When you’ve had a bad day, things seem to snowball.
You’re marketing a supplement that’s manufactured using only the finest herbs, vitamins and carefully processed laboratory formulations of amino acids.
Unfortunately, there was some contamination in one of the lots. You’ve recalled everything, which is easily done because you monitor every production lot and test your products exhaustively.
It’s been a long day, but you’ve managed your business professionally.
That’s when the double-whammy hits–your application for a nutraceutical merchant account was denied based on the business being considered “high risk.”
That’s especially galling because of the all the work that you just did to prevent a quality issue from hurting sales.
Supplements are big business, and consumers take supplements for health, recovery from illness, weight loss, weight gain, bodybuilding, athletic stamina and other reasons. More than 71 percent of adults take some form of dietary supplements.[1]
Nutraceutical payment processing companies, however, consider the industry risky because the FDA doesn’t regulate the industry the same way that it regulates pharmaceuticals. [2]
That leaves plenty of wiggle room for marketers to claim all kinds of false benefits, which often leads to lawsuits and chargebacks.
When chargeback rates hit 2 percent, payment processors can lose money, so underwriters often deny nutraceutical merchant account applications.
The “Risk” in High Risk Merchant Accounts
Even though you have a legitimate business and sell only the highest quality supplements and wellbeing products, banks worry about nutraceutical companies because they’re not regulated by government agencies.
That means there’s always the possibility of lawsuits and chargebacks for products that don’t perform as well as their marketers claim.
The North American Classification System, or NAICS, list nutraceutical products in five categories:
- Medical and Botanical Manufacturing
- Coffee and Tea Manufacturing
- Encapsulated Nutritional Supplements
- Diet and Weight Reducing Centers
- Pharmaceutical Preparation Manufacturing
These groups are broad-based, and unfortunately, some get-rich-quick schemers sell supplements that don’t deliver on their advertising claims or even fall outside regulations–such as supplements claiming the ability to “cure” medical disorders, which isn’t allowed under the law.
Unfortunately, insurance underwriters manage risk by grouping together “high risk” groups and refusing to approve nutraceutical payment processing or charging much higher processing rates for those companies that do win approval.
Blue Wave Merchant Solutions understands that supplements and nutraceuticals rank among the most popular products that are marketed online.
It simply doesn’t make sense to ignore this dynamic and lucrative source of income and refuse to process credit cards for aspiring nutraceutical entrepreneurs.
Many companies belong to Supplement Owl and register their products in its dietary supplement product registry. These entrepreneurs strive hard to produce pure, unadulterated supplements without claiming spurious benefits.
[3] CRN reports that supplements contribute more than $122 billion to a healthy economy and create more than 750,000 jobs.
We can’t guarantee that we’ll approve every applicant at Blue Wave, but we do approve 95 percent of them–and we won’t reject an application just because the company is a nutraceutical business.
Reducing the Risks of Product Returns in Your Nutraceutical Business
Supplement ingredients are often sourced in developing regions such as Mexico, India, China, Poland and Russia.
World demand for supplements increases 7 percent annually, and ingredients sales are expected to top $241 billion in 2019. [4]
Despite the potential cost savings of using low-cost ingredients, it’s important to protect your company, and its reputation by researching supplier qualifications and the supply chain that you use.
You can prevent complaints, chargebacks and lawsuits by doing your due diligence to ensure your ingredients are high-quality materials from reliable sources.
This reduces the chances that your products could be adulterated or contaminated. Providing ingredients transparency and accurate labeling can go a long way to foster a professional reputation.
That, in turn, will reduce returns, chargebacks and customer complaints.
Blue Wave Merchant Solutions Can Make Your Day a Little Brighter
If your business is legitimate, we can help by setting you up with a High Risk Merchant Account.
We offer the best possible rates and advice on how to maintain your account and reduce chargebacks.
What we really want to know is whether you run a professional business, label your products accurately and operate a stable website that won’t cause potential customers to have second thoughts resulting in chargebacks.
That doesn’t mean that we don’t recognize risk, but we try to minimize it by encouraging our customers to run professional business operations to reduce chargebacks, complaints and lawsuits.
Determining and mitigating risk are part of our job, so we recommend that you avoid these situations:
- Negative bank balances
- Late payments and unpaid bills
- High chargeback rates
- Unprofessional website with broken links, slow page loads, etc.
The way that customers order nutraceutical products is highly subject to disputed credit card transactions and chargebacks.
You can reduce your chargeback rate by giving accurate delivery dates, offering customers ways to track their orders, sending an electronic receipt for every order, seeking feedback after an order and generally following the standard business practices of professional online marketers.
It’s also important to post clear return and privacy policies on your website. Our nutraceutical payment processing is an ideal solution for many high risk businesses.
Few industries offer the financial opportunities of nutraceutical sales, and we can help you capitalize on your stable, legitimate business model. Contact us today to apply for a nutraceutical merchant account.
References:
[1] Nutraceuticalsworld.com: Over 170 Million Americans Take Dietary Supplements
https://www.nutraceuticalsworld.com/contents/view_online-exclusives/2016-10-31/over-170-million-americans-take-dietary-supplements/
[2] Fda.gov: Dietary Supplements
https://www.fda.gov/food/dietarysupplements/
[3] Crnusa.org: Homepage
http://www.crnusa.org/
[4] Nutraceuticalbuisnessreview.com: Best practices in supplier qualification and supply chain protection
https://www.nutraceuticalbusinessreview.com/news/article_page/Best_practices_in_supplier_qualification_and_supply_chain_protection/111375
