Businesses that use a continuity model, also called a recurring or rebilling sales model, can pose an extra layer of risk for their merchant processor and acquiring bank. Several factors play a role in the challenge of approving a rebilling model business. A continuity model usually consists of a business selling a product or service via a monthly subscription. The customer signs up to be charged a specific fee on a certain day each month, until canceling. While this can be a very profitable way to do business for the merchant, it also comes with issues the merchant will have to mitigate.

The main issues we see with these types of business models are as follows:

So, as you can see, most of the issues stem from unhappy customers for one reason or another. Our experts suggest a merchant has a very robust customer support department so it can manage any issues that may arise. If refunds and chargebacks spike to an unacceptable level by the card associations, the merchant account could be put in jeopardy and eventually closed. Fines for refunds and chargebacks can really start to add up, hurting the business’s bottom line. In extreme cases, the merchant account provider may even submit the company to the card association’s match file. Once on this list, it will become very hard for the business to obtain a merchant account in the future.

Some advice to avoid the above issues is as follows:

Continuity merchants that offer a free trial of the product or service tend to have an even higher level of risk for disputes and unhappy customers. Free trial terms must be set to the card association rules as well as the specific processor’s terms. Some processors will not support free trials at all, while some may impose some very stringent requirements. All the above advice applies to merchants that want to conduct business using a free trial model. The fundamentals of running a successful business such as quality product/service and excellent customer support come into play even more with a free trial model.

Here at Performance Card Service, we understand your continuity business. We will help you navigate the card association terms for rebilling and free trial models. We will connect you to several processing channels to ensure that you always have a merchant account to process on, even if one gets shut down. Please contact us today to discuss payment processing for your continuity business.


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