Nutraceutical businesses are among the high-risk ones – those susceptible to fraud, chargebacks, and strict legal regulations. Therefore, they require payment processing methods tailored to their needs. In this article, we focus on that, analyzing what a nutraceutical merchant account is. We will also give you a few tips on how to choose the best one. Interested? Read on.
The Problem with the Nutraceutical Industry
As we have mentioned in the introduction, the nutraceutical industry faces numerous problems that impose a high-risk status on them. The causes of that are many, some inevitably bound to the type of products sold. These include:
- High chargeback rates: Chargebacks are a problem among many industries, but for those selling medicines and supplements, this is especially visible. Many customers are simply dissatisfied with the effects of the products and opt for returns, meaning that nutraceutical companies suffer from higher-than-average chargeback rates.
- Regulations: Another aspect that forces nutraceutical businesses to acquire a high-risk merchant account is the law. Many credit card processors simply try to avoid the constant troubles connected with the ever changing regulations, thus labeling nutraceutical companies as high-risk.
- Potential legal action: Finally, nutraceutical companies often undergo lawsuits. This further increases the risk in the eyes of banks and credit card companies.
All You Need to Know about Nutraceutical Merchant Account
Knowing these issues, let’s focus on the nutraceutical merchant account. This is the account used for processing payments, which, as mentioned above, has to be high-risk.
To set it up, you need a plethora of documents, including:
- Basic company information
- List of the sold products
- Company financial history information
- Financial report (optional)
- Business license
- Compliance with the regulations
- Good credit score
Before you provide all of that, you need to select a good payment processor. There are several options on the market for high-risk companies, but the choice is limited when compared to more secure businesses. While searching for the right one, you should pay particular attention to:
- The fees: Unfortunately, high-risk payment processing is often more expensive than the standard one. What is more, many companies are not transparent and include hidden fees. Therefore, the first step that you should take is to analyze the offer and check whether the pricing is clear – this will show you that the processor is reliable.
- Chargeback policies: You won’t avoid chargebacks, so it’s best to ask your potential nutraceutical merchant account provider about them in advance. This way, you’ll learn the company policy and be able to judge whether the offer is good.
- Reserves level: Typically, processors block a portion of the money for high-risk businesses, to ensure that chargebacks are possible. However, the size of these reserves varies among providers, so look for those who offer optimal ones – you don’t want to get stuck with not enough money to keep your business operational.
The Takeaway
So, you’re ready to set up your nutraceutical merchant account and run your business. Remember to choose a trusted payment processing provider – it’s your key to a transparent, efficient, and profitable business.