Skin & Hair Care

Why Skin & Hair Care businesses are considered High-Risk?

The skin and hair care industry has been growing rapidly over the years, but businesses in this sector are classified as high-risk merchants due to several reasons:

Product Nature:

Beauty products are highly regulated, and any adverse reactions or side effects can lead to legal liability, which can result in financial losses.
The industry is highly competitive, and businesses must take measures to stay relevant in the market, which can involve offering high-risk services such as recurring billing, free trials, and subscription-based models.

Online Market:

Skin and hair care businesses often operate in the online market, which is also a high-risk environment due to the prevalence of fraud and chargebacks.
Customers can make purchases without physically inspecting the products, leading to disputes and chargebacks if the product does not meet their expectations.

Chargeback Fraud:

Skin and hair care businesses are often targeted by fraudsters who place fraudulent orders with stolen credit cards. When the legitimate cardholder disputes the charges, the business is hit with a chargeback, which can lead to financial losses and damage to the merchant’s reputation.

Complex Customer Service:

Customers can have complex and varied needs when it comes to skin and hair care products. This can lead to customer service issues such as returns, refunds, and exchanges, which can be time-consuming and costly for the merchant.

Product Liability:

Skin and hair care products can cause allergic reactions and other adverse effects, which can lead to legal liability for the merchant. This is particularly true for products that contain potentially harmful ingredients or that make certain health claims that are not backed up by scientific evidence.

Mitigation measures for Skin & Hair Care merchants to reduce risks when selling online

To mitigate risks, skin and hair care businesses must implement secure payment processing systems that use advanced fraud detection mechanisms to prevent fraudulent transactions.

Implementing Secure Payment Processing Systems: Skin and hair care merchants should use payment processing systems that include advanced fraud detection mechanisms to prevent fraudulent transactions. This can include tools such as Address Verification Service (AVS) and Card Verification Value (CVV) checks.
Maintaining Compliance with Regulatory Requirements: To protect sensitive customer information and maintain trust with customers, skin and hair care merchants should comply with regulatory requirements such as the Payment Card Industry Data Security Standard (PCI DSS). This ensures that customer data is handled securely and reduces the risk of data breaches.
Offering High-Quality Customer Service: Skin and hair care merchants should offer high-quality customer service to address any issues or concerns that customers may have. This can include providing clear return and refund policies, responding to customer inquiries promptly, and providing detailed product information to help customers make informed purchasing decisions.
Utilizing Chargeback Prevention Services: Skin and hair care merchants should utilize chargeback prevention services that can help identify fraudulent transactions before they occur. These services use advanced algorithms and machine learning to analyze transactions and detect patterns that are indicative of fraudulent activity.
Monitoring Product Quality and Compliance: Skin and hair care merchants should regularly monitor the quality and safety of their products to reduce the risk of adverse reactions and legal liability. This can include testing products for potential allergens and ensuring that product claims are backed up by scientific evidence.

These measures can also help businesses build trust with their customers and maintain a strong reputation in the highly competitive beauty industry.

Being a high-risk merchant vs. a regular merchant

Higher payment processing fees
Lengthier application process
Higher chargeback fees
Cash reserve requirments:
- Capped reserve
- Rolling reserve
- Upfrom reserve
Volume caps
Additional technical requirements
Being on the TMF / MATCH list

Check out our knowledge hub to learn more about what processing fees, application process, chargebacks and cash reserve requirements or TMF / MATCH list mean.

Other risk factors?

There may be other risk factors as to why you as a Skin & Hair Care merchant are classified as a high-risk merchant, such as:

Accepting subscription-style payments
Being on the Member Alert to Control High-Risk Merchants, or MATCH list — a list managed by Mastercard that monitors merchant behavior, like chargeback history
High average transaction sizes
High sales volumes
Highly regulated industries
International sales
Large number of card-not-present transactions
Little to no business experience
Long fulfillment time frames
New or poor credit scores
Past fraud or illegal activity

As high-risk Skin & Hair Care merchant how to find a payment provider?

It takes effort for businesses to secure a payment processing partner when they are considered high-risk but it is definetly possible to find the right payment solution if you focus on:

Maintaining healthy cash levels. Most processors would like to see a healthy cash level in your business bank account.
Try to reduce chargebacks. There could be a number of factors behind the soaring number of chargebacks in your business. Whatever the reasons may be, you can always analyze them and try to reduce your chargebacks.
Be transparent. Disclose all materials and relevant information during the application process. Payment processors may ask you for very detailed information about your business and finances. Be open, honest, and transparent.
Keep your documents ready. This could mean having six months of bank statements and a few years of tax returns. That said, each processor has its own set of requirements so make sure to check them.
Follow the guidelines of your payment processor. When you apply for a high-risk payment solution, besides your business needs, the risk the payment solutions provider takes also matters. So, be flexible and see if there are things you can do to reduce your risk by discussing with them and following their recommendations.

Our Platform will find the right payment solution for your business

Our biggest differentiator?

We provide payment solutions for merchants with a 90% Succes Rate by Algoritmic matching and pre-KYC onboarding in each industry and region globally.