Are you thinking about launching a new beauty, skin, or hair care company? Do you know if your business is under the high-risk payment merchant category? Opening a new business takes a lot of work. Finding a suitable payment processor is one of them. It is crucial to have a trusted payment processor to run all your non-cash payments smoothly. Mainly, if you are running a high-risk business, the rate of fraud payments and claims is even higher. A high-risk credit card processing and a payment processor take care of these issues for you. Keep reading to know more about high-risk payment processors.
Every business has its risk factor, some more than others. If the bank considers payment processing for your business is high-risk, then your business falls under high-risk business. High-risk businesses are more prone to get chargebacks. More chargebacks imply more risk and higher fees for your merchant account. The volume of your business and the area your business covers are also countable factors in measuring the risk.
The payment systems have changed a lot over the years. Customers do not have the patients to deal with complicated and time-consuming payment systems. If you do not upgrade your payment systems, you will lose business to your competitor. People want these procedures to be fast, safe, and efficient. Many banks and credit card processors decline merchant account requests for high-risk businesses. So, you have to find high-risk payment processors to run your business smoothly. Examples of some high-risk merchants are,
- Game codes
- Health and wellness products
- Online gambling
- Fantasy sports
- Replica handbags, sunglasses, etc.
- Cigar, e-cigarettes, and CBD products
- Vitamins and health supplements
- Talent agencies
So, banks and most credit card processors consider the beauty, skin, and hair care industry high-risk. Here we have gathered some information, why.
- Many merchants prefer the recurring billing system in the beauty, skin, and hair care industry. This billing system is more prone to get more fraudulent chargebacks by its nature. And more chargebacks, more risks.
- Many skincare, haircare, and beauty brands make claims about the effectiveness of their products that may not be exact or proven. These unproven claims affect the reputation of the entire industry. When the customer does not see the products working as advertised, they become angry. And the companies suffer chargebacks.
- Many beauty, skin, and hair care online retailer stores buy products from third-party manufacturers and sell them. This system has a higher chance of late shipping and bad packaging quality. Customers often claim chargebacks for these issues.
As you know, every business is different in terms of its risk factors. There are low risk, medium risk, and high-risk businesses. Unfortunately, the beauty, skin, and hair care industry fall into the last category. They face more frauds and chargebacks than most businesses. High-risk merchant accounts are also costly. If you find a suitable credit card processor for your business, they will help you open a merchant account. Here are some qualities of a high-risk merchant account.
- It operates in the high-risk business industries
- The chargeback ratio is higher than 2%
- The average credit card transaction is more than $500
- High volume or more than $100k monthly merchant transactions
- Recurring billing system (subscription-based items)
- International sales
- Operating in countries with a higher risk of fraud, poor cyber security, and extensive use of stolen credit cards
- Poor credit history or no credit history at all
- Inadequate card processing history
- Fluctuations in seasonal sales
It may be a good idea to know how frauds perpetrate and con your business. To safeguard the business from these frauds and criminals, you need to be familiar with the process.
- Fraudulent chargebacks:
It is the most common issue of them all. Often, general customers try to pull these as a trick for fun. They try not to pay for the product or service they received previously. They try to prove that they received a disputed product or service. And initiate a chargeback with the card company.
- Stolen credit cards:
It is a criminal offense. Criminals try to pay with stolen credit cards, and after shipping, the payment service provider reverses the payment when they detect fraud.
A top-rated high-risk payment processing company will have a rigorous fraud detection system to avoid such scenarios. Some signs they generally look for are,
- Urgent or Unusual orders
- False or incomplete address
- High transaction value
- Unusual shipping address, even in foreign countries
- Multiple purchases with the same card but different shipping addresses and other details
- Multiple purchases with multifarious credit cards, but same address
- Various credit card transactions from the same IP address.
Just because some credit card companies consider your business high-risk, it is not like you should give up on your dream. So, most credit card or payment processors avoid working with high-risk businesses. And it is a good thing. The experts of the industry who understand the risk and are willing to put in the work; take the risk. There are some things you should consider while trying to find a suitable credit card processor for your high-risk business.
- Reliable and top-rated
- Cutting edge technology and top-tier security
- Customization and flexibility
- 24/7 customer service
- Experienced and expert
- Affordable pricing
So, the bottom line is yes; the credit card processors do consider the beauty, skin, and hair care industry a high-risk business. So, you have to find a high-risk payment processor suitable for your business. Most payment processors will give you a generalized quote online. High-risk payment processors allow you to expand your business globally and generate higher revenues. So, choose a high-risk payment processor wisely. We wish you best of luck in your future endeavors.