Why do some vISP Providers require the virtual ISP to prepay for services used by their subscriber, while other vISP Providers do not?

Before answering this question, please be aware that most of Alliance Solutions' virtual ISPs do not prepay for their services. Now to answer the question...

A unique aspect of this industry is that all vISP Providers, including Alliance Solutions, are required to prepay (pay in advance) for all the services they provide to their virtual ISPs. Additionally, most vISP Providers require that their virtual ISPs secure their own merchant account and collect payments from subscribers themselves. And lastly, vISP Providers work with a very small margin on each subscriber and do not have room for bad debt - virtual ISPs not paying or not paying in a timely manner for services. As a result of these three factors, it is prudent for vISP Providers to also require their virtual ISPs to prepay for services used by their subscribers.

Securing and maintaining a merchant account (required for accepting credit cards) can be costly and administratively time consuming. Because of this, a few vISP Providers have seen the wisdom in offering a shared merchant account as part of the complete program offered to their virtual ISPs (see vISP Merchant Account). In these cases, the vISP Provider collects the subscriber payments, subtracts the virtual ISP's wholesale costs and remits a check for the difference. As a result the vISP Provider receives payments daily and the opportunity for bad debt has been greatly reduced. The virtual ISP also enjoys improved cash flow as they do not have to prepay for services.

In the case of the Alliance ISP Solution, see vISP Merchant Account to see how we handle the merchant account issue.