DRMA White Paper — National Merchants Association: Solutions for the Changing Payments Landscape

Case Study

National Merchants Association is a globally-recognized processor and merchant advocate that has specialized in trial and continuity subscription payment processing for nearly two decades — both domestically and internationally.

Recent years have seen the emergence of subscription-based services, including new incarnations of familiar recurring billing models, particularly within the e-commerce space. In response to the rise of subscription merchants, NMA is stepping up its industry-leading processing and advocacy efforts, working with businesses on a personal level to find solutions that benefit merchants and consumers alike.

Subscription-Based Services

NMA helps build better business models for merchants that are at times considered “high risk,” such as those offering subscription-based, as well as trial and continuity products. As a payment processor that provides expert service and advocacy for subscription merchants, the organization is committed to ensuring that its merchant partners operate healthy businesses with a long-term view and increased opportunities for growth and profitability.

Contrary to how it sounds, “high risk” isn’t necessarily bad. Most of the time, it simply refers to the type of goods and services a merchant is selling, the industry they do business in, or how their products are sold — subscription-based and e-commerce businesses among them.

Big box companies like Stripe and Square can process for these merchants, but unfortunately, they don’t offer the same quality of customer care, fraud-busting tools, and other valuable services that NMA provides.

NMA ensures the longevity of subscription-based merchant identification numbers (MIDs) and the profitability of businesses through dedicated in-house risk management and chargeback departments.

Business models that include subscription-based services — monthly-delivered boxes, for instance — work well because they build stronger customer relationships and ultimately increase lifetime value. These merchants have a specialized type of billing model – an area of specialty for NMA. Additionally, NMA helps merchant partners tap into changing revenue streams, allowing them to adapt to global opportunities.

The Cross-Border Commerce Model

Cross-border e-commerce continues to grow as more of the world’s population become digital buyers, and retailers scramble to facilitate these transactions. Alibaba, the world’s largest online e-commerce company, estimates cross-border e-commerce transactions will reach $1 trillion globally within 10 years.

Entering foreign markets is definitely a challenge, but considering the explosive growth in e-commerce around the world, it can prove to be a very worthwhile venture. As Payvision and Juniper Research found in their extensive 2017 research report, merchants’ attitudes toward cross-border e-commerce have become more positive, and 31 percent of merchants strongly agree that cross-border e-commerce is profitable. Additionally, the compound annual growth rate predicted through the next three years for cross-border e-commerce is 17 percent, compared to the current level of 12 percent.

Merchants are definitely concerned about this form of e-commerce and below are some points of interest they are likely to consider when going international:

  • Finding the best ways to market and sell products
  • The growth of mobile commerce and how to implement these capabilities
  • Data breaches and potential fraud threats
  • Alternative payment methods (cryptocurrency, etc.)

Understanding exchange rates and offering dynamic currency conversion is also an important component of offering an international processing solution.

Dynamic Currency Conversion is the ability of a merchant (through a payment gateway) to automatically convert a consumer’s payment to either the local currency or keep the customer’s home currency. While currency exchange rates may differ and there is typically a fee for the service, dynamic currency conversion is a valuable offering that makes accepting international payments a lot easier for merchants.

Most potential issues and problems can be alleviated by partnering with an international specialist. Finding a well-established partner with the right global business connections, not to mention the agility and ability to adjust to new opportunities that are available in the global market, is crucial to the success of a merchant’s business.

Chargeback Control

National Merchants Association offers a host of proprietary products and services — all designed to increase the longevity of merchant accounts and merchant profitability. Among them is the Chargeback Control Platform (CCP) that was developed in-house.

CCP is a one-of-a-kind tool that was designed with the merchant in mind — to forecast, prevent, and combat chargebacks. It offers bank-level interception of chargebacks and funding in less time than typical chargeback situations.

The real value of this platform lies in its ability to handle incoming chargeback alerts virtually instantaneously. This allows any issues to be quickly resolved and chargebacks to be avoided. This ultimately keeps MIDs active longer, so merchants can continue to do business and processors can continue to meet their needs.

CCP offers:

  • Bank-level interception and automatic refunds
  • Trend observation and visibility with comprehensive status updates
  • Forecasting of inbound disputes, issuing non-compliance warnings
  • Highlighting inbound disputes by count and cost volume
  • Dispute representment

Currently, 65 percent of NMA’s MIDs are using CCP. Additionally, 98 percent of alerts for CCP-enabled MIDs have been auto-refunded. The net result is 70-percent-longer MID lifespans. CCP supports merchants in all markets and countless industries, especially those with the potential for high chargeback rates, including recurring billing and subscription-based businesses.

NMA’s CCP is just one of the many ways the company is constantly searching for ways to save merchants money and improve the processing experience for both merchants and consumers.

Profitable ISV Partnerships

“Working with other businesses is the key to not only staying competitive but remaining relevant as well. National Merchants Association is no different and is certainly no stranger to collaboration and the positive outcomes that can result” — Jason Holderness, Chief Technology Officer

For payment processors like NMA, forging partnerships with integrated software vendors (ISVs) presents an ideal way for processors to support emerging businesses, including those within the payments industry. This is especially true when businesses choose to sell products and services using the subscription-based model or they decide to cross borders.

Similarly, commitment to development and being at the forefront of innovation is at the core of what integration is all about. Leveraging the advances made in the payments space can create massive new markets for businesses on both sides of a partnership.

The bottom line is that payment processing has evolved rapidly in recent years and customers’ payment expectations for frictionless purchase experiences must be met. ISV partnerships present a host of benefits — they minimize the time, cost, and complexity of creating or installing additional programs and systems.

A positive side effect is that partnering with an ISV can streamline a merchant’s PCI compliance process. Additionally, when small and midsize merchants receive point-to-point encryption (P2PE) and managed security services like payment tokenization through the help of ISVs, fraud risk is reduced significantly.

New unions always bring more opportunities for innovation and development, while continuing to provide further vertical integration for processors like NMA.

The Future

Changing the existing mindset from short-term revenue to long-term profitability by building better business models, such as subscription-based services and cross border e-commerce, will be crucial in order for merchants to remain relevant in an increasingly competitive marketplace.

Increased agility, profitable partnerships, and the ability to provide expert processing services and merchant advocacy continues to be at the forefront of National Merchants Association’s efforts. For businesses that specialize in subscription-based products and services, NMA continues to Work For You®.