It might seem like the wide popularity of nutraceuticals among consumers makes them an absolute darling for most merchant services providers. After all, dietary supplements account for 121.6 billion dollars annually to the U.S. economy, 754,645 jobs, and pay more than $38.4 billion each year in wages. There’s a lot to love about an industry as healthy as the nutraceuticals industry. Especially when you consider that nearly two-thirds of Americans consume dietary supplements each year.
Why are Nutraceutical Merchants Considered High Risk?
With so much popularity it might be a shock to learn that nutraceutical vendors are often identified as high risk merchants. This means the fees for payment processing and other services are higher and even means some credit card processing companies will refuse to work with you.
Why is that?
There are many reasons that add up to one thing: risk. Many payment processors don’t like it at all, leaving you only able to work with high risk credit card processing companies. These are some of the reasons nutraceutical merchants are considered high risk:
- No regulation and little, if any, oversight from the federal government.
- The ability of manufacturers to make false claims about their products and the ingredients in them—as well as their effects on consumers.
- Stronger odds of legal action against merchants in such an unregulated market.
- Higher risks of chargeback disputes as many merchants offer free trials with automated renewals.
All of these things add up to greater risks of chargebacks and disputes, which costs credit card and payment processors money and place them at risk for things like legal action.
Types of Nutraceutical Merchants Likely to be Identified as High Risk Merchants
Just as there are many health concerns and health goals, it makes sense that a wide range of merchants in the industry are especially at risk of being identified as high risk merchants, especially those offering the following types of products:
- Medicines made with botanical ingredients
- Dietary supplements
- Weight loss supplements
- Workout and sports performance enhancing supplements
- Nootropics (cognitive enhancers, for instance)
- Natural male enhancements
If you’re operating a business in any of these fields, then you may be identified as a high risk merchant, requiring you to pay additional fees for some services, maintain substantial cash reserves for your business (which can affect cash flow and available funds for your business), and even limit the number of credit card transactions you can process in a month to reduce the risks of your high risk credit card processing partners.
What to Look for in a Payment Processor as a Nutraceuticals Business Owner
Seek payment processing partners that have a reputation for dealing fairly and equitably with the businesses they partner with. This includes offering outstanding customer support, fair and transparent pricing, easy to understand billing practices, and not requiring you to commit to lengthy contracts to get started. Other things you might want to consider looking for when choosing a partner include things like:
- Chargeback mitigation programs
- Experience dealing with merchants in the nutraceuticals industry
- Understanding of how your business operates
- Scalable services and pricing to grow with your business and meet your needs along the way
Unfortunately, the perfect payment processing partner may take a little digging to find. At BankCard Services we believe that partnering with merchants in the nutraceuticals industry should be done fairly and ethically, regardless of risk. That is why we offer transparent billing and fees that are easy to understand on a month-to-month basis with no long-term commitments. Contact us today with any questions you might have about high risk credit card processing and how we can help you get the service you need without breaking the bank.