3125 Tan

Introduction

• What it is: This MCC code pertains to establishments that offer non-alcoholic beverages, primarily tea and coffee shops.
• Risk level: Medium — While generally stable, seasonal fluctuations can impact cash flow.
• Acceptance difficulty: Medium — Payment processors may require additional vetting due to the nature of food services.
• Typical business models: tea houses; coffee shops; smoothie bars; bubble tea shops; cafés.
• For merchants: Expect moderate MDR due to product type; reserves may be required based on sales volume; approvals can vary by processor.
• What PSPs expect: Clear business plan; proof of ingredients sourcing; detailed menu available for review.

Payment Insights & Benchmarks

Merchants in this MCC should plan for higher payment friction compared to standard e-commerce. Acceptance often depends on method mix, fraud controls, and PSP risk appetite.

Payment methods

Cards: frequently face scrutiny with higher decline rates, especially for high-ticket items.

• E-wallets: increasingly popular for quick transactions and usually have better acceptance rates.
• Bank transfers: widely used for larger transactions but may have longer processing times.
• Vouchers: considered for privacy-centric purchases, but limited in utility for online transactions.
• Cryptocurrencies: growing acceptance, particularly among tech-savvy customers, yet still limited by provider capabilities.

Authentication & security

Enhanced security measures such as 3DS are commonly utilized to mitigate fraud.

• These measures may lead to increased friction and cart abandonment if not optimized.
• Continuous fraud analysis is necessary to balance security with user experience.

Benchmarks (indicative, not guaranteed)

MDR: generally higher than standard e-commerce benchmarks due to risk factors.

• Rolling reserves: often present, sometimes reaching double digits.
• Settlement times: typically longer, often exceeding 5-7 days.
• Chargeback ratios: may be elevated compared to traditional retail, influenced by transaction type.
• Approval rates: can be lower for card transactions, with e-wallets showing relatively higher rates.

Key metrics to monitor

Authorization rates segmented by payment method and geography.

• Chargeback rates and reasons for disputes, particularly distinguishing fraud from legitimate complaints.
• Customer transaction trends, focusing on average order value and frequency.
• Analytics on cart abandonment linked to payment authentication failures.

Risk & Compliance

Merchants operating under the MCC 3125 (TAN) face considerable scrutiny due to potential risks associated with financial transactions. Payment Service Providers (PSPs) and acquirers often impose rigorous compliance measures to ensure that merchants effectively manage fraud, chargebacks, and the requirements for AML/KYC.

Chargebacks & fraud

High risks of friendly fraud (customers claiming they did not make purchases) and bonus abuse through promotional offers.

• Common fraud patterns include account takeovers and the use of compromised payment cards.
• Merchants should employ mitigation tools like velocity checks, device fingerprinting, and multi-factor authentication to reduce fraudulent transactions.

AML/KYC expectations

Demands for robust identity verification processes, including comprehensive checks against sanctions lists and politically exposed persons (PEPs).

• Source-of-funds verification is expected, particularly for high-value transactions or irregular patterns.
• Manual review may be triggered by large deposits, rapid transaction volumes, or payments from high-risk jurisdictions.

Operational red flags

Lack of transparency around ownership and operations can be a significant concern; merchants should avoid white-label setups without clear operator information.

• Traffic coming from unverified sources or regions with high fraud rates can raise flags for PSPs.
• Inadequate policies regarding responsible gaming or user account management can lead to operational scrutiny.
• Merchants should ensure clear communication of refund or return policies to minimize disputes.

Onboarding Checklist

Merchants under this MCC should prepare a complete onboarding package before approaching PSPs or acquirers. A well-structured submission improves approval chances and shortens review times.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for the relevant business activities
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for payouts
• description of antifraud setup and monitoring tools

Product & marketing

demo access or screenshots of the live platform

• marketing plan and traffic source overview (affiliates, SEO, PPC)
• geographic targeting information

Technical integration & security

payment architecture overview with supported methods/providers

• description of SCA/3DS flows, retry logic, and tokenization
• PCI DSS compliance status and data storage policy

Operations

customer support coverage (languages, 24/7 if available)

• SLA for dispute handling and chargeback response
• deposit and payout limits; self-exclusion mechanisms
• internal process for chargeback investigation and documentation

Regulation & Licensing

Licensing and certification are critical for merchants in this MCC, as PSPs and acquirers will require proof of compliance before onboarding. Recognition of licenses depends heavily on the merchant’s jurisdiction and the markets they target.

Operator licenses

Alcohol Beverage Control (ABC) license — necessary for businesses involved in the sale of alcoholic beverages in the United States; state-specific regulations apply.

• Local business licenses — various municipalities require special permits for the sale of alcohol and may have specific regulations regarding hours of operation and sales.
• Import/Export licenses — required for businesses that import or export alcoholic beverages; recognition varies by country.
• Some countries may enforce additional licenses or permits depending on the type of alcohol sold (e.g., spirits vs. wine).

Geo-restrictions

Countries with stringent alcohol regulations may prohibit the sale of certain alcoholic products.

• In the US, state-specific regulations can create a patchwork of restrictions on the sale of alcohol.
• Many PSPs may refuse to process transactions from businesses based in jurisdictions with high regulatory risk regarding alcohol sales.

Certifications & audits

Compliance with local health and safety regulations related to the storage and sale of alcohol.

• Certifications verifying adherence to alcohol labeling and advertising laws.
• Possible audits based on compliance with age verification laws and responsible beverage service training.

Official Definitions & Network Comparisons

This section shows how major card networks define this MCC and highlights practical differences that affect merchant onboarding.

Explanation:

The terminology used can vary, with terms like "cash dispensing" and "automatic teller" having different implications in terms of operation and regulatory adherence. Also, various networks may implement distinct restrictions regarding location and operational criteria, impacting approval processes. Common denial reasons frequently include failing to meet compliance requirements, operational shortcomings, and geographical risk factors.

Alternative MCC Codes

Merchants often confuse this MCC with other categories. The table below shows which codes are related, why they are confused, and what risks misclassification brings.

Rule of thumb for merchants:

Always ensure that your primary business operations fall under the MCC that accurately reflects your transactions. Misclassifying can lead to compliance issues and affect your ability to receive payment. If in doubt, seek clarification on your classification.

Best Practices for Merchants

Merchants under this MCC face higher scrutiny and must actively manage payments, risk, and operations. The practices below help build sustainable acceptance and reduce exposure to disputes and PSP restrictions.

Classification & transparency

always use the correct MCC; attempts to bypass classification often lead to account closure

• clearly display licenses, geographic restrictions, and responsible policies on the website
• maintain transparent business models and descriptors

Fraud & chargeback reduction

implement 3DS or step-up authentication for high-risk signals (amount, geo, device, velocity)

• use clear billing descriptors, instant confirmations (SMS/email), and responsive customer support
• log transaction and gaming events to build evidence for dispute representments

Payment acceptance optimization

support multiple methods (cards, wallets, vouchers, local A2A) to reduce dependency

• route traffic by geography, bank, or method and test PSP performance regularly
• use separate MIDs for product types or regions to manage scheme requirements

Operational discipline

track KPIs such as auth rate, decline codes, chargeback ratio, ARPD, and LTV

• schedule compliance audits, update internal policies, and run test purchases
• assign a dedicated owner for disputes with SLA-bound responses

Payouts & liquidity

maintain liquidity buffers to cover rolling reserves and extended settlements

• automate AML checks for withdrawals, especially at threshold amounts
• monitor payout velocity and suspicious withdrawal behaviors

Business Scope & Examples

This MCC covers businesses primarily involved in the tanning industry. Merchants classified under this category typically provide services related to tanning, including both sun-based and artificial tanning options. The focus is on establishments that offer tanning as a core service, where customers pay for immediate access to tanning solutions.

Models

tanning salons (UV tanning beds and booths)

• spray tanning services
• outdoor tanning (beach or resort operations)
• tanning product retail (lotions, oils, and skincare specific to tanning)
• mobile tanning services

Borderline cases

Beauty salons — while some may offer tanning services, they encompass a broader range of beauty treatments and may not focus primarily on tanning.

• Fitness centers — gyms or health clubs that provide tanning equipment alongside fitness services; classification may vary based on primary business focus.

Signals for correct classification

primary service offered is tanning or sun exposure

• customer pays directly for tanning sessions or products
• business operates dedicated tanning equipment or facilities