companies, and adds another hurdle to obtaining a merchant account.
- Be as transparent as possible when applying for your tech support merchant account.
- Make sure you have a legitimate, professional website in place.
- Consider providing free online resources about how consumers can recognize and avoid scams. The Better Business Bureau has an excellent resource on tech support fraud published in 2017 can be used as a starting point.
Challenge #4: Banks won’t work with you
As a high risk merchant, traditional banks and payment processors are unlikely to offer you a merchant account for tech support. It doesn’t matter if you’re the best merchant around; they’ll simply reject your application based on your industry classification. Fortunately, this challenge doesn’t have to be too much of a hurdle.
- To get the best merchant account for tech support, you need to work with an agency that specializes in high risk merchants. Agents and ISOs generally have accumulated a reliable network of partners over time, and can connect you with a payment processor that fits the needs of your business.
Step 4: Prove You’re a “Low Risk” High Risk Merchant
Sure, maybe tech support is technically a high risk industry, but as long as you’re running a legal business, there are processing solutions out there for you. You just need to show that you’re a “low risk” high risk merchant.
If you make your business look as legitimate and reliable as possible, you’ll have a much better chance of getting optimal rates and a dependable merchant account.
Here are some tips to that end:
Tip #1: Have all of the required paperwork in order
Not only does having all of your paperwork nicely organized help you come off as a legit business owner, but it will also help you get your account opened faster.
Some documents you should prepare before submitting your application to the underwriter include:
- A voided check & bank letter, with matching routing & account numbers
- A current copy of your driver’s license
- Articles of incorporation
- Company bank statements from the three previous months
- Processing statements from the past three months (if available)
- A list of websites
- Advertising material
- Proof that a URL belongs to you (screenshots are good enough)
- A utility bill
- Your EIN or SS4 paperwork
- If you’re new to the game, 3 months of personal bank statements is acceptable
Tip #2: Be as transparent as possible
Transparency is key when it comes to securing a merchant account for tech support. Payment processors are going to look closely at your history anyway, so you’ll do yourself a favor by being as open and honest as possible.
If you don’t have a payment processing history yet — or if your history is less than ideal — then you can also provide personal information that establishes your creditworthiness.
Tip #3: Focus on quality of service, not cutting costs
The more helpful and professional your tech support team is, the less likely you’ll have to deal with unhappy customers and chargebacks.
U.S. companies might think it’s cheaper to offshore their tech support, but the truth is that it’s often about the same to hire domestic support workers who work remotely as it is to hire offshore. If you’re providing support to U.S. customers, wouldn’t you want to have a U.S. support team to help them out? It’s simply a better customer experience.
Tip #4: Have a clear refund policy
It’s worth establishing a no-questions-asked refund policy for your tech support company, because refunds are a much better option than dealing with excessive chargebacks. Giving a refund can often help you steer clear of a potential chargeback, so offer them liberally.
Place your refund policy in a highly visible spot on your website, include it on ever email receipt, as well as anywhere else you can think of to get the point across. Not only will customers appreciate your effort (and likely dispute fewer charges as a result), but underwriters will also see that you’re committed to providing great service, making your business easier to support.
Tip #5: Join a trade association
Joining an IT trade association will give your tech support company a boost when it comes to reputation and public opinion. It will also provide you with excellent resources, training, and networking opportunities to help you stay ahead of the tech curve and keep in compliance with industry regulations.
Here are a couple associations worth checking out:
The U.S.-based Computing Technology Industry Association (CompTIA) was founded in 1982 as the Association of Better Computer Dealers. CompTIA focuses on empowering companies in the IT industry through education, certification, advocacy, and philanthropy. Membership benefits include networking opportunities, business tools and templates, access to meetings with lawmakers, unlimited access to research, complimentary CompTIA events, discounts on certifications and competitive analysis, and more.
Established in 1988, this U.K. association provides research, benchmarking tools, training, best practices, and a whole lot more for IT service professionals around the world. Their Service Desk Certification program is internationally recognized and provides ongoing surveillance audits to encourage continuous improvement.
Are you ready to secure your merchant account for tech support? Follow the four steps outlined in this article, and you’ll be able to find a merchant service provider capable of meeting your business needs in no time.