The health and beauty industry is a multi-billion dollar business juggernaut. It contains an array of business categories, including salons, haircare, skincare, and much, much more. The beauty business now sells an almost mind-boggling array of creams, supplements, and more. As the beauty business has expanded, so have the options that consumers have at their disposal when it comes to where they can make a purchase. If you are involved in this business type, you fully understand just how competitive it is—but also how rewarding it can be.

However, like all businesses, the health and beauty industry has some challenges that are unique to its interests. One such example is finding a credit card payment processor that can handle the needs of individuals within this business space. For a variety of reasons, it can be difficult to open health and beauty merchant accounts, and other card processing solutions are often hard to come by. This means that processing credit cards or online payments can be difficult, more expensive, or outright impossible. In a health and beauty business model, this is not acceptable. Virtually no business is cash only these days, and this industry is no exception.

Merchant processing is necessary for the health and beauty business. This means that you may have to explore alternative options. Opening a high-risk payment gateway is something that a high-risk business may need to do.

Despite these obstacles, owners of beauty businesses can still set up health and beauty merchant accounts. You’ll have to look for a specialized payment processor. This likely means that you’ll have to find someone who has explicitly worked with high-risk payment accounts. Zenti has years of experience working with these types of accounts and will be able to fulfill any payment processing and credit card processing needs you may have. As industry leaders in the payment processing solutions world, you can expect to be able to rely on Zenti to solve your high-risk payment processing needs, provide you with POS equipment, and ensure that you will be accepting payments from customers that want to do business with you.

What Does the High-Risk Classification Mean?

It means more money, time, and hassle for your business.

A high-risk classification means that a merchant account provider believes your business has a higher-than-average risk of fraud or chargebacks occurring. Chargebacks are when a card on a chargeback is reversed. This may happen for a variety of reasons. A chargeback means lost revenue for you, but it also means additional costs to your credit card provider.

The burdens that come with a high-risk classification include:

• Processing Fees: Every time a credit card is charged, there is a processing fee that must be paid by the merchant in question. A high-risk account will have to pay a higher processing fee. This is done to offset the risk to the credit card processor.
• Chargeback Fees: Chargeback fees are normal for any line of business. They are higher for high-risk accounts.
• Additional Records: You’ll need to supply a payment processor with a variety of records, regardless of if you are low risk or high risk. You’ll likely have to supply additional records if you are high-risk. This includes credit history, bank statements, past payment processing history, and more.
• Higher Reserves: A payment processor will deposit any money you are entitled to into your bank account. They may keep a small percentage of that money as a cash reserve to protect against any loss incurred by chargebacks. High-risk accounts will have higher cash reserves.
• Volume caps: Volume caps are normal in the processing industry. They are viewed as protection against the risk that comes with credit card processing. You may face volume caps. These caps can occur in the total amount of transactions, or the total cost of the transactions.

What Businesses May Need Health and Beauty Merchant Accounts?

Many businesses could use this type of account. It includes:

• Salons or hair care operations
• Nutrition stores, including stores that sell supplements and related products
• Tanning salons
• CBD vendors
• Nutraceuticals
• Skincare products
• Freelance hair or makeup artists
• Nail salon
• Esthetician
• Selling makeup as part of an MLM operation, such as with Mary Kay or Avon

Why Are Health and Beauty Merchant Accounts Considered High Risk?

It’s important to understand why health and beauty merchant accounts are considered high risk. If you have a good understanding of why this is the case, you may be able to alter your business practices to reduce the risk associated with your health and beauty merchant accounts.

• High chargebacks: Beauty products tend to have high chargebacks. There are many reasons for this, but it’s typically associated with high claims and the inability of many products to meet such claims.
• Reputational issues: Beauty products have a bad tendency of making grandiose claims and then being unable to deliver on these claims. Furthermore, some health and beauty products claim to be able to do certain things—like remove pain or help people lose weight—and then not meet those promises. This results in dissatisfied customers, and this results in chargebacks.
• Subscription-based problems: Many health and beauty products operate on a subscription-based model. This model tends to be associated with high-risk products, as people will often seek refunds for subscriptions that they either don’t remember seeking or no longer want.

Does This Apply to All Facets of the Beauty Industry?

Yes.

The issues noted above impact many different subsections of the health and beauty industry. You may practice haircare, skincare, tanning, salons, or more. This category also includes businesses that have less reputable reputations, including those that sell nutraceuticals or CBD.

Ultimately, this is irrelevant: A payment processor is still likely to classify you as a high-risk business if you sell products in this category.

This is also the case if you have a brick-and-mortar store or if you manage online stores. In many cases, having an online store can increase the risk that your business may incur. This is because of the high amount of card-not-present transactions. A card-not-present transaction is what occurs when someone uses their credit card to make a purchase, but the vendor doesn’t physically see the card. This increases the likelihood of fraud, as it’s harder to verify the identity of the card owner. If there is a fraudulent charge, it increases the chances of a chargeback being incurred by the merchant account provider. This will increase your high-risk classification issues, and payment processing companies will eventually classify your business as high risk.

What Services Do Health and Beauty Merchant Accounts Need?

These factors increase the pressure on businesses that are seeking to open health and beauty merchant accounts. These businesses will have to look much harder to find the services that they are seeking. They will need to find processors who are experienced in dealing with high-risk merchant accounts and have worked extensively with high-risk industries.

When it comes to payment processing, there is no shortage of needs. Companies like Zenti are built to fulfill your various processing options and ensure you have access to the services that will enable you to process payments.

Can your high-risk payment processor handle processing credit cards? Do they have online payment options, and can these options easily be installed into your website to ensure that you can process credit cards or use other payment services? That last item is particularly important, as traditional credit cards are being used less and less in payments. More people are shifting to a variety of other highly flexible payment options. This includes services like Stripe, Venmo, PayPal, and more. Even if you only have a brick-and-mortar store, you should make sure that you find payment options that can handle this growing area of payment processing.

If you have a brick-and-mortar store, you’ll need a high-risk merchant processor who has worked in retail locations. This means that you’ll need a processor who can help you with a low-cost or no-cost set-up and be on-call whenever you are open. This is vital: Your business can’t stop if a piece of equipment breaks, and you must have access to payment processing tools and 24/7 customer service.

You should also fully understand the costs of processing, and if your merchant account provider offers items such as high-risk protection. Some merchants, like Zenti, offer zero-cost processing tools. This allows the costs of processing to be passed along to customers and folded into your total price. This can be successful for some merchants and many have found it to be a viable method of covering costs associated with credit card processing.

You also have to keep an eye on the future. At the moment, credit card and online payment processing tools are what your business will most likely need when it comes to collecting payments from your customers. The future may change this, and the rise of cryptocurrency means that your business may need to consider adding these payments in the future. Most health and beauty businesses do not actively need this payment processing method—yet—but may in the future. You should make sure that your payment processor has an eye on future payment collection methods and will be able to serve you should the need arise.

There are also payment options that extend beyond credit cards, online payment methods, or crypto. ACH payment has become a fast and reliable way of allowing customers to make payments directly from their bank. Your business may need to consider the addition of ACH payment options to appeal to a segment of customers that prefers making payments in this manner.

What Other Services Does My Health and Beauty Business Need?

The above services are the basics that any high-risk payment processor should be looking for. However, you’re going to need more than that to survive in a highly competitive business world.

Among the more important services your business may need are options for integration. This integration means many things:

• Website: Any payment processor must easily integrate with your website. This means that setting up a payment processor may be as easy as copy and pasting a line of code onto your website. Some websites or apps may need customer-created software or applications. If this is the case, your payment processor must have the expertise on staff that allows you to manage these options.
• Accounting software: Your payment processor must easily integrate with whatever account and tax software you have. This is necessary to reduce your workload and make sure that you are easily and accurately able to pay any taxes owed.
• Already existing gateways: Your business may have already set up a variety of payment accounts on numerous services. If this is the case, a payment processor should be able to easily integrate with your already existing accounts.

Finally, it’s worth considering how a payment processor can help you market. A payment processor should be able to provide you with contact information on your customers, including addresses, phone numbers, and Email addresses. This should allow you to expand your potential marketing options and give customers a chance to learn more about your business.

At the end of the day, you’ll need to ensure that you find a merchant account provider with experience in the area of health and beauty merchant accounts. Zenti has ample experience in working with a slew of high-risk merchant accounts, including health and beauty merchant account providers. If you are interested in learning more about Zenti and the services they may be able to offer you, contact us today.