6399 Insurance - unclassified

Introduction

• What it is: This MCC covers various insurance-related services that don't fit a specific category.
• Risk level: Medium — Due to the diverse nature of services and potential fraud risks.
• Acceptance difficulty: Medium — Varies significantly based on the specific type of insurance offered.
• Typical business models: Insurance brokers; general insurance agents; specialty insurance firms; financial consultants.
• For merchants: Expect moderate MDR rates; potential for reserves; varied approval processes based on risk assessment.
• What PSPs expect: Comprehensive business documentation; clear service offerings description; strong financial history.

Payment Insights & Benchmarks

Merchants in this MCC should plan for potentially elevated payments friction compared to standard e-commerce. The specifics can vary widely based on service type, customer risk profiles, and chosen payment service providers (PSPs).

Payment methods

Cards: Generally accepted but may face stricter scrutiny and lower approval rates due to perceived risk.

• E-wallets: Popular for their convenience but may have limitations on certain insurance-related transactions.
• Direct debits: Common for recurring payments, though they can lead to authorization issues if not properly managed.
• ACH transfers: Widely used for higher-ticket transactions; however, expect longer settlement periods.

Authentication & security

Strong authentication measures like 3DS are often required for card transactions.

• These controls may reduce fraudulent transactions but can also lead to increased false declines.
• Regular monitoring for suspicious activity is essential, given the risk associated with insurance payouts.

Benchmarks (indicative, not guaranteed)

MDR: Typically higher compared to standard retail due to associated risks.

• Rolling reserves: May be implemented, often reflecting higher percentage ranges than normal.
• Settlement delays: Commonly observed in the range of 5-10 days, particularly for complex insurance claims.
• Chargeback ratios: Usually elevated, reflecting the nature of the services provided.
• Approval rates: Often lower than standard e-commerce, necessitating a diverse payment method strategy.

Key metrics to monitor

Authorization rates by payment method to identify bottlenecks.

• Chargeback reasons and trends, focusing on fraud versus customer service issues.
• The average settlement time for various payment methods.
• Customer demographics associated with higher fraud rates.

Risk & Compliance

Merchants in the unclassified insurance sector face substantial risk and compliance challenges due to the potential for high chargeback rates and various types of fraud. PSPs and acquirers maintain stringent governance, necessitating proactive measures from merchants to effectively manage regulatory expectations and mitigate risks.

Chargebacks & fraud

High rates of friendly fraud as customers may falsely claim non-receipt or dissatisfaction with services.

• Common patterns include policy misrepresentation and fraudulent claims, especially around travel or health insurance.
• Mitigation strategies encompass tools such as device fingerprinting, transaction monitoring for unusual patterns, and clear communication of terms and conditions to clients.

AML/KYC expectations

Robust identity verification is crucial, including thorough verification of identity documents and checks against sanctions lists.

• Regular source-of-funds verification, especially for high-value policies or unusual payment methods.
• Triggers for manual reviews include large or frequent policy purchases, atypical payment paths, or the use of mixed payment methods.

Operational red flags

Lack of transparency regarding policy ownership or the identity of beneficial owners can lead to heightened scrutiny.

• Inconsistent or unclear documentation processes when onboarding clients.
• Insufficient customer support channels and grievance redressal mechanisms can raise concerns about operational integrity.
• Failure to communicate clear refund or cancellation policies to clients can lead to disputes and chargebacks.

Onboarding Checklist

Merchants under the Insurance - Unclassified 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 related to insurance services
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy, applicable industry-specific regulations

Financials & risk management

recent financial statements and projected cashflow forecasts

• liquidity reserve planning for claims payout
• description of risk assessment and antifraud measures in place

Product & marketing

demo access or screenshots of the insurance platform

• marketing strategy including traffic source overview (affiliates, SEO, PPC)
• geographic targeting information for offered insurance products
• KYC process details, including customer identification verification methods

Technical integration & security

payment processing architecture overview with supported methods/providers

• details on compliance with SCA/3DS flows, tokenization processes
• PCI DSS compliance status and data handling policies

Operations

customer support setup (availability, languages offered)

• SLA for dispute handling and claims process
• limits on insurance coverage and payout procedures
• procedures for evaluating and handling claims disputes

Regulation & Licensing

Licensing and certification are critical for merchants in this MCC, as payment service providers (PSPs) and acquirers typically require proof of compliance before onboarding. Recognition of licenses largely depends on the merchant’s jurisdiction and the specific markets they target.

Operator licenses

Insurance Regulatory and Development Authority of India (IRDAI) — regulates insurance providers in India, ensuring they meet necessary operational guidelines.

• Financial Conduct Authority (FCA) — oversees financial services firms in the UK, including certain types of insurance businesses.
• State insurance departments in the US — each state has its own regulations and licensing procedures for insurance providers.
• National Association of Insurance Commissioners (NAIC) — provides a framework for state regulations but is not a licensing body itself, yet compliance with its standards is essential.
• Some jurisdictions may require specialized licenses depending on the type of insurance offered (e.g., life, health, property).

Geo-restrictions

Many global regions have stringent regulations; insurance services may be limited to licensed practices within those jurisdictions.

• Cross-border insurance sales are often heavily regulated, with some countries imposing outright bans.
• Certain PSPs may decline to process transactions from unlicensed or grey markets.

Certifications & audits

Compliance with PCI DSS for any handling of cardholder data in insurance transactions.

• Solvency and actuarial audits may be required to ensure financial health and regulatory compliance.
• AML (Anti-Money Laundering) and KYC (Know Your Customer) compliance reviews are mandated for insurers to prevent fraud and ensure regulatory adherence.
• Periodic internal audits to assess risk management practices and operational effectiveness are also common.

Official Definitions & Network Comparisons

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

Explanation:

While all networks address unclassified insurance services, differences in their definitions signal varying requirements for merchant onboarding. Terms like "unclassified" versus "not categorized" can lead to unique processing rules. Common reasons for application rejections include inadequate licensing, failure to meet regional compliance, and lack of clarity in business activities.

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:

Ensure your business activities align closely with the specified MCC for your services. Misclassifying under an alternative code to evade higher fees or scrutiny can lead to compliance issues and potential account penalties. Always choose the MCC that accurately reflects your core operations.

Best Practices for Merchants

Merchants categorized under MCC 6399 (Insurance - Unclassified) need to adopt best practices that promote transparency and build trust with customers while effectively managing their payment operations. The following practices are essential for fostering sustainable relationships with payment service providers (PSPs) and reducing disputes.

Classification & transparency

always use the correct MCC; accurate classification helps maintain compliance and avoid account issues

• clearly display insurance offerings, terms, conditions, and responsible business practices on your website
• ensure transparent billing descriptors to enhance recognition and trustworthiness

Fraud & chargeback reduction

implement 3DS or step-up authentication for transactions that exhibit high-risk signals (e.g., unusual transaction amounts or rapid purchasing patterns)

• utilize clear billing descriptors, provide immediate transaction confirmations via SMS or email, and offer responsive customer support to address concerns promptly
• maintain logs for transaction history and customer interactions to build a strong case during dispute representments

Payment acceptance optimization

offer a variety of payment methods, including cards, digital wallets, and bank transfers, to cater to diverse customer preferences

• regularly assess and route payments based on geographical data, banking affiliations, or method to optimize transaction success rates
• consider using separate Merchant Identification Numbers (MIDs) for different insurance products to streamline compliance and reporting

Operational discipline

set and monitor key performance indicators (KPIs) such as transaction approval rates, decline reasons, chargeback ratios, and overall customer satisfaction

• establish regular compliance audits to review internal policies and ensure adherence to industry standards
• designate a responsible individual or team to manage disputes, ensuring clear communication and adherence to service level agreements (SLAs) for response times

Payouts & liquidity

create liquidity buffers to accommodate potential rolling reserves and extended payout timelines common in the insurance sector

• automate anti-money laundering (AML) checks for all withdrawal requests, especially for large or threshold amounts
• closely monitor withdrawal patterns and payout speeds to quickly identify and address any suspicious activities

Business Scope & Examples

This MCC covers businesses that are involved in various types of insurance services that are not specifically classified under other codes. Merchants in this category typically provide payment processing for a broad range of insurance products, including life, health, property, and casualty insurance services.

Models

life insurance providers

• health insurance companies
• property and casualty insurance agents
• insurance brokerage services
• auto insurance service providers

Borderline cases

Financial services — companies that offer financial products (like loans or investments) but are not primarily focused on insurance; usually classified elsewhere.

• Non-insurance related services — businesses that provide related services (like risk assessments or consultancy) without selling actual insurance policies; may not fit in this MCC.

Signals for correct classification

company specifically offers insurance products to consumers

• merchant processes premium payments directly for insurance policyholders
• operations include underwriting or claims processing for insurance contracts