Nutraceuticals Merchant Account​

High-Risk Credit Card Processing for Nutraceutical Products​

Nutraceutical companies can often find it difficult to accept credit card payments due to the risk involved with their products. However, there are various high-risk merchant accounts that nutraceutical companies can apply for to process credit cards through their website and avoid expensive FDA studies and testing. Below is information on how you can get approved for a high-risk merchant account, as well as what they’ll provide you with:

  • Accepted by more processors than standard accounts.
  • Lower cost per transaction.
  • Easier time navigating applications and regulations.
  • Higher limit on monthly sales volume.

Why your nutraceuticals business might be classified as a high-risk business

Nutraceuticals are everywhere, even popping up in grocery stores. With so much popularity, it can be shocking to find out that the industry is often marked as high risk for a variety of reasons, including:

  • No regulation and little oversight from the federal government
  • Manufacturers making false claims about their products, ingredients, and effects
  • Stronger odds of legal action in such an unregulated market
  • Higher risks of chargebacks with free trials and automated renewals

Find a Payment Processor That Has Everything You Need

Not every payment processor is familiar with the nutraceuticals industry. BankCard specializes in high risk and has experience working with merchants in the nutraceutical industry to provide:

  • Chargeback mitigation programs
  • Understanding of how your business operates
  • Scalable services and pricing to grow with your business and meet your needs along the way

Take the first step to getting approved for a nutraceuticals merchant account. 

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Find the payment processing services that match your needs—no matter what type of nutraceutical products you sell.

  • Weight loss supplements (ie. Garcinia)
  • Diet programs (ie. Keto)
  • Sports enhancing supplements
  • Botanical, herbal and plant-based health products
  • Pain management
  • Meal replacement shakes and snacks
  • Male enhancement supplements
  • Minerals
  • “Smart drugs” or cognitive enhancers (also called nootropics)
  • Dietary supplements
  • Hair treatment & growth products
  • Anti-aging treatments
  • Multivitamins
  • Cosmeceuticals
  • Detox kits including colon cleanse supplements

What are nutraceutical products, and why do they need to be processed differently from other products?

Nutraceuticals are natural therapies marketed for their ability to improve health and function on the human body without being classified as drugs by the FDA because these products don’t have drug effects beyond what you’d expect from food sources. 

They differ from pharmaceuticals because they’re not intended to treat or cure diseases. Yet, the term “nutraceutical” is used more on products marketed and sold as pills, capsules, powders, and liquids (versus whole food supplements like diet shakes, protein powders, and meal replacement shakes).

As with all products, the FDA regulates the safety of nutraceuticals and how they’re manufactured, distributed, and sold. This means manufacturers must meet strict guidelines on manufacturing processes for these products. 

There are different regulations, depending on the type of nutraceutical product. For example, dietary supplements can use gluten as a filler or coating only if it’s unavoidable. However, for most products, manufacturers must ensure that pesticide residues are below specified limits. The manufacturing process also requires compliance with FDA BPC Code Part 111 Current Good Manufacturing Practices (CGMPs), and the labeling must follow FDA requirements.

Manufacturers of nutraceuticals must abide by all existing FDA regulations, regardless of whether food or drug claims are made about the product. The regulation of both types is based on federal laws: 

  • The Federal Food, Drug, and Cosmetic Act (FD&C) describe prohibited acts, misbranding, contaminated food, drug approval requirements, and the only enforcement area is for drugs.
  • The Federal Trade Commission Act (FTCA) describes prohibited acts for false or deceptive advertisements to promote the sale of a product. In addition, the FDA enforces both federal laws “Import Alerts” that provide instructions for inspectors at all ports of entry to detain certain foods, dietary supplements, and nutraceuticals that do not comply with the law.

Manufacturers who anticipate selling a nutraceutical product in the U.S. need to know how their product can be legally marketed and labeled, regardless of whether it’s classified as a food or drug. Manufacturers must also provide evidence for safety and compliance with all standards (regardless of claims made about the product).

When it comes to manufacturing these products, there are several options for handling product inputs, including the main ingredient’s food and non-food grades. The appropriate choice depends on the type of nutraceutical ingredients used in your product formulation.

The nutraceutical product needs to be tested for efficacy and safety by the manufacturer. In addition, testing must follow strict guidelines by state and federal food agencies, which means that nutraceuticals need a separate facility from pharmaceutical products with more stringent requirements.

Testing is generally done on the finished nutraceutical product. However, some states require secondary ingredient testing (in addition to the finished nutraceutical product). It depends on whether or not it’s a new ingredient and what type of nutraceutical is being made.

The FDA’s guidelines for nutraceuticals

Nutraceuticals are considered high-risk by Lloyds of London. This is because nutraceutical companies often don’t meet or comply with FDA guidelines, which can cause problems with credit card processors refusing to work with them. In addition, once the nutraceutical product is on the market, it’s subject to additional government regulation through drug approval or meeting Generally Recognized as Safe (GRAS) requirements.

In addition, a nutraceutical product must meet the FDA’s definition of a nutraceutical or dietary supplement before you can market the product.

One nutraceutical guideline that nutraceutical distributors fail to comply with is providing safety and toxicity information. This is because nutraceutical products are typically sold in small quantities – 1 ounce or less, for example. That makes it challenging to provide the necessary data about nutraceutical’s safety and toxicity. 

Another nutraceutical guideline that nutraceutical companies fail to follow is labeling; the guidelines are particular about dietary supplements, so your products can only be marked as nutritional supplements and not considered one.

Nutraceutical companies also need to include nutritional information and ingredients to be labeled as dietary supplements. The dietary ingredient list needs to be listed in descending order of predominance, not by weight. 

Nutraceutical distributors also fail to comply with nutraceutical payment guidelines, accepting only credit cards as the primary form of payment for their products, which is problematic for companies because they’re high-risk items, meaning it’s difficult to process payments through a credit card processor. As a result, wholesalers and nutraceutical distributors must take special precautions when necessary to process nutraceutical payments.

On the other hand, there are nutraceutical guidelines that companies find easy to comply with. For example, they have no problem complying with nutraceutical storage guidelines, like how they must be appropriately stored to stay fresh. Nutraceutical companies also find nutraceutical record-keeping and nutraceutical regulations easy to comply with.

Ways that nutraceutical companies can get their credit card processing in order

To comply with the FDA’s guidelines, nutraceutical companies must first apply for a high-risk nutraceutical merchant account. This is because of strict guidelines for processing credit card payments that go beyond the requirements of most other industries. 

In addition, customers often do not know enough about nutraceutical products to make an informed decision about whether or not they are suitable for them. However, there are some things that you can do to get your company on the correct path!

There are three ways that nutraceutical companies can get their credit card processing in order: one way is by joining a company that already has an account; another way is by selling your products exclusively online, and finally, if all else fails, then you may be able to work with a company that specializes in nutraceutical merchant accounts.

The importance of having a merchant account for nutraceutical companies

Do nutraceutical companies need a high-risk merchant account?

The short answer: yes.

Due to the danger of chargebacks, unavailability of nutritional product regulatory standards, and continuity billing strategies based on recurring payments, many well-established nutraceutical firms have been shut out from traditional lenders. However, there are alternatives available for credit card processing. Create a high-risk merchant account with a friendly bank to the industry and have competitive rates that include debit/credit card processing.

Using high-risk merchant account services for your nutraceutical business means that you can accept Visa, MasterCard, or American Express through either paper or electronic transactions without ever having to worry about further penalty actions. 

Add electronic check processing to your merchant accounts to get sales from consumers who choose to pay you through their bank account rather than with a debit or credit card. Electronic checks are also less expensive than cards in terms of processing costs, and they save you money on that front. Nutraceutical merchants should investigate all viable alternatives and select the best fit for their company.

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Finding a high-risk processor for nutraceuticals

Finding a nutraceutical processor can be tricky since nutraceuticals are high-risk products. However, though nutraceutical companies are high-risk, there are nutraceutical processors that specialize in nutraceutical processing.

The first step to finding nutraceutical processors is making sure that you know what compliance means. Compliance means being on the right side of the law, which avoids any penalties. The FDA has strict guidelines for nutraceutical processing that nutraceutical processors need to follow to process nutraceuticals.

When you’re getting a nutraceutical processor, it must be compliant with FDA guidelines. The FDA has strict guidelines for nutraceutical processing because nutraceuticals are high-risk products and need to be inspected thoroughly before being sold to consumers. If nutraceutical processors aren’t compliant, nutraceutical companies may be subject to penalties.

Even nutraceutical processors that are compliant with the FDA guidelines for nutraceutical processing sometimes find it challenging to meet all of the compliance guidelines, especially if they are new nutraceutical processors.

If you’re looking for nutraceutical processors, take the time to find nutraceutical processors that can follow FDA guidelines for nutraceutical processing.

How to get your nutraceutical merchant account approved

The Food and Drug Administration highly regulates the nutraceutical industry. Nutraceutical products are considered highly dangerous, which means that the processing of credit card payments presents unique challenges for nutraceutical companies. Even if your company complies with all the guidelines of nutraceutical merchant accounts, there’s still no guarantee of approval.

However, nutraceutical companies can improve their chances at high-risk nutraceutical merchant accounts approval by applying the following tips:

  1. Make sure that all pages on your website or mobile app load quickly and correctly. The underwriters will check these pages during the review process, so it’s essential that all content is accurate and easy for them to access when necessary – even late at night or very early morning hours because they may contact you at those times as well.
  2. Answer any phone calls or emails promptly, so there is no question about how your company is expected to handle customer inquiries and requests. Of course, the nutraceutical underwriters will contact you occasionally, so you must be prepared. However, even if you haven’t made any contact, keeping track of any missed calls or unanswered emails can help you determine whether your company was contacted as a potential consumer or just someone checking up on the nutraceutical industry and your company specifically.
  3. Do some research on nutraceutical merchant accounts to know what they’re expecting when reviewing your nutraceutical merchant account application. If you know what they’re expecting ahead of time, it’ll make your job that much easier.

Nutraceutical companies and chargebacks

A chargeback is when someone disputes an item on their account. For example, customers might have received the product but do not like it, or there are significant problems with its quality after purchase.

If your chargeback ratio is more than 3%, you might lose your merchant account, which means that the credit card companies will stop working with your company. They might even make it harder for you to get approved again because of stricter terms of use.

Since dietary supplements and similar products aren’t tightly regulated, they’re vulnerable to chargebacks. In addition, the claims made on these items are often not supported by clinical trials or scientific evidence, so impulse buyers who take them without making any lifestyle changes have buyer’s remorse when the supplement wasn’t what was advertised as being able to do for them in terms of preventing illness or improving health outcomes.

Nutraceutical companies are also likely to suffer from chargebacks because nutraceutical products can be expensive, and people often forget or refuse to pay for them. More than half of all customer disputes related to credit card transactions with a nutraceutical merchant account provider than any other type of business because customers know the company will usually lose those disputes if they wait long enough.

To avoid reshipments and chargebacks, merchants should ensure that you can ship the item to their country of origin. They also need accurate shipping information verified before purchase.

A merchant who ships an item from abroad may find themselves receiving the back-ordered or incorrect product if they do not verify where it’s going beforehand.

How to reduce the number of chargebacks

Here are some helpful best practices for reducing the number of chargebacks:

  1. Communicate your return policies on the website so that consumers know what they should do if there’s an issue with their purchase. You can resolve this by issuing a refund even though you believe it may not be valid. Otherwise, people will file chargebacks.
  2. When you describe your products, use easy words. Don’t use jargon, and be careful about what you say. People may buy your product over the internet or in a magazine. Include a contact phone number or other ways for people to contact you if they have questions about your products.
  3. To avoid chargebacks, you need to use the same information on your email as their credit card statement. You can also send an email after they buy something with more details about the purchase and what will appear on their credit card statement. This way, they know you want them to be happy.
  4. Most people contact their credit card bank instead of contacting a seller. You can get a refund before the customer does anything if you contact your credit card company. If there is a problem, you can also get help with fighting chargebacks. This way, you won’t have as much money lost from the transaction.

Get started with Zenti

Nutraceutical sellers should take the time to find nutraceutical processors that can follow FDA guidelines for nutraceutical processing. If you’re looking for a high-risk processor, make sure they have experience in this area and provide references from other companies.

Also, be clear on your return policy, so customers know exactly what they’ll get if something goes wrong with their order or even before it’s shipped out. Send email thank you’s after each transaction to maintain a conversation between buyer and seller. Most importantly, never accept credit cards without protection against chargebacks!

BankCard is a payment processor that specializes in high-risk transactions. For example, to help merchants accept payments from customers, BankCard has worked with retailers in the nutraceutical industry to provide services such as:

  • Chargeback mitigation programs
  • Understanding of how your business operates
  • Scalable services and pricing to grow with your company and meet your needs along the way.

Take the first step toward obtaining a nutraceuticals merchant account. For further information on nutraceutical accounts and how to establish one, contact us today.

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