As per our experience, we can say that yes, this type of store can be considered high risk by payment service provider. Basically, this kind of profile mixes three things that payment processors generally watch very closely. This includes:
- Donation
- Physical product sales
- Health claims about pet products.
Each one of this is fine on its own. However, when you put all of this together, it gets confusing for the underwriters. It becomes difficult for them to easily tell if you are a retail shop, a charity, or you are doing both. That confusion can often be enough to get your account flagged, or paused, or even put under a review, even if you are doing everything in the right way possible.
Let us explain you why this happens.
A payment processor does not just look at your brand story. They basically look at what the transaction actually is for. When your checkout page says that customers can buy this product, and it also says that this purchase helps our foundation, then the payment processor has to decide how to classify the sale.
A donation and a product sale, they all follow different rules. They also give the customer different rights when it comes to disputes and chargeback situations. On top of that, if your product listing uses words like medicinal for pet health items, and if you don’t have proper licensing or approval behind the claims, then it can create extra scrutiny, and in most of the cases such accounts do not get approved.
This is the same kind of red flag that supplements brands, nutraceutical companies, herbal companies, and other health product sellers run into. Payment processors are very strict about health-related claims and unclear claim. And these can lead to account review or hold.
Here is what you can do to fix such situation and make your business easier to approve.
First of all, you should separate the product sale from the donation, both in your website and in your wording. Show the price of the item clearly, and make sure that you show the donation amount or percentage in a separate line. Do not blend them into one vague sentence like, Your purchase helps.
The second suggestion which we would like to recommend is remove risky words like medicinal from the product page. You can look at safer or common wording instead, like supports joint health, or helps with mobility. This is the normal language that is used across pet and supplement industry.
If you are a registered charity, then make sure that you have the documentation ready. Also you should prepare a clear breakdown of how much money goes to the products and how much actually goes to the foundation. This can potentially make your business model easy to understand instead of something that underwriters has to guess about. The underwriting team at any payment processing company is usually very busy because they work with so many applications. They do not have time to dig deeper into your business model when initially it looks complicated and vague.
The smartest move will be to be upfront about your business model from the start, instead of hoping the donation part goes unnoticed and surprises the underwriters during the review, which can cause more damage to the actual product category, that is your main category on the website.
Remember, because of this mixed model, you’ll do best with a high-risk merchant account from a provider that fully understands cause-based e-commerce and pet health products. This kind of situation might not be best to approach with a standard payment processor because sometimes they even freeze the account and start asking questions later.
Discuss with the underwriters that is there any rolling reserve, and if you are having a hard time to get any account approved, then be open to accept rolling reserve terms presented by the processor, and always have a backup payment gateway ready. When you rely only on one payment processor while operating in complex sectors such as charity or pet products, then if one and only payment gateway which you use goes down, then you suddenly lose the ability to accept payments.
At QuadraPay, we offer charity and pet product merchants accept credit and debit card processing solutions on their website and also at retail locations through our partner processors across different countries. Our solutions are available through our partner processors in UK, US, Europe, Australia, and New Zealand. Ask us today for more details.