Health And Beauty Merchant Accounts – Flawless Payment Processing Solutions

Health and beauty is a competitive yet highly profitable industry. Whether you are a merchant specializing in online sales or storefront sales, a health and beauty merchant account will be required for your business.

There are many different sub-niches within the health and beauty industry, and with these can come different types of business models and payment processing options.

Health and beauty merchant accounts and payment processing are often considered high-risk by acquiring banks and payment processors. This means that, should you be a merchant in this field, you will want to avoid traditional, low-risk solutions, so you don’t risk getting your merchant account terminated in the future. 

While high-risk merchant accounts will probably cost you more, they also help set your business up for success in the long run and allow you to accept payments, fight against chargebacks, and process transactions globally.

At Corepay, we can quickly review your business, get you approved, and set you up with a merchant account so that you can process transactions. Once you apply for a merchant account, we can determine the best solutions for your business and assure you that you are successful in the health and beauty industry.

With a steady push towards organic/vegan health products and over 25,000 skincare products, we are entering an age in which many products claim to have the solution for smooth skin, beautiful hair, diminishing wrinkles, etc. While some products may work great, these types of claims leave the door wide open for chargebacks.

The health and beauty field is on pace to yield over $500 million in 2021. Over 22% of all health and beauty transactions come from online sales. This means storefronts can take advantage and take their business to the next level with an online store.

health and beauty overview

It is important to note that the most common MCC code for health and beauty products is 7298. Below are some examples of health and beauty merchants:

  • Haircare
  • Nail care
  • Fragrances
  • Skincare
  • Makeup
  • Supplements
  • Sexual health products
  • Lotions
  • Deodorant
  • Wellness products

Payment Processing Solutions For Cosmetics By Corepay

Corepay is proud to offer the following for high-risk beauty credit card processing:

  • Swift account approvals within 24-72 hours
  • Zero set up fees
  • Zero annual fees
  • Waived application fees
  • Risk mitigation with Order Insight/CB-ALERT
  • Payment gateway integration support
  • Low-risk rates, as low as $99 per month and $.05 per transaction
  • Maximize approval ratios based on your target customer base
  • Extremely competitive high-risk rates as low as blended 2.95%

Corepay offers bespoke solutions for cosmetics and beauty merchants globally and strives to ensure pricing is always 100% transparent, so our partners are never left with surprises when viewing their processing statements.

Why Are Health & Beauty Businesses Considered High-Risk?

The term “high-risk” is typically viewed in a negative manner. High-risk merchant accounts have their advantage at the expense of typically paying more in fees. The main reason why the health and beauty niche is deemed high-risk is the high number of chargebacks.

On top of chargebacks, the cosmetics industry is also deemed high-risk by acquiring banks and payment processors as they may have inherent reputational risk depending on the products being sold. 

If a payment processing provider allows transactions to occur for unproven products, it could end up damaging their reputation, which banks obviously avoid at all costs.

Below you will find the main reasons why health and beauty businesses are often deemed “high-risk.”

  • Chargebacks (customer disputes)
  • Lack Of FDA Approval
  • Reputational Risks

Health And Beauty Chargebacks

Chargebacks can be the bane of any eCommerce merchant’s existence, especially health and beauty merchants. 

Skincare products, anti-aging creams, and energy-boosting supplements specifically see a high number of chargebacks. The reason for this is because some products imply or claim incredible results so that when a customer finds the product to be ineffective, they feel scammed.

When a customer deems a product to be ineffective and files a dispute, it usually ends in a chargeback, which is costly for your business and your payment processor.

Customer service can usually be used as an effective way for merchants to fight against chargebacks. However, smaller health and beauty businesses typically don’t have a strong customer service center to deal with unhappy customers.

Below is a list of some of the reasons why chargebacks are rampant in this industry:

cosmetics chargebacks

It can not be overstated enough that merchants must have a fully compliant website that states return policies, refund policies, recurring billing policies, and trial policies. When it comes to free trials, if the business does not state clear guidelines, the customer will be able to submit a dispute and likely win.

The more information beauty merchants can provide, the greater chance they have at avoiding a chargeback against them.

Neutraceuticals are an example of a product typically not approved by the FDA and boast claims such as “heightened brain functionality, more energy, and healthy weight-loss.” These types of claims are usually the culprits for frequent chargebacks and rightfully so. The industry has been rampant with fraudulent activity, stemming from widespread scams.

Visa and Mastercard cracked down on nutraceuticals, (MCC 5968) a few years ago, which has made credit card processing for these types of businesses extremely high-risk. With the MCC 5968 came many rules and restrictions related to trials and info offers.

What birthed the extreme regulations was the massive amount of fraud over the years in which neutraceutical companies were charging cards and holding onto the products.

In the end, all chargebacks equal lost revenue, and depending on your number of disputes, the brand is what suffers the most.

At Corepay, we help all of our clients set up and implement anti-chargeback tools to prevent as many chargebacks against your brand as possible. 

Lack Of FDA Approval

By law, cosmetic products and ingredients do not need approval by the FDA. The common law does not require cosmetic products and ingredients, outside of color additives, to have FDA approval before hitting the market.

Seeking FDA approval for your beauty line is always recommended as selling unregulated products can be dangerous and damage your reputation and your acquiring bank/payment processing company.

Reputational Risks

The reputational risk with the health and beauty niche differs from adult industry merchant risk. Banks are more concerned with a product potentially harming a customer.

Should a payment processor and or bank work with a business that has improperly labeled a product or lied about specific ingredients, this can prove to be highly damaging to their reputation.

Worst case scenario for merchants is that a product damages/harms a customer. Should this occur, this harms the bank, the payment processing provider, and the merchant.

Applying For The Best Health And Beauty/Cosmetics Merchant Account

Health And Beauty

If you’re a merchant selling health/beauty products online, you will need a reliable solution to processing transactions. 

Searching for payment processing solutions for cosmetics/health and beauty can often be challenging as the industry is considered high-risk.

At Corepay, we boast over two decades of high-risk credit card processing experience, and we have a full grasp of the health and beauty industry.

When it comes to applying for your health and beauty account, we make everything as easy it possibly can be. Once you submit your application, our team will review your business and set up the best payment processing solutions for health and beauty products.

We are proud to offer all pricing structures for businesses, and we pride ourselves on 100% transparency with all of our clients.

Should you use Corepay, you will be internally pre-approved for your high-risk merchant account, and you will then speak with your account manager, who will be there 100% of the way to guide you through the application process.

You will need the following when filling out an application:

  • A fully compliant website
  • A Voided check or proof of bank accounts
  • A Driver’s license or a valid government I.D.
  • Social security number
  • Six months of processing statements if possible
  • Articles of incorporation
  • A fulfillment agreement
  • A customer service center agreement (if outsourced)

Upon submitting your application, you will be greeted with an email shortly after. This period can take between 24-72 hours on average, depending on the information provided to us.

How To Find The Best Payment Processing For Cosmetics/Health & Beauty

Should you be looking for payment solutions for cosmetics, we strongly advise you to compare rates and submit applications with high-risk credit card processing companies.

Rates and experience will ultimately vary from processor to processor, and you may find that certain companies can offer services that others aren’t capable of.

Customer service is one of the essential things when deciding on a cosmetics merchant account solution. Should you be experiencing frequent delays throughout your application process, this could be an immediate red flag.

When reviewing your statements, you will want to have transparency with your provider and know that, should you need to speak with them, you can do so 24/7. 

At Corepay, we understand how essential customer service is, and we are available around the clock to answer your questions and get you on the right path.

Health And Beauty Merchant Account Fees

Should your business be deemed high-risk, the fees will vary. You will likely pay more than a typical brick-and-mortar beauty store would if you are operating primarily online due to card-not-present (CNP) transactions and the chargebacks that often come with them.

With this being said, your business will be able to process global transactions without the fear of having your account terminated overnight and your funds held.

Corepay also waives all application, annual, and setup fees to maintain transparency. Our main priority is to provide top-notch payment processing at affordable and honest rates.

Regulation Of Cosmetics Products

Regulations

Cosmetic transactions can be complicated due to certain FDA regulations. While haircare and skincare products can be considered cosmetics, they can also be considered drugs/medicine. This is where improper labeling and misinformation can severely damage a brand and or a product.

Cosmetics advertise to cleanse and moisturize whereas drugs advertise to cure, prevent or treat a specific problem. If you sell a product that claims to cure wrinkles, you will need to get it approved by the FDA or you risk harsh consequences

Can You Use A Low-Risk Merchant Account Like Paypal For Health And Beauty?

Low-risk solutions are not advised when it comes to the health and beauty industry. While it can be easy to start processing via low-risk services such as Paypal, your business can be terminated just as quickly as you started.

While Paypal is an extremely established and respected company, they do not operate with high-risk businesses.

Another thing to note with Paypal and other low-risk solutions is that they typically do their underwriting months into processing payments.

This means that companies can get an account up and running, processing payments, and then suddenly have their account terminated with funds help up to 180 days.

Was Your Health And Beauty Account Recently Frozen, Put On Hold, Or Terminated?

Having your funds frozen can be devastating for businesses depending on cash flow. If your account was terminated from a low-risk processor, we strongly advise you to seek out high-risk solutions.

Unfortunately, merchant account holds and freezes happen all too often these days. When this occurs, the only thing that you can legally do is be proactive and make sure you get another merchant account up as soon as possible.

If you are looking for payment processing in the health and beauty industry, we think our services would be a perfect fit for your business and highly recommend filling out an application today.

Health And Beauty Industry Overview

The cosmetics industry has been sitting near a 5.5 percent increase in revenue per year since 2018. Skincare leads the health and beauty industry, accounting for nearly 39% of total sales globally.

Organic beauty products are expected to increase by $54.5 billion in the United States by 2027.

Overall, the health and beauty industry has many products and business models that can be highly profitable.

The United States currently leads the charge when it comes to beauty product consumption. In 2018, The U.S. consumed over $89.1 Billion dollars worth of beauty products.

Health And Beauty Industry Fraud

Like all eCommerce businesses, fraud is rampant in the beauty industry. Cosmetic merchants can reduce fraud by choosing a reputable payment service provider that knows how to mitigate fraud.

At Corepay, we offer chargeback mitigation and dispute management services to reduce the impact of chargebacks on your business with our product CB-ALERT.

We also help merchants implement 3DS2, which can dramatically reduce the risk of fraud.

To ensure security with your health and beauty merchant account, we recommend the following to our clients:

  • Work with payment services providers who understand your business model.
  • Choose a provider that has a PCI-Level 1 secure payment gateway – Corepay offers this as well as our gateway, Solidgate, which was specifically crafted to support high volume and high-risk merchants.
  • Have an understanding of the backend of your website. It is of utmost importance that your website is secure and able to withstand spam attacks.

Keeping Your Account In Good Standing

Having an established relationship with your merchant account provider is crucial. Beauty and health products are unique as they teeter on the edge when it comes to FDA regulations, which increases risk. You should be in contact with your merchant account provider regularly to make sure everything is going smoothly on both sides of your business.

  • Process a steady sales volume, in accordance with your MPA
  • Keep settlement accounts in good standing
  • Maintain transparency with your credit card processor
  • Ensure FDA regulations are being followed as well as proper labeling to avoid a freeze on your account
  • Limit chargebacks by creating a strong backbone of customer support as well as the implementation of chargeback tools such as CB-ALERT

Why Choose Corepay For Your Beauty And Health Payment Processing

At Corepay, we have been processing payments in the high-risk industry for two decades. We pride ourselves on staying up to date when it comes to security, new trends, and we strive to provide flawless services in the health and beauty industry.

Should you choose us for your health and beauty credit card processing, you will be choosing transparency, dedicated experience, and the highest level of payment processing understanding in the beauty industry.