- July 31, 2018
- Posted by: ipaytotal
- Category: High Risk Merchant Accounts, Payment Gateway
Due to lack of health regularization by the government, Nutraceuticals are tricky businesses to find merchant accounts. Due to the chance for legal action in such a loose and unregulated market, the companies are considered high risk. Many American adults take dietary supplements every year, they basically do so to fill in the gaps in their nutrition. The questionable benefits surrounding dietary supplements make business nervous when it comes to working with businesses in this industry. With probiotics coming into the play there are many options now. And seeing the pros and options on the receiving end, the nutraceutical industry has a reputation of being a high risk for credit card processor; now that the banks do not easily approve merchant accounts for these businesses.
Types of businesses in the nutraceutical industry
With the dawn of civilization our needs have expanded and now companies have way too many products to fulfill our needs. Hence, Companies in the nutraceutical industry manufacture vitamins, dietary supplements, herbal remedies and other natural health products that promise better health and wellness. Nutraceutical companies offer the following products:
- Dietary supplements
- Medicines made from botanical ingredients
- Natural male enhancements
- Nootropics, such as cognitive enhancers
- Weight loss supplements
- Workout and sports performance supplements
Why are Nutraceutical Businesses considered High-Risk?
Nutraceutical companies are called high-risk because of historically high chargeback rates. There is the following reason for considering nutraceutical businesses high-risk:
- When the people see the bill on their statement the customer may not fully understand that they are signing up for a monthly, quarterly or annual recurring billing. Some of those people will always initiate a chargeback.
- Some customers are there May not happy with the product they receive, or the results that it generates; as a result, these nutraceutical businesses will often see chargeback.
- Dietary supplements are not well-regulated. All the traditional drug companies do testing of their products on the same day but the manufacturers do not submit their products for testing in the same way and by that reason, some remedies are in the market without being proven safe, and this increases the risk of legal actions against businesses.
What do you need to get a nutraceutical merchant account?
Applying for nutraceutical merchant account is so easy with ipaytotal; an online business can begin the process to obtain a nutraceutical merchant account today. Along with the application, merchants will need the following items:
- A valid, government-issued ID
- A bank letter
- 3 months of the most recent processing statements
- An SSN or EIN
- Chargebacks ratios must be under 2%
Chargebacks cost credit card processors money
Credit cards are highly responsible for excessive chargebacks because they end up paying for them. Merchant account providers already have a deeper sense that if businesses end up without money then they are not able to pay refunds to dissatisfied customers or chargebacks for disputed transactions, these refunds are there responsibilities.
Due to high chargebacks ratios the relationship between the credit card processor and sponsor bank and credit card companies. Damaging a relationship with a bank is more expensive for credit card processor than any profits they can make from the merchant’s business.
Why do nutraceutical merchants end up with so many chargebacks?
Nutraceutical companies often end up with chargebacks because dietary supplements and nutraceutical products aren’t tightly regulated by the government, and the claims they make in their products are not substantiated by a regulatory body. Since the claims often are not supported by clinical trials, many impulse buyers who take supplements without making any lifestyle changes have buyers lose. These types of buyers are often blaming merchant and its dietary supplements instead of doing any exercise or change in their foods. This is the reason for chargebacks. One another reason for chargebacks are the way nutraceutical products ordered and paid for, there is a higher risk of disputed credit cards. for example, dietary supplements are often sold to customers for free trails and then their credit cards are charged for a supply after the free trial is over then after customer decide the product is not effective or maybe they did not understand how they would be billed, and then they end up filling chargebacks.
There are many reports about the dietary supplements that supplement not contain the ingredients or the doses that are marked on their labels. These reasons are responsible for legal issues, and also for unsatisfied customers. An unhappy or dissatisfied customer is equal to the disputed credit card transaction.
Chargebacks are bad for any business:
Many small businesses don’t even realize that chargebacks are very bad for them, they don’t even realize why maintaining a low chargebacks ratio is bad for their long-term success. The thing is that merchant will lose their merchant account if the ratio of chargebacks will high. Merchant shaving more than 3% chargebacks ratio can have their merchant accounts terminated by credit card processors. If once a merchant loses their merchant account then it’s very difficult to approve another one.
Nutraceutical Merchant Account
To know more just fill out our short form and we’ll get back to you. The nutraceuticals industry can depend upon a reliable merchant account and we help you in providing the nutraceutical merchant account with the expertise solutions. Our highly experienced and well-educated team, with more than a decade of experience in the industry, will always ready to help in giving you payment solutions to start your new business with safe and secure policies and also to expand you an existing business.IPAYTOTAL is here not only to provide you a merchant account but also to assist you and help you anytime (24/7).