Low Cost Merchant Accounts
Based on discussions with merchants over the last couple of months it would appear that the low cost merchant account provider Clickbank is losing popularity in favour of other third party processors.
The reason for this is Clickbank’s unfortunate credit card verification process which seems to be refusing many perfectly valid credit cards.
Not only does this mean it is becoming more difficult for international merchants to get an account (because the Clickbank website won’t let them pay the activation fee) but also Clickbank may well be losing your website perfectly legitimate orders.
Many merchants have been complaining about a drop in sales over the last few months, coupled with a growing list of dissatisfied customer emails explaining that their credit card, which is perfectly valid, keeps getting refused when they try to order.
Here is just one comment made on the AssociatePrograms.com discussion board recently:
"Potential customers have written to us, complaining that they are unable to complete purchases, because their credit cards have been rejected by Clickbank. They insist that their cards are clean… I’m inclined to believe that. Just last week a customer whose card was rejected by Clickbank ended up purchasing 3 domains for which we accepted payment via 2Checkout."
Indeed, in recent discussions with Chuck McCullough, author of the excellent Affiliate Mistakes book, he told me he’d had a similar experience with his business.
Here’s what he had to say on the matter:
"As a matter of fact I have gotten several emails from potential customers telling me they were declined on good credit cards. I’m concerned about this because I know there probably are a number of people out there that won’t contact me but rather move on and not purchase."
So it seems more and more people are experiencing problems with Clickbank.
I know myself that I’ve had brand new credit cards through the post that I have tried to use with Clickbank, yet have got refused despite never having been used before, being in date, having the correct address, no chargebacks etc.
We decided to analyse both Clickbank and it’s closest competitor (in terms of similarity and cost of service) by setting up brand new accounts for each.
Once you have signed up for a Clickbank account, you need to follow their guidelines on what you must have on your website to be authorised by them to accept credit cards (for example, you must state that it is Clickbank that will process your customer’s card).
When this is all in place you email Clickbank to let them know you’re all set up, and a real human visits your site to ensure you’ve completed everything as promised. If your site does, you pay the activation fee and start accepting credit cards straight away.
Clickbank state that the time it will take to verify your site may be up to 3 business days so we were suitably impressed when we got the acceptance email less than 24 hours later.
All we needed to do now was pay the activation fee and we were off.
Here’s where the problems started.
I typed in my credit card details and hit the submit button, only to get my card refused. So I went away and tried again an hour later. Still refused. So I tried a different credit card. Same result. In all, my business partner and I tried 6 different cards over the course of 3 days (both Visa and Mastercard) and every single one got refused!
To say the least we were rather annoyed – imagine if we’d been six different customers waiting to buy your product!
We have since sent off a check (if that doesn’t get refused for no reason!) to Clickbank to activate our account and I’ll keep you informed of how we’re doing.
However, after this experience, it’s clearly time to discuss the competition in terms of low cost merchant accounts.
Of the other closely competing accounts we set up, the quickest and simplest was 2Checkout.
We were literally set up to take credit cards in less than 10 minutes, and in contrast to many third party processors that require a contract to be signed and posted back to them (slowing down the verification procedure) 2Checkout requires no form of offline application. Oh, and the credit card we picked at random to use was accepted first time for the activation fee!
Besides the speed of set-up we were also impressed that the fees of accepting credit cards with 2Checkout are slightly lower than with Clickbank and you are provided with quite an attractive shopping cart as standard. You can also sell real-world goods as well as digital products, unlike Clickbank.
The only thing 2Checkout doesn’t have that Clickbank does is the built-in affiliate software. Here’s how it works.
If you are selling through Clickbank then you can sign up affiliates for your site on the spot. They simply open a Clickbank account of their own and as an affiliate rather than a merchant, need pay no activation fee (i.e. it’s free to them).
When an affiliate makes a sale, the percentage of that sale that you have offered to your affiliates is automatically deducted from your account and added to theirs.
At pay-day, Clickbank sends out a check to you and all your affiliates for exactly the amount of money each of you has earned – there’s no need for you to personally write checks to each individual affiliate.
So is Clickbank still number one? At the moment the jury is still out but Clickbank’s stronghold on the third party processing market is definitely looking increasingly shaky.
The problem with refused credit cards is seen as a growing problem that can stunt your business.
It is also possible to get around Clickbank’s main selling point of the affiliate software.
There’s a link on the 2Checkout low cost merchant account site to a free shopping cart and affiliate management program that can effortlessly track affiliates’ sales for you.
If you’re outside the US all you need to do is set up a US Dollar business account which can be done in most countries then pay your affiliates by check from this account.
Indeed, this needn’t be so arduous. For the start up or small business, it should be remembered that current industry statistics show that only around 5% of affiliates ever make the merchant any money so it’s unlikely you’ll be sending out hundreds of checks (at least at first!).
Will Clickbank fall from favour? Will we remove it from the number 1 spot in the near future? If things carry on as they are now I think it’s highly likely – and 2Checkout at the moment seems a contender for the crown.
We’re going to be monitoring both companies closely over the next few months and we’ll keep you updated.
To check out 2Checkout now (no pun intended!), which we believe is fast becoming the very best low cost merchant account available, click here. You’ll be set up to accept credit cards in 10 minutes, even as an international merchant.