5975 Hearing aids - sales, service, and supply

Introduction

• What it is: This MCC encompasses businesses focused on the sale, service, and supply of hearing aids and related devices.
• Risk level: Medium — While generally stable, there can be concerns around product recall and warranty issues.
• Acceptance difficulty: Medium — Payment processors may require additional documentation due to product liability.
• Typical business models: hearing aid retailers; audiology clinics; hearing aid repair services; mobile hearing specialists.
• For merchants: Expect considerations for inventory management; potential moderate MDR; and a focus on customer service quality.
• What PSPs expect: Common onboarding requirements include proof of business operation; compliance with health product standards; and a detailed service description.

Payment Insights & Benchmarks

Merchants in the hearing aids sales, service, and supply sector should anticipate unique challenges in payment processing. Acceptance will often vary based on the blend of payment methods used, customer demographics, and the risk tolerance of payment service providers (PSPs).

Payment methods

Cards: commonly used, but may face scrutiny based on average transaction size and customer profile leading to potential declines.

• E-wallets: helpful for quick transactions and customer convenience, but not universally accepted.
• Insurance payments: could represent a significant portion of sales, adding complexity in payment verification and reconciliation.
• A2A transfers: growing in popularity for their lower fees, but may require robust customer authentication.

Authentication & security

Strong Customer Authentication (SCA) is often required, increasing friction at checkout.

• Implementation of 3D Secure (3DS) can enhance security but may negatively impact conversion rates.
• Merchants need to be proactive in monitoring for fraudulent transactions, particularly with high-ticket items like hearing aids.

Benchmarks (indicative, not guaranteed)

MDR: likely to be higher than standard e-commerce due to the specialized nature of products.

• Rolling reserves: potentially implemented to mitigate chargeback risks, often starting at around 10%.
• Settlement cycles: may take longer than typical e-commerce, often exceeding 7 days.
• Chargeback ratios: possibly elevated compared to general retail averages, necessitating close scrutiny.
• Approval rates: could be lower for card transactions, with alternative payment methods performing better.

Key metrics to monitor

Authorization approval rates segmented by payment method and customer profile.

• Chargeback rates alongside reasons for disputes to identify patterns.
• Average transaction values to assess the impact on fees and reserves.
• Customer feedback and satisfaction related to payment experiences.

Risk & Compliance

Merchants in the hearing aids sales, service, and supply sector face specific risks that require diligent compliance practices. Due to the nature of the products and customer vulnerabilities, PSPs and acquirers closely monitor transactions, expecting merchants to manage fraud, chargebacks, and adhere to strict AML/KYC procedures.

Chargebacks & fraud

Common fraud types include the use of stolen cards to purchase expensive hearing aids and a prevalence of friendly fraud, where customers dispute legitimate charges.

• Chargeback disputes can arise if customers feel that products are defective or don't meet expectations.
• Mitigation tools such as behavioral analytics, chargeback alerts, and verification requirements during high-value purchases can help manage risk.

AML/KYC expectations

Merchants are expected to implement robust identity verification processes (IDV) to ensure customer legitimacy.

• Sanctions checks for international customers and monitoring of transactions for anomalies are crucial.
• Manual review triggers may include high-value purchases, unusual ordering patterns, or a sudden influx of returns.

Operational red flags

Lack of clarity regarding ownership or operators can alarm PSPs, particularly in a sector with vulnerable customers.

• Insufficient transparency about product sourcing or supply chain origins may raise flags during compliance checks.
• Risky practices like unclear return policies or insufficient servicing guarantees can also provoke scrutiny from acquirers.
• High levels of traffic or purchases from regions known for fraud or abuse can indicate a problem needing immediate attention.

Onboarding Checklist

Merchants in the Hearing Aids industry must ensure a comprehensive onboarding package is ready before engaging with PSPs or acquirers. A well-prepared submission will facilitate a smoother approval process and minimize the risk of delays.

Legal & corporate documents

company registration and incorporation documents

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

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for business operations
• description of antifraud measures in place for transactions

Product & marketing

demo access or detailed descriptions of hearing aid products and services

• marketing strategy and overview of traffic sources (online, offline)
• geographic targeting information for service areas
• KYC flow details, particularly regarding customer identification for insurance purposes

Technical integration & security

payment architecture overview with supported payment methods

• description of SCA/3DS flows related to online sales
• PCI DSS compliance status and data storage policy regarding customer data

Operations

customer support setup, including availability for hearing aid inquiries

• SLA for handling customer disputes and service-related issues
• overview of return/exchange policies and processes
• internal procedures for managing customer data and compliance with privacy regulations

Regulation & Licensing

Licensing and certification are essential for merchants in the Hearing Aids MCC, as they ensure compliance with health regulations and industry standards. Recognition of licenses can vary based on the merchant’s jurisdiction and target markets, making it crucial for businesses to understand local requirements.

Operator licenses

State Licenses for Hearing Aid Dispensing — required in many U.S. states, ensuring that dispensers meet authorized standards. Recognition may vary by state.

• Health Canada Medical Device License — necessary for selling hearing aids in Canada, confirming that products meet safety regulations.
• European CE Marking — indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area.
• National Board for Certification in Hearing Instrument Sciences (NBC-HIS) — provides certification for professionals in the U.S., enhancing credibility and consumer trust.
• Some regions may require additional licenses related to healthcare services or therapy provision.

Geo-restrictions

Certain countries restrict the import and sale of hearing aids without local certification or approval.

• In the U.S., specific state laws may impose unique requirements for licensing and operation, varying significantly across jurisdictions.
• Some countries mandate that hearing aids must be prescribed by an authorized healthcare professional, affecting retail operations.

Certifications & audits

FDA compliance for hearing aids classified as medical devices in the U.S.

• ISO 13485 certification for quality management systems related to medical devices.
• Regular audits may be required to ensure compliance with industry standards and local regulations.
• Environmental certifications if dealing with electronic waste associated with hearing aids.

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 by each network can vary slightly (e.g., "sales" vs. "retailers" vs. "providers"), which can affect the categorization of merchants during onboarding. Acceptance policies may mandate valid certifications or adherence to health regulations, particularly for sellers of medical devices. Common reasons for denial include failure to provide appropriate documentation, misalignment with network-specific definitions, and regional restrictions on services.

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 is selling or servicing hearing aids, always use MCC 5975. Misclassifying your business under other codes may lead to transaction rejections or account issues, potentially jeopardizing your operation.

Best Practices for Merchants

Merchants operating under MCC 5975, which includes sales, service, and supply of hearing aids, must prioritize compliance and operational excellence to enhance acceptance and minimize risks. The following best practices can help foster sustainable relationships with payment service providers (PSPs) while ensuring efficient operations.

Classification & transparency

always use the correct MCC to accurately reflect the nature of your business and avoid account issues

• clearly display your services, product offerings, and return policies on your website
• maintain transparent communication regarding warranties, service agreements, and pricing

Fraud & chargeback reduction

employ 3DS or step-up authentication for online purchases to minimize fraud during transactions

• utilize clear billing descriptors to help customers recognize charges, reducing disputes
• log all customer interactions and transactions to create a robust record for dispute representments

Payment acceptance optimization

offer multiple payment methods (credit/debit cards, digital wallets, financing options) to cater to customer preferences

• test and monitor payment routing by geography or method to optimize acceptance rates
• consider using separate merchant IDs (MIDs) for different product lines or service types to streamline processing

Operational discipline

establish key performance indicators (KPIs) to monitor transaction success rates, chargeback ratios, and customer satisfaction

• conduct regular compliance audits to ensure adherence to policies and industry standards
• designate a specific team or individual for managing disputes with defined response timelines

Payouts & liquidity

maintain sufficient liquidity buffers to accommodate potential rolling reserves that PSPs may require

• implement automated AML checks for withdrawals to mitigate risk during payout processes
• regularly review payout processes to ensure timeliness and address any irregular withdrawal patterns

Business Scope & Examples

This MCC covers businesses engaged in the sale, service, and supply of hearing aids and related products. Merchants classified under this category typically provide a range of products and services that aid individuals with hearing impairments, focusing on both the retail aspect and accompanying services like repairs and adjustments.

Models

retailers of hearing aids and assistive listening devices

• clinics offering hearing tests and audiological evaluations
• providers of hearing aid fittings and adjustments
• businesses selling accessories for hearing devices, such as batteries and cleaning kits
• organizations offering hearing aid repair services

Borderline cases

Consumer electronics stores — while they might sell sound-related devices, they typically do not specialize in hearing aids specifically.

• Occupational health services — may provide hearing assessments as part of workplace safety but are not primarily focused on hearing aid sales.

Signals for correct classification

primary revenue comes from the sale of hearing aids or related services

• offers specialized expertise in audiology or hearing health
• conducts fitting and adjustment services directly linked to hearing aids