Our quest to find a payment gateway that doesn’t prohibit the sale of human hair extensions
When we started working with a leading human hair extension retailer, it felt like we stumbled at every hurdle in our search for the perfect payment gateway. PayPal, though willing to serve us, wanted to withhold a large portion of due payments for extended periods of time. Stripe served us well for several weeks until they caught onto what our client was selling. After this, they too withheld a percentage of our sales for 90 days to cover potential chargebacks. Every other payments provider we spoke with told us that they prohibit the sale of human hair on their gateways. Except one.
You see, these providers deem human hair sales as “high-risk”. High-risk is a term used when gateways expect a large number of chargebacks – more than is deemed legally acceptable. A chargeback refers to a customer’s demand to banks to reinstate funds after a sale, usually reserved to reverse fraudulent payments or to claim back refunds that were previously refused by retailers.
We spoke in-depth with Stripe about their decision. Here’s what a representative told us on the matter shortly after informing us they’d be disallowing our client’s sales through their gateway:
Stripe is required by law to complete what’s called a KYC (Know Your Customer) survey for every business that signs up with us, regardless of how many transactions they’ve processed. This involves completing in depth reviews of every single business, including what you’re selling, how you intend to sell it, your own description of your products and services, your website, and a variety of other details. We then use all of this information to determine how risky a business is.
During that standard review of your account and business, we came to the realization that your likelihood for future chargebacks exceeds the rate we’re legally able to support based on regulations as set up by our banking partners.
Those same regulations also dictate that for very high-risk accounts such as yours, we’re required to hold onto a portion of your remaining funds for the industry standard chargeback window of 90 days. This hold is only put in place to help protect ourselves, our banking partners, and your customers from any potential fraud or disputes that tend to occur more with the sale of human hair extensions and similar products.
Once that period is over we’ll deposit all remaining funds into your bank account automatically.
So then began our search for a payments gateway that’d allow the sale of human hair.
One gateway came to the rescue
We spent a good chunk of time speaking with payment gateways on the phone, on live chat and via email. Aside from many of the larger providers, we spoke to those who specialise in the sales of high-risk products and services. These traditionally range from bets on gambling sites to sales of pharmaceutical drugs. However these gateways, alongside being less known and thus less trusted, had much higher service fees.
After initially casting them aside based on assumptions that our application would be denied, we eventually spoke with a Sagepay representative on the phone. To our joy, they confirmed that they’d facilitate the sale of human hair and so we promptly signed up on behalf of our client.
If you’re used to implementing Stripe and Paypal for your clients, implementing Sagepay can be a bit of a hassle. You’re obliged to be PCI compliant to protect your customers from fraud and you must be using an SSL certificate to encrypt payment data in transit from your server to theirs. However, at the time of writing this post, it’s probably your only viable choice.
Before we go – a word about PayPal
PayPal doesn’t outright ban the sale of human hair using their gateway but they will withhold funds for extended periods of time. This, they say, is to ensure there’s money in your account to cover any potential chargebacks. Whether this is acceptable for you will depend on your business’ financial circumstances.