5970 Artist's supply and craft shops

Introduction

• What it is: This MCC represents businesses that sell art supplies and craft materials directly to consumers.
• Risk level: Medium — Moderate risk due to potential chargebacks and fraud from online sales.
• Acceptance difficulty: Medium — Some providers may impose stricter guidelines on creative goods.
• Typical business models: art supply stores; craft shops; specialty hobby retailers; online craft marketplaces.
• For merchants: Expect moderate merchant discount rates (MDR); potential reserve requirements; possible scrutiny during onboarding.
• What PSPs expect: Valid business registration; detailed inventory description; compliance with age restrictions where applicable.

Payment Insights & Benchmarks

Merchants in this MCC should plan for a varied payment experience influenced by customer demographics and the specific nature of their products. Understanding common payment methods and potential challenges can help streamline operations.

Payment methods

Cards: widely accepted, but may experience fluctuating approval rates based on transaction value and risk assessments.

• E-wallets: popular for online purchases, providing convenience but sometimes facing limits on funding sources.
• Installment payments: attractive for higher-priced items, improving sales but may involve more complex processing.
• Gift cards and vouchers: can boost customer loyalty, yet may complicate reconciliation and reporting.

Authentication & security

3DS (Three-Domain Secure) is typically required for online transactions to enhance security.

• Strong customer authentication may add friction but helps reduce chargebacks from fraudulent transactions.
• Ongoing fraud monitoring is essential, particularly for high-value orders or unusual purchase patterns.

Benchmarks (indicative, not guaranteed)

MDR: can be slightly elevated compared to standard e-commerce, particularly for premium product categories.

• Rolling reserves: often seen, especially for new merchants or those with high transaction variance.
• Settlement delays: may extend beyond the standard 2-3 days, frequently reaching 5-7 days.
• Chargeback ratios: typically higher as customers may dispute purchases for quality or misrepresentation.
• Approval rates: often lower for card transactions; some alternative methods may yield better success.

Key metrics to monitor

Transaction approval rates segmented by payment method and product category.

• Declined transactions and reasons to identify any patterns in payment behavior.
• Chargebacks categorized by product type to pinpoint potential concerns in offerings.
• Sales trends per payment method to optimize the accepted payment mix for profitability.

Risk & Compliance

Merchants operating under MCC 5970 face unique risks primarily related to chargebacks and fraud due to the nature of their products and customer base. Payment Service Providers (PSPs) and acquirers are vigilant in monitoring this sector, requiring merchants to take proactive steps to mitigate associated financial and reputational risks.

Chargebacks & fraud

Friendly fraud is prevalent, as customers may claim they did not authorize a purchase, leading to disputes.

• Abuse patterns include the return of high-value items for cashback without intent to keep the products.
• Common fraud-mitigation tools include device fingerprinting, behavioral analytics, and dynamic fraud scoring systems.

AML/KYC expectations

Merchants must implement robust identity verification processes, including ID validation and checking against sanctions lists.

• Monitoring for unusual purchasing behavior and source-of-funds scrutiny is essential, especially at higher transaction values.
• Triggers for manual review can include inconsistent billing addresses, frequent returns, and significant cash transactions.

Operational red flags

Lack of transparency regarding ownership and clear identification of persons behind transactions may raise concerns.

• Unverified or untraceable traffic sources, particularly from regions with high fraud rates, can trigger scrutiny.
• Absence of stated return/refund policies or clear communication regarding product guarantees could lead to customer disputes.
• Limited operational controls over user accounts, such as inability to self-regulate spending or restrictions, may raise alarm for PSPs.

Onboarding Checklist

Merchants in the Artist's Supply and Craft Shops category should prepare a complete onboarding package before approaching PSPs or acquirers. A well-structured submission enhances the likelihood of approval and expedites review times.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for selling art supplies and crafts
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

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

Product & marketing

demo access or screenshots of the live platform showing products

• marketing plan and traffic source overview (online, social media)
• geographic targeting information for sales
• details on customer identification processes, if applicable

Technical integration & security

payment architecture overview with supported methods and providers

• description of security measures including tokenization and fraud detection
• PCI DSS compliance status and data storage policy

Operations

customer support setup (hours of operation, languages)

• SLA for dispute handling and chargeback response
• policies for returns and exchanges; order processing times
• internal process for managing chargeback investigations and documentation

Regulation & Licensing

Licensing and certification are important for merchants in the Artist's Supply and Craft Shops MCC, as they help ensure compliance with local regulations and protect consumer interests. Recognition of licenses can vary significantly based on the merchant's jurisdiction and target market.

Operator licenses

Local business licenses — typically required by municipalities to operate retail outlets.

• Sales tax permits — necessary in many jurisdictions to collect sales tax on items sold.
• Occupational licenses — some regions may require these for certain types of craft classes or workshops.
• Health and safety certifications — relevant for businesses offering classes involving hazardous materials (e.g., certain paints or chemicals).
• Compliance with zoning laws — ensures that the retail space adheres to local regulations.

Geo-restrictions

States or countries may have specific regulations regarding the sale of hazardous materials, limiting sales by region.

• Some jurisdictions may have restrictions on online sales of certain art supplies, depending on the materials used.
• Local ordinances that affect locations where craft shops can operate, particularly in residential areas.

Certifications & audits

No specific industry-wide certifications, but local compliance may require business credentials.

• Basic safety audits if products involve the sale of potentially hazardous materials.
• Environmental compliance checks if operating in areas with strict pollution controls.

Official Definitions & Network Comparisons

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

Explanation:

Though the definitions are aligned, differences in phrasing (e.g., “artistic supplies” vs “artist's supply”) may lead to variance in merchant classification. Networks might emphasize requirements for clear product descriptions to prevent misuse, and compliance may vary regionally. Common denial reasons could stem from lack of documentation, inadequate inventory proofs, or non-compliance with category definitions.

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:

If your primary business focus is on selling artist's supplies, ensure you're using MCC 5970. Avoid classifying under alternative codes, as doing so may result in compliance issues and elevated risk.

Best Practices for Merchants

Merchants categorized under the MCC 5970 must navigate unique challenges in the arts and crafts sector, especially concerning payment acceptance and operational efficiency. By adhering to these best practices, merchants can enhance their transaction processes, mitigate risks, and foster stronger relationships with payment service providers (PSPs).

Classification & transparency

always use the correct MCC; inaccuracies can lead to account termination

• clearly display product offerings, customer policies, and contact information on your website
• maintain transparency in pricing and terms of service to build trust with customers

Fraud & chargeback reduction

implement 3DS or step-up authentication for online purchases, especially for high-value items

• utilize clear billing descriptors to avoid consumer confusion and minimize chargebacks
• log transaction details and customer interactions to support dispute resolutions and representments

Payment acceptance optimization

support multiple payment methods, including cards, digital wallets, and local payment solutions, to capture a broader audience

• route transactions based on geographic data and analyze PSP performance periodically through A/B testing
• create separate merchant IDs for different product lines to better manage payment processing and reporting

Operational discipline

establish KPIs to monitor metrics like authorization rates, chargeback ratios, and average transaction values

• conduct regular compliance audits, review transaction data, and update internal practices to maintain standards
• appoint a dedicated individual or team to manage disputes and ensure timely resolution based on established SLAs

Payouts & liquidity

set aside liquidity buffers to accommodate rolling reserves and manage cash flow effectively

• implement automated Anti-Money Laundering (AML) checks for high-volume withdrawals to reduce risks
• keep track of payout timelines and monitor for any unusual withdrawal patterns to safeguard funds

Business Scope & Examples

This MCC covers businesses that specialize in the sale of artistic supplies, crafts, and hobby materials. Merchants classified under this category typically provide products and services that cater to artists, crafters, and hobbyists engaged in various creative activities. The focus is on retail environments where creative individuals can purchase necessary materials for their artistic expressions.

Models

Retail stores selling painting supplies (paints, brushes, canvases)

• Craft shops offering materials for knitting, sewing, and scrapbooking
• Specialty stores for sculpting and pottery supplies
• Online platforms focusing on DIY projects and craft kits
• Art supply wholesalers serving retail businesses

Borderline cases

Custom framing services — businesses that provide framing for artwork may sometimes be classified here, but they may also operate under a different MCC depending on their primary service.

• Art galleries — while they sell artwork, they might focus more on art sales than supplies and could belong to an alternative MCC.

Signals for correct classification

primary revenue from selling materials and supplies rather than finished art

• products specifically designed for DIY or craft use
• store engages actively with the local art/community scene through events or classes