Nutraceutical Merchant Account
The nutraceutical industry has rapidly grown over the past decade along with the number of nutraceutical websites. The merchant accounts required for nutraceutical businesses however are considered high risk by most banks and payment processors. Nutra merchants must work with a payment company that specializes in this niche industry to provide reliable and affordable merchant services.
Why Are Nutraceuticals Considered High Risk?
Nutraceutical merchants have been troubled with the task of being approved for a credit card processing account for years. Many merchant account providers avoid working with nutra merchants since there is an increased amount of risk on the side of the payment processor. Nutraceuticals are not FDA approved and the industry is plagued with nutra businesses fabricating false claims that lead to unhappy customers. As in any industry, if unhappy customers are unable to return the products they have purchased and receive a prompt refund, they will inevitably chargeback the sale.
Nutraceutical merchants are notorious for their aggressive and unforgiving sales tactics. Some Nutra merchants will sell their products in the traditional “straight sale” style where a customer makes one purchase and receives the product one time. Other merchants employ the recurring or continuity sales method, where the customer purchases the product once and agrees to the rebilling and reshipment of the product (usually monthly). Lastly, the free trial strategy is the most aggressive of all. The free trial method advertises a free trial of a product (usually the customer is just paying a nominal fee for shipping) and they are entered into an automatic rebilling if the “subscription” is not cancelled within the allotted time. A $5.95 trial could easily become a $79.95 a month subscription. As you can imagine, this sales method generates a number of unhappy customers that are ready to chargeback their orders. It is not uncommon for some online nutraceutical businesses to operate with multiple sales strategies; possibly one website to show a bank during the approval process and another one for marketing to customers.
Nutraceutical Credit Card Processing Account Approval & Setup
Even with the small percentage of deceptive nutraceutical businesses operating today, there are still a handful of banks and payment processors interested in accepting merchants selling these types of products. High risk banks, similar to all payment processors, prefer merchants with previous processing history but, it is not a requirement.
Nutraceutical merchant accounts differ from regular or low risk merchant accounts in a few different ways. Similar to other high risk businesses, there is normally a rolling reserve (usually 10%) for 6 months. This protects the bank from losses due to chargebacks. Secondly, rates for recurring type nutraceutical businesses will be slightly higher compared with the rates of a company selling their products with a one-time sales model. The higher rate coincides with the heightened risk that recurring billing bears.
The application and approval process is similar to other merchant accounts. The application covers the business and the owner. There is a checklist of supporting documents including; owner’s ID, voided check, business bank statements and processing statements. Some businesses that are startups will not have all of the supporting documents. The owner should submit everything they have available. After approval, the merchant will be setup in a gateway and their tech people will be able to complete integration with their shopping cart and website.
Advantages of Using Global Pay
Global Pay specializes in providing domestic and offshore merchant accounts to nutraceutical businesses. Accounts are available for companies selling through; straight one-time sales, recurring sales and free trial offers. Global Pay works with a network of banks that actively accept nutra merchants throughout the world. Accounts are normally approved within a few days and setup same day credentials are issued from the bank. Already running merchants and startup companies are encouraged to apply. Contact Global Pay today to see what we can do for your business.