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The hair and skin care industry has transformed into a business juggernaut. Estimates vary, but the entire sector likely has an overall economic impact well north of $140 billion. The fact that this industry can impact every human being on the planet – and its recession-proof nature – helps to drive home why it’s such a valuable industry.
The figure above is a massive number, and it speaks to the importance of ensuring that individuals and businesses who participate in this industry have access to the financial tools that are necessary in order to be successful. This is not always the case. As many individuals in the hair and skin care business know, there are some unique challenges that occur in this industry. One such example is that starting skin and hair care merchant accounts can be a challenge.
Hair and skin care merchant accounts can be challenging to set up. These accounts are usually classified as high-risk accounts by payment processors and merchant account vendors. This is not a small issue: Being classified as high risk can dramatically increase the cost of doing business for these merchant accounts. Merchant accounts are essential in order to take payments, either in person or online.
It should be clear that a high-risk classification is not fatal to a business. With enough effort, any skin or hair care business can find a payment processor who can help them with their payment systems. One such example is Zenti, a payment processor that has decades of experience in working with an array of high-risk industries. If you need to set up skin and hair care merchant accounts, you should look at Zenti to handle your high-risk processing needs.
Skin care and hair care are considered high-risk businesses. A high-risk account is an account that has been flagged by a payment processor as potentially having a high risk of problems. This encompasses many types of businesses, including hair and skin care merchants.
The primary source of these businesses issues typically comes in the form of high risks of fraud or chargebacks. Chargebacks are particularly problematic for businesses. A chargeback occurs when a charge on a credit card is refunded. This means that the merchant will lose money on the payment. Costs are then incurred by the vendor and the payment processor. Too many chargebacks can indicate a problem with your industry or business model, and they are known to occur within the skin and hair care industry. Chargebacks can lead to lost revenue and a high-risk classification.
There are many business models that are likely to get tagged by vendors as high-risk. These include businesses that have high risks of chargeback, fraud, questionable legality, or otherwise problematic reputations. They also include certain kinds of businesses models, like businesses that operate with subscriptions.
The skin and hair care industry is susceptible to a high-risk classification for many reasons.
First, there are reputational issues. In many cases, the beauty, hair care, and skin care industries have been damaged by outlandish claims of others within their industry. Indeed, many anti-aging creams, lotions, soaps, and hair care products have been cited by governmental officials as making claims that are not supported by science. This often results in fines or worse.
These reputational issues can lead to broader problems with customer satisfaction, with customers expecting that beauty products will be able to work wonders that are just not possible. When this happens, customers will be upset. As a result, customers may be more likely to seek refunds or express dissatisfaction with the beauty products sold. This can lead to chargebacks, which is precisely what your business is trying to avoid incurring.
Many of these products are sold over the internet. Internet-based credit card purchases are more likely to be fraudulent because of the high amount of card not present transactions. These transactions occur when a credit card is used, even if the business in question can’t see the card. As a result, it’s easier to fraudulently use a card.
Finally, there are also problems associated with subscription business models. These models – usually found with internet purchases – often result in consumer confusion. People may take out these subscriptions, only to forget that they did so, then become upset when charged for something they didn’t want.
The high-risk classification that skin and hair care merchant accounts usually have will have multiple impacts on your business. These include:
As you can see, this high-risk classification can be a major deal for your business. It means more work, more fees, and less flexibility. It can put a variety of additional burdens on your business. There are companies that have experience in this area and can ensure that your high-risk payment processing needs are met. One such example is Zenti. Zenti knows what it’s like to do business with retail or Internet businesses. It can work with you to ensure that a high-risk classification is something that your business can manage.
It’s difficult, if not impossible.
In order to avoid this classification within your beauty business, you will have to find a processor who can work with you to ensure that your beauty merchant account can be set up the right way. This may involve taking many restrictions, including limits on transactions. This can damage your functionality, ability to take credit cards, and overall bottom line. In many cases, being classified as a high-risk vendor early is preferable. This eliminates any surprises, ensuring that you won’t ever be moved from low risk to high risk.
There are many services that your hair and skin care merchant account will need in order to survive and thrive in the retail, Internet, or beauty industry space.
Chief among them is a high-risk credit card payment gateway. This means that your merchant account processor should be easily able to handle making any credit card payments. It should be able to handle any credit card and manage all payment processing options.
Many hair and skin care businesses have online components to their business. These websites – which may supplement a business, or make up the entire business – can sell and mail products. An online business is typical these days, and your payment processor must have options to support these efforts. This means that they should also have eCommerce options. A high-risk payment processor must be able to process a credit card over the Internet. It should also be smoothly able to integrate into your already existing online store, thus minimizing the extra work that you will need to do in order to get it up and running.
If you sell products out of a retail location, you will also need to make sure that your payment account processor can handle the sale of any personal care or cosmetic products. This means that they can sell or give you the point-of-sale devices that can allow you to process these payments.
Furthermore, how diverse is their offering of payments when it comes to payment processing solutions? In addition to processing credit cards, do they also process alternative payment methods? This may include integration with Stripe, Square, PayPal, and more. Indeed, depending on the nature of your customers, you may also have to go one step further: Does your business offer cryptocurrency payment processing? Does it even need to?
The above products are an excellent starting point to find out what can support your business. They are just that – a starting point. Your business may need more.
A chief consideration when selecting a high-risk merchant processor must be the provision of customer support. How often is the processor available to answer questions? What happens if you have website issues and your online shopping portal needs to be reconfigured? If POS equipment breaks, can they provide you with alternatives or make the necessary repairs, or does a high-risk merchant account somehow mean you don’t get the quality services that you may need? How quickly can you get the customer support that you need, and what sort of charges might you face if you need immediate or emergency assistance?
You also cannot underestimate the importance of integration, and properly integrating your merchant payment processing into your business. This integration means many things. First, if you already have certain accounts set up – like through PayPal. Shopify, Woocommerce, or other online vendors – then your new processing must easily integrate with these already existing services. It also needs to integrate with your accounting software. Any sales made should come to you in a format that you need. This will allow you to properly export data for accounting or tax services and ensure that you can accurately make the payments that you need. You will also have to ensure that your processing software will easily be able to make payments into your bank account.
Remember, you also need to ensure that your payment processing can do more than just collect payments. What sort of analytics does your payment processor provide with you? Can you generate reports that show sales data, including data that breaks down how much of a product was purchased and where the product was purchased from? What other sales analytics are available to you?
Payment processing can also be a marketing boost to your business. Can a customer easily share information about their purchase to social media? Does the payment processor give you contact information about a customer, including their address, cell phone, or Email address? Can you then allow the customer to opt-in to future marketing efforts? Can you link to your own social media when someone makes a payment on your website?
Your skin and hair care business needs and deserves a merchant account processor who can suit your needs and make sure that you are able to process payments at an affordable price. Zenti is there to handle all of these needs and more. If you want more information on how Zenti can help you, reach out today.
Zenti Connect integrates seamlessly with ISV software to simplify payment processing for merchants: any payment type, on any device, anywhere.
Zenti integrates with over 99% of the tools you are already using, including popular accounting software and e-commerce apps, regardless of your industry. Our payment services were designed to be adaptable to provide seamless integrations for our customers.
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Government organizations face a growing need for secure payment processing services while managing highly specific needs for content management and security.
We can work with popular technology products government agencies prefer, like Ciber and Cubic, to create an integrated solution that meets all your needs for processing payments, managing information, and more.
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Regardless of your industry, we can help you get approved for a high-risk merchant account.
The industries we accept for high risk merchant accounts include, but are not limited to the below industries.
Zenti can provide merchant accounts to customers in the below countries. Kindly note that many payment solutions are regulated based on location.
Being a start-up business will not hinder a business from getting approved for a merchant account. While having a processing history helps your likelihood of getting approved, the lack of processing will not necessarily stop you from getting an approval. Consult an experienced Account Executive today to learn more.
There are never guarantees when it comes to the approval of a merchant account. However, we do work with merchants that have low credit scores. Reach out to an Account Executive today for a consultation.
If you’re a United States citizen applying for a merchant account for a United States registered business, a social security number is required.
A merchant account can be labeled high risk for many reasons. You can be labeled as such due to high average tickets, being in an industry that historically has high chargebacks, or an industry that tier one banks do not support.
To apply for a high-risk merchant account, you need to complete our pre-qualification form and upload all required documentation. Once the pre-qualification is complete your Account Executive will locate the best placement for your account, and send you a final agreement. Once that final agreement is signed, underwriting will complete a full package review for approval.
There is no fee to apply for a merchant services account with Zenti. However, If you get approved with us there may be a small setup fee for your gateway account.
Square, Stripe, and Paypal are all payment facilitators and do not accept high-risk merchant accounts. Signing up with Zenti gives you a direct merchant relationship with a sponsor bank. The approval process requires more documentation, but you’re at a significantly lower risk of getting terminated.
This depends upon how quickly you, the merchant, completes our pre-qualification form. Once we have all of your documentation, we get to work. We can typically locate placement for your merchant services account in 48 hours.
Once you get an approval, you’ll be able to accept credit card payments within 24 business hours.
Depending upon the program, you will receive your funds anywhere from 24 to 72 hours after the batch is settled.
The industry type is a major determining factor when it comes to risk levels of merchant services. But, other factors such as credit, card-present vs not present, and chargeback ratios can also push an account into the high-risk category as well.
Your legal business name should match the business name on the state business registration or licensure. However, if you are a sole proprietor, your name would be the legal business name.
If you’re not sure how much processing you’ll do, we recommend applying for $5,000 to $10,000 monthly. You don’t need to hit that number each month, but if you’re close to going over, reach out to your Account Executive for assistance.
Your average transaction amount should be the average of all transactions you would accept with your merchant account. Your maximum transaction should be the anticipated maximum amount accepted in one transaction. If you attempt to process a transaction that is higher than the maximum amount provided, additional proof of purchase may be requested.
You may provide personal bank statements in lieu of bank statements if your business bank account is new or does not have any activity.
If you’re applying for a merchant account for ecommerce processing you will need a fully functional website with products or services listed with associated pricing.
Yes, a credit check is required in order to obtain a high-risk merchant account. Once a final agreement is signed, a hard credit pull is done. Credit scores are taken into consideration when underwriting reviews a full application for merchant services.
If you’re a United States citizen applying for a merchant account for a business registered in the United States, your social security number will be required to apply.
The first step to applying for a high-risk merchant account is completing the pre-qualification form. Three months bank statements, three months processing statements (if applicable), a voided check or bank letter, and driver’s license or passport will be required to apply.
If your business does not utilize checks, we can accept a bank letter that includes your full account and routing number as well as the business or account holder’s name. The letter should be on bank letterhead, be dated within the last 30 days, and be signed by a bank representative.
If you don’t have three months of business bank statements, don’t fret. We can accept three months’ personal bank statements from a business owner, or director.
Bank statements show a lot about a prospective merchant, namely, processing activity, and the average monthly ending balance. If a merchant is currently processing, we want to know why they’re switching, if we know a merchant’s pain points we can find better solutions for their needs. The average monthly ending balance is also relevant to show financial stability within the business as well as validating the monthly volume requested.
If a merchant is currently processing credit card payments and successfully managing a merchant account this can increase the likelihood of getting approved. Some payment facilitators such as Paypal, Stripe, and Square might not supply monthly processing statements. Underwriting may request login credentials so they can get an overview of the processing activities.
For in-person retail card acceptance, Zenti can provide equipment that will arrive programmed and ready to accept payments. Discuss your equipment options with your experienced Account Executive.
Here at Zenti, we do offer our own gateway solution that’s exclusive to merchants that sign up with us. Of course, if there’s a gateway you prefer we are willing to work with you as long as integration is possible. Please reach out to your dedicated Account Executive for details.
Zenti integrates with NMI, Authorize.net, and more. For specific gateway integration questions reach out to an experienced Account Executive.
Your merchant account will be set up to accept Mastercard, Visa, American Express, Discover, and ATM cards.
Load balancing is the strategy of spreading transactions over more than one MID. It’s not necessary for all high-risk accounts, but can be considered as a way to manage chargeback ratios with high-risk merchants.
Not to worry, this number can be increased as needed. However, the bank underwriting your merchant account needs to be aware of the expected monthly volume to ensure they have capacity available for all merchants processing with that bank.
If you go over by a small amount you might be asked for a copy of the invoice or receipt. However, if you go over the monthly limit by a large amount there is a chance your excess funds might be held temporarily.
When it comes to high-risk accounts, banks ideally want chargeback ratios below the 3% threshold. If you can provide long term processing history the bank may take this into consideration. Lower chargeback ratios are ideal. Consult your knowledgeable Account Executive for assistance in lowering your chargeback ratio.
Rolling reserves are a way to financially protect the processing bank from potential losses from chargebacks or refunds. Not all high-risk merchant accounts require a rolling reserve. The risk department will determine if and when a rolling reserve is required.
Interchange fees refer to the issuing credit card brand fees such as Mastercard, Visa, Discover, and American express. These fees vary depending on the card type, American Express tends to be the most expensive card to process. Interchange rates can range from 1% to 2.5%.
Of course! Once you’ve established a healthy processing history, you may reach out to your Account Executive for a rate review. We recommend only doing this if your processing history shows low chargeback ratios and relatively low refund activity.
You may request an increase in your monthly volume at any time. However, it’s recommended to wait until your merchant account reflects healthy processing history as well as financial stability from your bank statements.
Reach out to our support team, or your dedicated Account Executive for any account-related updates you may need.
Depending on the program your merchant account fees are either taken at the beginning of each month. Some programs require daily discounts. Program details will be notated on your final agreement and if you have further questions you can always consult your Account Executive.
Zenti can assist with ACH or eCheck services. An application and approval process still applies to this service, or it can be an added service with your processing account. Reach out to your Account Executive for details.
The approval process requires less documentation than applying for a merchant services account. And if you’re already processing with Zenti an approval can be expedited.
Every account is different, however, most programs allow next-day settlements for ACH transactions.
ACH payment acceptance can be integrated into most website platforms. Reach out to a dedicated Account Executive for more information.
High-risk merchant accounts are priced higher than low-risk accounts because fewer banks are willing to work with businesses labeled “high risk”. Banks also need additional financial protections from loss on these accounts.
Zenti will always provide fair pricing based on the risk level of every merchant. And if a current processing statement is provided we’ll do everything in our power to beat the merchant’s current rates.
While we love working with merchants that are considered high risk. There are limitations put in place by bank and card brand rules. If a merchant does not abide by the specific program rules described by the Account Executive assisting them we cannot ensure an approval.
Think of merchant accounts as a loan or a line of credit. And processing banks take on the risk of transactions getting charged back. Banks can end up liable for the actions of merchants, a problematic merchant can damage the reputation of the bank funding and processing the transactions.