The seminar and coaching businesses have several features that make merchant account providers reluctant to work with them.
First, most credit card processors want credit card chargebacks to be 2% or below. When chargebacks exceed that rate, the processor can lose money, and lots of it. In coaching and seminar businesses, chargebacks tend to exceed 2%, since a certain number of attendees or clients may not be satisfied with the results.
Second, training and coaching services are high ticket items, increasing the risk of chargebacks: When customers pay a great deal of money for training or coaching and feel they have been shortchanged, they are apt to become angry and initiate a chargeback without first taking other, less extreme steps to resolve the issue.
Third, as coaches and trainers well know, cancellations are an unfortunate cost of doing business. Cancellations, whether for on-site or virtual services, often trigger chargebacks whenever deposits or fees have been collected up front.
Fourth, many coaching and training businesses rely on or use the recurring billing model, which is yet another driver of chargebacks. Customers with recurring charges often forget what they are paying for, or because their financial situation changes, decide they can no longer afford the service. For these reasons, we always recommend that coaches and trainers clearly label credit card charges that appear on their customers’ credit card statements, and provide clear instructions for cancelling a subscription.
Fifth, fraud unfortunately enters into the processor’s risk calculations, since some in the training and coaching industries really don’t deliver or even have the credentials they advertise. Fraudulent service providers create a host of chargebacks and eventually have their businesses fail, all of which is devastating financially and reputationally to the processor. Although the instances of fraud are a tiny percentage of what is a highly professional business, the threat and perception of fraud contribute to categorizing coaches and trainers as high risk.