Tattoo shops have been around for centuries, helping people get the ink of their dreams. Tattooing is a multi-billion dollar industry, and projections show that it’s only expected to grow in the next few years.
However, despite this anticipated growth, the tattoo industry faces real problems. Chief among them is gaining access to necessary financial services. Despite its popularity, the tattoo industry is often classified as high-risk. This classification means it struggles to gain affordable access to many business basics, like credit card processing. So how can tattoo studios get access to financial services? Find an excellent company that specializes in services to help businesses in high-risk industries, like those offered by Zenti.
The tattoo industry is much broader than it may first appear, and people need to understand just what is considered part of the tattoo industry.
There are some obvious answers, of course. Tattoo artists that work in tattoo parlors are part of this industry. These businesses provide tattoo, piercing or other forms of body art services. Surprisingly, many related businesses may also be categorized as a tattoo business, including piercing shops and shops that give other forms of body art, like henna tattoos.
Unfortunately for these shops, real challenges exist in being a tattoo shop. Merchant account processors find most small tattoo businesses to be high-risk businesses. Being classified as a high-risk business can negatively impact your ability to do business, take credit card payments, and have an adequate cash flow.
In this particular context, a high-risk business is a business that has a higher-than-average risk to credit cards, debit cards or merchant account processing organizations. There are many reasons businesses fall in the high-risk category, and it’s essential to understand that these risk factors can vary between merchant account processors. There is no legal definition of what makes a business high-risk, and different processors can have other metrics that determine whether a business is high-risk.
Generally speaking, a few factors can cause a business to be considered high-risk. Chief among them is the risk of having chargebacks. A chargeback happens when a credit card company must refund the purchase made – when fraud occurs on the otherwise unauthorized use of a credit card. Chargebacks are more likely to occur over the internet, as the internet runs card-not-present charges in which a credit card can be charged without having to be in front of a staffer. This makes fraud much easier.
Chargebacks are not a small problem. According to the United States Chamber of Commerce, each chargeback can cost a business between $20 – $100, adding up quickly.
That’s not all. Vendors may also be less than willing to work with certain industries in many cases. These industries include those with reputational issues, like adult shops or products. It may also be those with questionable legality or products that have only recently been legalized, like CBD. In these instances, merchant account processors may refuse to offer their services within their legal rights. In other cases, they may do business with them but charge them extra for processing and other account services. However, an excellent high-risk merchant account processor, like Zenti, can help a tattoo shop find ways to reduce their risk, keep costs to a minimum and still gain access to the services that they need to process credit cards.
Tattoo shops do have some reputational issues. As noted by many tattoo artists, this makes it more difficult to access financial services and can increase the price of doing business. Some payment processors fear — however unjust — that people who get tattoos are more likely to use stolen credit cards or engage in other illegal activity when making purchases, leading to increased fraudulent charges and chargebacks.
Some believe tattoo shops have a negative connotation: they’re seedy or only for criminals. This stereotype is false, of course. The tattoo industry is growing because tattoos are becoming more mainstream. However, the reputational issues surrounding the tattoo industry remain. Negative reputations turn off merchant account processors. As such, they categorize tattoo shops as being high-risk, making it more expensive for these shops to do business.
Many tattoo shops unfamiliar with merchant account processing may fail to realize just how significant being a high-risk business is. It can cost a considerable amount of money for tattoo shops to maintain a merchant account processor, resulting in many shops taking cash or check payments only.
There are many specific ways tattoo shops pay due to being a high-risk business. These costs include:
More often than not, this means that a tattoo shop will need to do business with a specialized high-risk merchant account processor who has a history of doing business with high-risk clients and understands their specific needs. Specialized companies, like Zenti, often perform better than massive conglomerates, as they have more hands-on experience working with high-risk clients. This experience gives them the perspective they need to help your business succeed.
Every high-risk business wants to reduce risk to have more affordable access to various financial services. It isn’t easy to move from a high-risk to a low-risk business. However, reducing risk can also save a business money, as it can reduce fees. At the same time, many risk-reduction measures that a high-risk business can take will result in happier customers, as risk reduction also means fraud prevention.
Tattoo owners can also work with merchant account providers to identify business-specific ways to reduce risk. Good merchant account providers, like Zenti, can help businesses find customized ways to minimize risk and save money.
Some risk reduction methods include:
Like any other business, a tattoo parlor might have challenging and evolving business needs regarding its financial services. After all, tattoo shops are very trendy, and the financial world is constantly changing. They must continuously adjust how they take card payments, manage walk-ins and integrate new payment methods.
Fortunately, if done correctly, a tattoo shop can appropriately integrate various financial services and even use the information gleaned from their payment to expand marketing opportunities. In addition, businesses like Zenti can ensure that these integrations happen quickly and appropriately.
Other services you might need:
Tattoo shops deserve the best when it comes to financial services, but if you own a tattoo shop, you may struggle to find the financial services you need and deserve. Zenti is here, and we have years of experience that can help take your business to the next level. We offer a variety of services specially designed for businesses like yours. It doesn’t matter if you’re a new or long-established business: We’re ready and able to help your shop grow and thrive.
Want to find out more about how we can help? Contact us today, and learn how Zenti can help you grow your tattoo business.