According to reports, the global nutraceutical market is worth $233.9 billion. Figures are projected to reach $358.5 billion by 2027. Nutra merchant accounts are in high demand and finding the right high-risk eCommerce merchant account nutraceutical provider is of utmost importance.
The United States has the largest number of nutraceutical consumers in the world and is followed by Japan and China respectively.
Nutraceuticals are products derived from food sources and provide a combination of nutritional (nutra) and medicinal (ceuticals) benefits.
Nutraceuticals can be a specific food component like omega-3 fish oil derived from salmon or a naturally nutritious food with medicinal values like soybeans or garlic.
Even though the nutraceutical business market is considered high risk, it still went on to record an astonishing annual growth rate of 7.3% between 1999 and 2002 and still shows no signs of stopping.
There is an unbelievable demand for nutra products worldwide, however, any business owner looking to enter and profit in this sector, requires a nutraceutical merchant account.
The benefits of a high-risk merchant account nutraceutical provider are that it will help you maximize opportunities in this multi-billion industry. The right Nutra payment processor can help you seamlessly accept and process payments while many low risk sponsoring banks and payment service providers are simply reluctant to provide.
Before examining the motives of financial institutions not providing merchant services for this hugely profitable sector, let’s look at 5 major reasons why this industry remains on the rise.
5 Trends Driving the Nutraceutical Market in 2021
Results from a consumer survey shows the use of dietary supplements in America is at an all time high with over 77% Americans admitting they use supplements to improve their health.
Here are 5 major reasons why baby boomers and millennials show a strong interest in nutra products.
High healthcare costs: A World Health Organization report claims that health expenses are growing at a faster rate than the world’s economy.
With medical treatments getting expensive every day, people are turning to nutraceutical products because they are more affordable.
Non-communicable and chronic diseases: Before the pandemic, over 70% of deaths worldwide were caused by non-communicable diseases (NCDs) like cancer, diabetes, high blood pressure, heart disease and lung disease.
These NCDs are driven by 4 major risk factors: unhealthy diets, physical inactivity, alcohol and tobacco use.
The belief that these lifestyle diseases are preventable has driven the demand for nutraceuticals.
Mistrust in conventional medicine: Medical negligence, lawsuits, discrimination and unequal access to health insurance, health facilities as well as treatments are some of the reasons why medical mistrust is rampant.
This has made many people choose nutraceuticals as a viable alternative, instead of keeping faith with a health system, they allege does not hold their best interests at heart.
Aging Population: There are 71.6 million people between the ages of 57-75 in the U.S.
Most of them are on the verge of retirement, if they have not retired already.
They want to stay healthy as well as enjoy their retirement lives. And with more disposable income as retirees, they can afford to spend on nutraceuticals.
Health-conscious millennials: The millennial generation, usually between the ages of 25 and 40 eat smarter, smoke less and exercise more.
They know that healthy living reduces the risks of developing diseases like diabetes, heart disease and cancer later in life. However, they are a generation not really keen on popping pills to stay healthy.
This is why they are incorporating nutraceuticals like protein bars, milk shakes, vitamin supplements and fortified foods into their healthy regimen.
Why use a High-Risk Merchant Account Nutraceutical Payment Processor?
Ecommerce business models make up a sizable portion of the nutraceutical industry as they promise more profits by reaching more people.
Unfortunately, running an online nutra business makes it vulnerable to excessive chargebacks and fraud as purchases are made virtually.
Fraudsters often get away easily with card-not-present transactions by stealing credit card information, splurging money on purchases and sending goods overseas, where they are difficult to trace.
These products usually end up in the hands of their partners in crime who sell for profit. In other cases, they simply steal credit card information and sell it to the highest bidders.
The nutraceutical sector is a hot-spot for fraudsters and criminals. Unlike traditional payment processors, high-risk merchant account nutraceutical providers recognize the risks involved with nutra merchant accounts and have solutions in place to help fraudulent transactions from happening in the first place.
One of the main reasons why lower risk financial institutions are reluctant to do business with the nutraceutical industry is because of the high number of chargebacks.
These chargebacks stem from products not delivering results as promised.
Nutraceutical products are not regulated as pharmaceuticals and so their health benefits are largely unproven, which leaves plenty of unsatisfied customers asking for their money back.
In other cases, merchants can go ahead and charge a customer’s card even after a cancelation request has been made.
These incidents are common with nutra merchant accounts primarly with regards to consumers who request free trial periods after submitting credit card information. The payment information is entered into the recurring billing system which can be charged as soon as the free trial has ended.
Customers occasionally forget their card information that is on file and only find out when billed for the following month. As soon as they discover this, they want an immediate refund.
This is a financial liability banks and card companies always want to avoid.
Additionally, there is the issue of regulation, where the nutra industry operates under multiple layers of state and federal law.
By legal definition, nutra products cannot be classified as food or drugs and therefore cannot be categorized by the U.S. Food and Drug Administration. Yet, when ingested in substantial amounts they can have drug-like effects and can also provide nutrients for the body.
The original use, potency levels and safety of nutraceutical products are confusing for traditional financial institutions.
It adds to the liabilities and expenses of servicing merchant accounts in an industry with many risks.
High-Risk Nutra Merchant Account for Nutraceutical Companies
Most standard low risk merchant providers are not willing to provide services for this industry.
And the few relcutant payment providers willing to take the risks simply cannot cope with the painstaking underwriting and risk management process required for this high-risk business.
The alternative to succeeding in this industry is partnering with a qualified and experienced high-risk merchant account nutraceutical provider.
The best high-risk merchant nutraceutical providers offer:
- Decades of experience in the high risk industry
- Solid domestic and international banking partnerships
- Transparent fees and no hidden pricing
- Provide payment options for Nutra merchants on the MATCH list
- In-house underwriting team to ensure fast nutraceutical merchant account approvals
- Offer anti-fraud and secure payment gateways with full PCC DSS compliance
- Provide multiple merchant payment solutions with intelligent transaction routing to help mitigate chargebacks
- Seamless integration with popular shopping carts
Payment processing platforms like Stripe, Square and Paypal do not process nutraceutical merchant accounts.
Their fast approvals require very little to no underwriting during the application process so your business will get approved initially.
However, when they discover the real status of your business, they will shut down your account with no questions asked.
The last thing you want is a disrupted payment processing platform that derails your business.
This is exactly what will happen if you choose to rely on an aggregate payment account provider, instead of using a direct MID high-risk merchant account nutraceutical provider.
Merchant accounts for nutraceutical companies should only be opened by seasoned high-risk nutra merchant service providers with expertise and experience in hard- to-place and higher-risk industries. High risk merchant account nutraceutiacal specialist’s like SecureGlobalPay are happy to assist you and look forward to taking your call should have any questions.