Nutraceuticals are products derived from food sources that provide medicinal and nutritional benefits. No matter how beneficial taking vitamins and supplements may be, a nutra merchant account is extremely difficult to get approved for payment processing services.
Nutra products by definition include herbal tinctures, vitamins, dietary supplements, genetically engineered foods, and even some basic items that we eat every day like fortified cereals.
Nutraceuticals tend to prolong the aging process, increase life expectancy, foil chronic diseases, and generally improve our wellbeing by boosting the functions and performance of the human body. All this being said, having the proper card payment processing services for the sales of these products must be done via a high-risk merchant account.
Other benefits of Nutra products are:
- Improves sleep
- Increases energy
- Better skincare
- Lesser food cravings
- Sharper mental clarity
- Improves gut health
- Supports reproductive health
Nutraceuticals are also known by the following terms:
- Designer foods
- Functional foods
- Nutritional supplements
- Medical foods
Nutraceuticals is a Booming Industry
People are always searching for ways to stay younger for longer, feel better in their bodies, last longer in bed and not pile on the pounds as they get older.
This is the reason why 66% of adults (over 170 million people) in the United States use dietary supplements.
And that is not all, according to the Sun Safety Report, 62% of Americans use anti-aging products every day.
Little wonder that the American nutraceutical market is valued at $88.3 billion and is estimated to skyrocket to $118.73 by 2026 at a growth rate of 6.1%.
Why the Nutra Industry is considered High Risk
Owning a nutraceutical business can be profitable, but acquiring banks consider the industry unstable and are reluctant to offer payments services or open Nutra merchant accounts for these businesses mostly due to their high chargeback ratios.
Excessive chargebacks: Many people are looking for the magic pill that will stop them from aging or transform them into stallions in bed.
But these products do not always deliver the happily ever after results people expect.
Nutra companies also use various continuity billing models including free trials. However, Most of these products are meant to be used over a prolonged period of time if they are to be effective and the Nutra business model easily accommodates this need.
But most customers want fast fixes and lose interest rather quickly. And so they dispute recurring payments even when initial agreements have been reached.
The end result is that merchants find themselves constantly issuing refunds and responding to chargebacks. These two items alone if left unchecked can result in a merchant being shut down by their payment processor.
Fraud: There are many online e-Commerce businesses in the nutraceutical industry.
These types of businesses are soft targets for fraudsters because the main method of payment is by credit card.
The nutraceutical marketplace is also a low-hanging fruit within anybody’s reach. Many inexperienced merchants operate in this space because of the quick profits they hope to make.
And so they delve into this arm of e-Commerce without taking the precautions required to protect their business and customers.
This makes them easy pickings for fraudsters who are way more experienced and sophisticated and will often take advantage of unsuspecting merchants. Merchants not using the latest fraud scrubbing technology and payments gateways to help identify these fraudulent transactions are often the biggest targets.
Poor regulation standards: There are no clear-cut standards for nutraceutical products.
America’s Food and Drugs Administration oversees the regulation of pharmaceuticals, cosmetics, food products, and more.
Nutraceuticals do not fall under the scope of the FDA because they are not considered food or drugs.
Unlike drugs that require rigorous safety checks, tests, and FDA approval before hitting the market, nutra products are allowed to enter the market with less scrutiny.
Financial institutions are not comfortable with this neglect because of the controversies and potential lawsuits it could generate.
Applying for Payment Processing Services – Nutra Merchant Account
As a merchant, your best chance of opening a Nutra merchant account is dealing with a high-risk payment processing provider for your payment processing services.
To increase your chances of approval, ensure the following documents are in order before filling out an application and submitting it to underwriting.
- Letter from bank
- Recent bank statements of last 3 months
- 3 months of transaction processing history (if you are doing business already)
- Certificate of incorporation
- Employer Identification Number (EIN) or Social Security Number
- Government-issued identity card
- Product fulfillment agreement with suppliers
These documents help underwriters get a good grasp of your business and make the right decision with regard to your application.
If you are having issues preparing your application, nutraceutical merchant account specialists are always on hand to help you out.
Check Website for Flaws
Most nutra businesses have an online presence. If your business is online, it is crucial to reassess the areas underwriters usually focus on.
These areas include:
Description of products: Ensure that all products are well labeled with their ingredients.
The products should not contain prescription medicine or unsafe substances.
Shipping policy: A clear shipping policy page providing a detailed explanation of how your products can be ordered is compulsory.
Trial period: If you are offering a trial period for any product, highlight the details with clearly defined terms to avoid any ambiguity or confusion. This helps to minimize the risk of chargebacks.
It is important that these 3 things are in place, before directing underwriters to your website.
If your website is already live and missing these important components, these amendments are a priority.
Account Analysis Preparation
Underwriters delve deep into high-risk businesses because they do not want any blowback from the sponsoring bank when they eventually open a nutra merchant account for you.
Underwriters want to stay clear of any kind of financial trouble after approving your account.
To give yourself the best chance of getting approved with a viable payment processing solution, make sure you do these things:
- Pay all outstanding bills and debts
- Allow the partner with the best credit score to apply for the merchant account
- Keep chargeback ratios low
- Bank accounts should contain sizable sums of money and daily balances
These things help determine how much processing volume you will acquire both initially and after a solid relationship has been establsihed.
It also gives the underwriting team plenty of confidence that you can run your business properly. And that you can cover any chargeback risks linked to your Nutra merchant account.
Nutra merchant account approvals take a minimum of 3-5 business days, occasionally much longer. International Nutra merchant accounts take a minimum of 7-14 days for approvals.
The Ideal Nutra Merchant Account Provider
- Competitive rates
- Quick approval
- High volume processing
- Chargeback mitigation and prevention
- Multiple payment alternatives
- Dedicated customer service
- One time and recurring payment options
- Local and international nutraceutical merchant accounts
- Fraud security
- PCI-DSS level one priority security
Last Words on Nutra Merchant Accounts
Sometimes, underwriting representatives contact the customer department posing as potential customers.
Ensure all emails and calls are responded to promptly.
If the calls have to go to voicemail, ensure you identify your company, sincerely proffer your apologies, and state when you will return the call.
In the case of emails that cannot be answered immediately, use autoresponders.
Note, that underwriting teams also conduct online searches about your company’s reputation.
This is something you should do too before turning in your application.
If there are any negative reviews, do not ignore or argue with the client. Respond to the customer in the best possible light by giving your own side of the story.
This shows professionalism and that you care about the people that patronize your business.
Using these tips not only boosts your chances of getting a nutra merchant account approved, but also brightens your chances of getting the lowest rates and highest processing volumes for your payment processing services.