Cosmetics

There are a few wrinkles that affect cosmetic companies in more ways than one. Stay informed about regulations and enhance your business with a cosmetic merchant account from Website Payment Pro.

Skincare items take up the lion's share of the cosmetic market, closely followed by makeup, cologne, toiletries like deodorants, hair color and styling products, and dental cosmetics. According to Statista, the U.S. cosmetic and personal care market's revenue totaled $70,818.43 million in 2017, and it's predicted to rise.

With a noticeable shift toward clean beauty products, consumers are leaning toward all-natural ingredients and the absence of certain additives. Another trend is ecommerce becoming a more popular distribution channel. The cosmetic market, notably makeup products, is unique because it remains relatively stable despite changes in the economy and consumers' disposable income. The demand for cosmetics and beauty products is almost as steady as it is for need-based merchandise.

Setting up a Beauty Payment Processing Account

If you've just launched a skincare line or want to explore your credit card processing options for an existing business, establishing a cost-efficient merchant account often requires some research. Some merchant providers don't accept high-risk businesses, especially those that are regulatory-risk heavy like cosmetic lines. But there are still many high-risk companies that can assist.

Your determining factors should come down to the provider's quality of products and services, their transparency, and the transaction rates and fees they charge. Altering your business model to become less prone to chargebacks can improve your processing costs. Factors behind cosmetic business chargebacks include:

• Unproven health benefit claims and deceptive sales tactics in general
• Dishonest manufacturing or testing practices brought to light
• Buyers experiencing unexpected or adverse results after use
• Not utilizing the Address Verification System (AVS) or Card Verification Value (CVV) for online and MOTO transactions
• Recurring billing patterns without visible terms and conditions
• Trial offer business models without noticeable terms and conditions
• Lack of return policies when the product has been opened
• Incorrect labeling
• Scams

When the business experiences fraud, excessive chargebacks, or bankruptcy and struggles to handle financial setbacks, the payment liability falls onto the merchant service provider (MSP). MSPs tend to charge higher rates to create a cushion to absorb financial loss, should it occur, allowing them to pay back banks and credit card issuers if the business can't without taking too much of a financial hit themselves.

Website Payment Pro works closely with these merchants to ensure they've established a profitable, chargeback-protected business structure. That includes a clearly worded return policy, openly displayed terms and conditions (particularly if you offer free trials or recurring billing), fraud-fighting tools, and more. Our PCI compliance team is here to walk you through the necessary security requirements to protect your business, and we provide free vulnerability scanning for ecommerce and IP-connected terminal merchants to ensure their internet connection is protected from sophisticated online fraud attempts.

We assist with payment gateway integration, allowing your customers to seamlessly check out on your website. Our goal is to provide you with the best, yet affordable, payment solution. With a cosmetic merchant account from Website Payment Pro, you have options to customize the features and capabilities you need for your unique business:

• Ability to accept credit, debit, gift cards, and echecks in-person, online, or over the phone
• Industry-leading mobile processing app, online terminal, payment gateway, and in-store POS system options, including the Clover Suite
• Next-day funding
• Advanced Fraud Detection Suite to protect your business
• Merchant cash advance and merchant lending options
• Payment gateway integration assistance for accounting apps (QuickBooks, FreshBooks, and more), shopping carts, customer loyalty programs, and numerous other third-party programs
• 24/7 U.S.-based customer service
• Free consultation

Our main concerns for your business are enhancing your revenue, helping you build a loyal customer base, establishing a credible brand, and achieving long-term viability in the competitive market.

Regulations for Beauty Products

Marketing cosmetics can be challenging due to U.S. Food and Drug Administration (FDA) regulations. There's a fine distinction between hair and skincare products that are deemed cosmetic products and those that fall under the FDA's category of drugs and medical devices. It comes down to their intended use.

Cosmetics are products that cleanse, moisturize, or adorn skin or hair. For example, basic skin lotions, shampoos, perfumes, deodorants, nail polishes, and makeup are cosmetic products. Their intended use is to enhance appearance, decorate, or alter something in a positive way. The FDA classifies drugs as "articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease" or products that "affect the structure or any function of the body." So, when products claim to affect the skin or hair itself, rather than just its appearance, or provide therapeutic benefits, they're deemed drugs.

This is where marketing becomes crucial. Here's an example: If your skin product promises to cover the appearance of wrinkles, it is considered a cosmetic. Cosmetics don't require FDA approval (apart from certain color additives that go in them), but they are FDA regulated. They must not have deceptive labeling or packaging, and it's the merchant's legal responsibility to ensure they're safe for their intended use. There's also a list of FDA-prohibited ingredients that aren't allowed in them.

The FDA usually doesn't get involved unless a red flag is brought to their attention, like a consumer experiencing adverse effects from a toxic ingredient in the product, so the cosmetic industry has a more self-regulated sense.

If your product promises to stop or even reverse wrinkles ("anti-aging"), it is considered a drug and must be FDA-approved for safety and effectiveness before being offered. Antibacterial cleansers, sunscreens, acne treatments, and other products designed for specific treatments, preventative or not, are examples of skincare products that are considered drugs, rather than cosmetics, by the FDA. The gray area grows larger since several products are considered both cosmetics and drugs and must meet the FDA requirements for both categories. For example:

• Antiperspirant deodorants
• Makeup with any SPF
• Fragrances with aromatherapy claims (e.g., an essential oil that promises to help you sleep better)
• Lotions that claim to relieve sore muscles
• Moisturizers that claim to increase skin's collagen production
• Shampoos that promise to reverse hair loss

If you're launching a skincare line, consult the FDA to determine your products' classification and set of requirements. Our underwriting team is available to answer any questions you have about categorization and best practices for your specific product.

Discover how Website Payment Pro can support your salon or beauty business. Contact us today at 1-800-304-0555 to learn more about our tailored payment processing solutions.