Software selling merchant accounts and payment gateways

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Libby James
Merchant Services Expert

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

Software selling merchant accounts

Let’s face it most software sales require a merchant account, as card payments are taken over the phone or online via ecommerce. Software, tech and fintech businesses are a multibillion-pound market, so why is it so difficult to find long term card payments solutions? Our ultimate guide is here to break things down for you, enabling you to make informed decisions when it comes to how you accept card payments for your software business.

Software selling merchant services

The reason it’s so difficult to find suitable long term payment processing for software associated products is the risk involved. This leaves us with very few merchant services options. Naturally it also means merchants panic and tend to look offshore for merchant banks, which may not always be the best for your software selling company. Before we dive in, let’s take a look at why software selling is deemed high risk by acquiring banks?

Software selling high risk merchant accounts

There are a few reasons software selling is high risk when it comes to payment processing;


CARD NOT PRESENT TRANSACTIONS – the majority of software sales take place without the customer or card present, which inevitably creates more risk for the merchant bank. 


CHARGEBACK RATES – software and tech sales have historically higher chargeback rates, which acquiring banks do not like (understandably) however anything with chargeback rates under 2% is generally acceptable.


INTERNATIONAL MERCHANTS – some merchant account providers will rule you out based on your location alone. For example, not all banks process payments outside of the UK and EU. 


INTERNATIONAL CUSTOMER BASE – similarly to the above, not all banks process payments worldwide, meaning that choosing the correct bank for your customer location as well as registered business location is important.


Software selling payment providers

The likelihood is, if you’ve ended up on this page you’ve experienced either a declined merchant account application or worse still you’ve been terminated by your existing provider. This is commonplace in high risk card processing, and software sales is no different. It’s worthwhile pointing out that just because one bank has said ‘no’ it doesn’t mean all will, however we may need to look a little further afield than the high street and mainstream payment providers for your software selling business.


Software selling payment processors

Before you start popping out applications left right and centre, it’s important to understand if your software download business fits within the payment processors criteria. This can be complex as it’s not only based on business type but trading location and currencies too. Some acquiring banks will accept software selling companies on a ‘case-by-case’ basis, but its worthwhile finding out before applying.


Alongside your application you will be asked to submit the following paperwork;


  • ID from the Directors/Shareholders
  • Proof of address from the Directors/Shareholders
  • Certificate of incorporation
  • Proof of business address/locations
  • Six months transaction history to illustrate chargeback rates


If you are unsure as to which payment processor to apply to for your software selling business, you may wish to enlist the help of a non-biased broker who can point you in the right direction and help with the application process.

Software selling credit card processing

Once you’ve submitted your application, the underwriting team within your chosen bank will review your business and decide if they wish to handle card processing on your behalf. All being well, following a successful application the bank will then present you with the terms in which it agrees to handle your credit card processing. With high risk accounts you can expect the acquiring bank to request a rolling reserve or deposit on account to counterbalance the risk involved in accepting the payments. Although rates and fees might be a little higher, we suggest comparing accounts on a pound for pound basis and looking to switch banks every couple of years to ensure preferable processing costs.

Software selling merchant account instant approval

Due to the high risk nature of software selling payment processing, merchants are often searching for instant approval accounts after a decline or termination. Sadly, for the same high risk reasons, instant approval merchant accounts are unavailable for software businesses. The banks require adequate time to underwrite these types of application which can take up to ten working days. 


For this reason, and as your business grows, we suggest having more than one merchant account to process payments which mitigates risk of termination and being unable to accept transactions.


Software selling online payment processing

The majority of card payments for software sales are taken online which means you’ll need a merchant account and payment gateway. Choosing the right payment gateway to suit your business will enable secure and profitable online payment processing. Let’s take a look at what you need to consider…

Software selling payment gateways

Finding the most suitable payment gateway for software sales is imperative to running a successful business, here’s what we suggest you consider;


SECURITY – each gateway provider works on a PCI DSS compliance rating, one being the best you can get. When accepting payments online security is key.


CHARGEBACK AND FRAUD MANAGEMENT – some gateway providers assist with chargeback management, in high risk industries this can be high and therefore time consuming, so its worthwhile considering these features.


INTEGRATION – payment gateways need to integrate with your merchant account and website provider as standard, however additional integrations such as customer databases and accounting systems can make transaction admin a lot easier.


RECURRING PAYMENTS – if your software business is operating on a subscription model, you’ll want a gateway which can accommodate recurring payments. 

INTERNATIONAL TRANSACTIONS – the location of your business and customer base will come into play when choosing the right payment gateway for software sales, if you’re looking at accepting international transactions, make sure your location and currency are covered.

Software selling business bank accounts

Software sales isn’t just high risk when it comes to card payments, business banking can be a struggle too. This is why we’ve partnered up with expert high risk brokers to help you with software business banking. Together our team is on the ball when it comes to international transaction costs and can even help with offshore Directors. Speak to us today.

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Libby James

Libby James Co-founded Merchant Advice Service alongside David Bird in 2016. Her finance background, coupled with retail and customer service experience, gave Libby the drive to bring transparency and non-biased advice to the world of merchant services. Having come from the heavily regulated mortgage and insurance industry, Libby found it puzzling that other financial sectors lacked regulation and transparency leaving customers confused and unable to make informed decisions when it came to accepting card payments. This was soon to become Libby’s obsession!

With the help of some of the industry’s best, Libby began to research acquiring banks, complex terminology/regulation, and the problems customers experience within merchant services and payment gateway markets. She spent years on sourcing solutions for complex clients, which previously others were unable to assist with. Libby established relationships with brokers and banks which would soon form the cornerstone of Merchant Advice Service. As a result Libby has been featured in high-profile publications across the web.

Libby is proud to be the entrepreneur’s champion, supporting start-up businesses regularly. Her industry insights can often be found on LinkedIn where she provides free of charge advice and money saving pointers. It’s safe to say she has her finger on the pulse of everything card payments related.

Libby speaks of her experience in founding and running Merchant Advice Service…

‘Merchant Advice Service is one of my greatest achievements to date. We help business owners to overcome card processing issues which can become detrimental to their business. We assist SME’s in finding suitable card payments solutions, helping them create their vision. Each and every day is different, exciting and fore filling. As technology advances I can’t wait to see the way in which the merchant services market advances, and I’m pleased that our business will play a part in educating company owners along the way.’

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