A guide for underwriters at ISOs and Acquirers onboarding MCC 7298 spa and wellness services merchants, covering risk assessment, fraud signals, and the underwriting questions that matter.
If you're underwriting a health and beauty spa, MCC 7298 concentrates risk around prepaid packages, memberships, and gift cards that create future-delivery liability. When a spa closes or a customer stops attending, prepaid balances turn into chargebacks. Here's what to look for.
Key Information
This guide covers health and beauty spas, where prepaid packages, recurring memberships, and gift card liability drive chargeback and future-delivery exposure.
Typical Business Types
Day Spas
#1
Facilities offering massage, facials, and treatments by appointment.
Medical Spas
#2
Spas providing cosmetic procedures under clinical oversight.
Membership Wellness Clubs
#3
Recurring-billing spas with monthly access and credits.
Payment Processing Information
Transaction Types
1
Single Treatment Payment
Card charged for an individual service at the visit.
2
Prepaid Package Purchase
Bulk purchase of sessions redeemed over time.
3
Recurring Membership Billing
Monthly charge for ongoing access and credits.
4
Gift Card Sales
Stored value sold for future redemption.
5
Product Retail Sales
Skincare and wellness products sold alongside services.
Common Payment Methods
Credit and Debit Cards - Primary method for services and packages
Card-on-File Recurring - Stored cards for monthly memberships
Digital Wallets - Contactless payment at the front desk
Gift Cards - Spa-specific stored value for future visits
Financing for Medical Spa Procedures - Installment plans for cosmetic treatments
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Disputes over packages and memberships not redeemed.
Sudden Volume Drop With Outstanding Liability
Declining service delivery against large prepaid balances.
Membership Cancellation Disputes
Spikes in disputes after cancellation attempts.
Unlicensed Medical Procedures
Cosmetic services without proper clinical oversight.
High Refund Request Volume
Frequent refunds on packages and memberships.
Common Underwriting Questions
UW Tips Business
Verify spa, cosmetology, and medical licensing
Confirm facility location and operating status
Review clinical oversight for medical spa procedures
UW Tips Financial
Recognize prepaid and membership models with future liability
Review seasonal demand around holidays and wellness cycles
Assess outstanding prepaid and gift card balances
UW Tips Risk
Examine chargeback ratios on prepaid and recurring billing
Evaluate cancellation and refund policies
Review delivery rate against prepaid obligations
UW Questions Business
What services do you offer and are any medical procedures?
Do you sell packages, memberships, or gift cards?
Is your facility properly licensed and supervised?
UW Questions Payments
What share of revenue is prepaid versus per-visit?
How do you bill and store cards for recurring memberships?
How do you track and redeem package and gift card balances?
UW Questions Fraud
How do you handle membership cancellations and refunds?
What controls cover prepaid balance liability?
How do you secure stored cards on file?
UW Questions Compliance
Are you PCI compliant and when was your last assessment?
Do you hold required spa and medical licensing?
Do gift cards meet expiration and disclosure rules?
UW Questions Chargebacks
What is your chargeback ratio and which reasons dominate?
How do you handle disputes on unredeemed packages?
Do you retain service records and consent forms?
UW Questions Infrastructure
Are booking, billing, and membership systems integrated?
How do you track prepaid liability in your system?
Do you reconcile gift card balances against sales?
Ongoing Monitoring
Transaction Monitoring
Watch prepaid balance growth against delivery rates
Track membership cancellation and refund trends
Review gift card liability against redemption
Compliance Checks
Maintain spa and medical licensing
Keep PCI assessments current
Stay current on gift card and prepaid rules
Security Updates
Use EMV terminals at the front desk
Apply tokenization for cards on file
Secure recurring billing authorization records
Risk Assessment
Hold reserves against outstanding prepaid liability
Address cancellation disputes with clear policy
Monitor delivery rate against prepaid obligations
Merchant Communication
Help the merchant manage prepaid and membership liability that becomes chargebacks if delivery stalls. Share clear cancellation and refund policies to cut disputes. Support reserve planning tied to outstanding package and gift card balances.
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