Healthy & Beauty

Why Healthy & Beauty businesses are considered High-Risk?

There are several reasons why health and beauty products can be classified as high risk merchants when selling online. These include:

  • Fraudulent Activity
    • Health and beauty products are susceptible to fraudulent activity, such as the use of stolen credit cards or the creation of fake customer accounts to make purchases.
    • Fraudulent activity can result in chargebacks and losses for the merchant.

 

  • Chargebacks
    • Chargebacks occur when a customer disputes a transaction and requests a refund.
    • Chargebacks can be costly for merchants and can lead to the suspension or termination of their payment processing account.
  • Risk of Harm to Customers
    • Health and beauty products can have side effects or cause allergic reactions, which can result in customer complaints and legal issues.
    • The potential for harm to customers can increase the risk of chargebacks and legal disputes.

 

To mitigate these risks, it is important for health and beauty product merchants to implement fraud prevention measures, provide clear product information and warnings, and have a solid customer service and return policy in place. By taking these steps, merchants can protect themselves and their customers while selling their products online.

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Mitigation measures for Healthy & Beauty merchants to reduce risks when selling online

Fraud Prevention

  • Use fraud prevention tools and software to detect and prevent fraudulent transactions.
  • Implement multi-factor authentication for customer accounts and orders.
  • Use a trusted payment gateway with anti-fraud measures and fraud protection insurance.

 

Clear Product Information

  • Provide accurate and detailed information about each product, including ingredients, warnings, and potential side effects.
  • Use high-quality images to show the product in detail.
  • Make sure the product description matches the actual product to reduce the risk of customer complaints and chargebacks.

 

Strong Customer Service and Return Policy

  • Have a dedicated customer service team that can answer customer inquiries and resolve issues quickly.
  • Provide a clear and transparent return policy to reduce the risk of chargebacks and customer complaints.
  • Offer a satisfaction guarantee or free returns to boost customer trust and confidence.

 

Compliance with Regulations

  • Follow all relevant regulations and guidelines for selling health and beauty products online.
  • Obtain any necessary licenses or permits.
  • Ensure all products are safe and comply with all relevant regulations.

 

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 Health & Beauty 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 Healthy & Beauty 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.

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