Nutraceutical Merchant Account

Nutraceutical Merchant Accounts. Better Nutraceutical Credit Card Processing.

A nutraceutical merchant account is a credit card processing solution tailored for businesses operating in the nutraceutical industry, allowing them to accept payments for dietary supplements, vitamins, minerals, herbal products, and many other types of nutraceuticals and related products.

According to SkyQuest Research (Published Date: August 2024), the global nutraceuticals market is projected to reach $420.14 billion USD by the year 2031. The market for nutraceutical supplements is substantial in countries like the UK, USA, Canada, and the EU region. However, most merchants in this industry face challenges in obtaining a dependable merchant account.

Traditional sponsor banks have encountered many issues with merchants from the nutraceutical and supplement industries. Key issues include:

• Exaggerated health benefit claims
• Potential for high chargebacks
• Health concerns
• Ecommerce fraud

These factors motivate many sponsor banks to decline merchant account applications from businesses operating in the industry.

In the merchant services industry, nutraceuticals are considered high-risk, and ecommerce and retail stores selling such products require high-risk nutraceutical merchant accounts. QuadraPay has been providing high-risk nutraceutical merchant accounts since 2016. In this detailed guide, the nutraceuticals payment processing team at QuadraPay highlights important details that every merchant should know when searching for, using, or deciding on a high-risk nutraceutical merchant account and payment gateway. Let’s begin.

Types of Nutraceutical Merchant Processing Solutions

There are a variety of merchant processing solutions available for businesses operating in the nutraceutical industry. These include:

• Online credit card processing solutions
• Retail credit card terminals
• Virtual terminals.

We will discuss all of these in detail.

E-commerce Merchant Processing for Nutraceuticals

Nutraceutical businesses that operate in the e-commerce space require specialized online credit card processing solutions to manage digital transactions. Because of the high-risk nature of the nutraceutical industry, involving factors like strict regulations, refund policies, and potential chargebacks, it is important for merchants to choose the right solution.

A good nutraceutical e-commerce merchant account should support smooth transactions, handle multiple payment methods including credit cards, debit cards, e-wallets, and gift cards, as well as ensure that optimum fraud protection is implemented.

For nutraceutical ecommerce merchants, it’s important to have the ability for recurring billing, which is why the payment processor must support subscription payments.

Other features merchants should look for include advanced reporting, better chargeback management, and integration with popular shopping carts like WooCommerce, WordPress, Joomla, BigCommerce, Shopify, Magento, ZenCart, etc.

Retail Credit Card Terminals for Nutraceutical Shops

For brick-and-mortar nutraceutical stores, retail credit card terminals are essential to facilitate in-person or face-to-face credit and debit card transactions. A good retail terminal for any nutraceutical store must accept both chip-enabled EMV payments and contactless payments such as Apple Pay and Google Pay to improve customer experience.

While choosing a credit card terminal for your nutraceutical business, it is important to ensure that the terminals are of good quality, primarily because nutraceutical products are expensive and generally high-ticket items. Poor-quality terminals could result in declined transactions and revenue loss.

The credit card terminal should also have the ability to print receipts, which can be provided to the customer as a transaction record. A few of the finest retail credit card terminals we offer can easily integrate with nutraceutical point-of-sale (POS) software. Connecting the retail credit card terminal with the POS software helps in easy inventory management in real time as transactions happen.

For data security, card terminals must use strong encryption and tokenization features, which help reduce the risk of fraud and data breaches.

Virtual Terminals for Nutraceuticals Mail Order

For nutraceutical businesses that offer mail order services, virtual terminals play a critical role as they allow businesses to accept credit card payments remotely. These virtual terminals allow merchants to submit customer payment information directly into an online interface, making it easy to accept orders over the phone or via email.

A virtual terminal can be especially beneficial for businesses that handle large transaction volumes. Features like recurring billing and stored customer information are useful for businesses providing subscription-based supplements and nutraceuticals.

Our virtual terminal solutions come with built-in security features like industry-recommended compliance and fraud detection tools, ensuring that customer payment information is secure throughout the process.

Nutraceutical Merchant Account Fees

The term sheet of a nutraceutical merchant account will have various fees listed. It is important for merchants to clearly understand these fees to make informed decisions. The merchant pays a fixed transaction percentage on each order. The order may include one item or more; however, the percentage charge will be based on the total sale value. For nutraceutical merchants, this generally starts at 2.5%. Depending on the risk profile of the merchant, this pricing can be higher. The pricing may also vary depending on the card type used by the customer, as credit cards generally have higher transaction fees than debit cards.

Apart from the fixed discount rate, the merchant may also be charged a monthly or annual fee to cover account maintenance and support costs. Some providers may also charge a setup fee at the time of activating the account. This fee is generally applied if the setup requires custom integration or if the merchant has a higher perceived risk. For virtual terminals, merchants are typically required to pay a monthly access fee.

It is important for nutraceutical businesses to negotiate with their payment processor regarding fees to secure the best deal. Many payment processors offer tiered or flat pricing, while others provide interchange-plus pricing. Merchants should negotiate with the processor to find the right pricing model. Additionally, it is crucial to consider all the penalties that may be associated with using the account. Carefully evaluating the merchant account agreement can help merchants identify hidden fees and conditions.

KYC for Nutraceutical Merchant Account

To set up a nutraceutical merchant account, you will need to provide copies of a few business documents. These documents are required to validate the existence of the company and the business owner, as well as confirm that the products being sold comply with various health regulations. In most cases, the credit card processing company will ask for basic KYC documents, but in rare cases, additional documents may be requested by the processor.

This is why we have bifurcated the list of KYC documents for nutraceutical companies into two parts: Basic KYC and Additional Documents. Let’s look at both in detail.

Basic KYC Documents for Nutraceutical Credit Card Processing Account

• Articles of Incorporation: Credit card processing companies generally prefer to work with incorporated businesses rather than sole proprietors. A certificate of incorporation is required for the applicant company, along with articles of association and a memorandum of association.
• Owner and Officer ID Documents: Government-issued photo IDs help payment processors confirm the real identity of the company’s owners. Any person holding over 25% shares in the company must submit a photo ID.
• Tax Identification Number (TIN): In some countries, merchant processors may ask for a tax identification number. For example, in the United States, processors usually ask for the Employer Identification Number (EIN).
• Bank Statements: They reflect the financial health of the applicant company. Merchants should provide 3 to 6 months of business bank statements displaying the company’s name, address, account number, and other details.
• Processing Statements: Although startups can apply for nutraceutical merchant accounts, experienced merchants often secure better pricing. This is because experienced merchants can provide 3 to 6 months of credit card processing history, helping processors evaluate potential credit risks.
• Product Descriptions and Ingredients: Nutraceutical products are for human consumption, so it is mandatory for merchants to clearly display product images, labels, ingredients, specifications, and associated certifications.
• Supplier Agreements: Many nutraceutical merchants operate on a drop-shipping basis, meaning they do not hold inventory. This can present risks for credit card processors, which is why a supplier agreement outlining the terms between the merchant and the nutraceutical supplier is often required.
• Refund and Shipping Policies: To reduce chargebacks, merchants must clearly define refund and shipping policies in compliance with industry standards. A copy of these policies is required at the time of application, and any future modifications must be notified to the processor. The shipping policy should include product delivery timelines to ensure customer satisfaction.
• Domain Registration Proof: For a nutraceutical e-commerce merchant account, the merchant must provide proof of domain purchase, showing the domain name and date of purchase. It is advisable that the domain has at least 6 months left before it expires.

Additional Documents for Nutraceutical Merchant Accounts (Rarely Requested but Good to Know)

• Certificate of Analysis (COA): Lab results or certificates confirming the safety, quality, and purity of the nutraceutical products may also be requested. These documents detail active ingredients and contaminants like heavy metals or pesticides.
• Good Manufacturing Practices (GMP) Certification: If the merchant claims GMP certification for their products, they must produce a copy. GMP refers to good manufacturing practices, which are crucial for selling dietary supplements and other health products.
• Claims Substantiation: If the merchant claims that their product has been scientifically studied or endorsed by experts, they may be asked to provide substantiating documents.
• Marketing Materials: To ensure compliance with advertising laws, the payment processor may ask for copies of marketing materials, including website screenshots, flyers, and display banners. In the case of a retail nutraceutical store, photographs of the store’s inventory and storefront may also be requested.
• Site Inspection: A merchant site inspection may be required on a case-by-case basis. The surveyor typically looks for the physical presence and business legitimacy, which includes checking for business signage and evaluating operational efficiency. Additionally, the surveyor may gather insights on stock availability, product compliance, and storage conditions. For retail businesses, the surveyor may assess whether the terminal integrates with the existing point-of-sale (POS) system.
• Product Liability Insurance: Depending on the product and its associated risks, the processor may require product liability insurance.

It’s important to note that in most cases, only basic documents are required, and additional documentation may only be necessary in rare circumstances. Once these documents are provided to the underwriting team, they are evaluated. Based on the assessment, the team will determine if the merchant can be approved. After approval, a terms sheet is presented, clearly defining the rates and fees the merchant will pay for using the credit card processor’s services. Once the agreement is signed, the merchant can proceed to the next step, which is the integration and setup of the solution.

Integration of Nutraceutical Merchant Account

There are various payment solutions available for nutraceutical merchants, including e-commerce merchant accounts, virtual terminals, and retail credit card processing options. Depending on the chosen solution, the integration or setup process will vary. For example, if a merchant opts for a virtual terminal, no integration is typically required. It comes with a username and password to access a secure portal where the merchant can log in and start processing transactions.

For online businesses that wish to integrate an e-commerce merchant account into their website, payment processors usually provide API guidelines in various programming languages, such as PHP, ASP.NET, and JSON, among others. For well-known platforms like WordPress, Shopify, WooCommerce, Magento, and Zen Cart, payment processors often offer ready-made integrations through plugins, making the process even simpler.

For retail businesses that require a credit card terminal in their nutraceutical store, the terminal will come with installation guidelines. In many cases, the credit card processing company will also provide integration assistance over the phone. Modern credit card terminals used in nutraceutical stores are typically easy to set up and quick to use, ensuring a smooth payment experience for both merchants and customers.

FAQ: Nutraceutical Credit Card Processing

What are Government Regulations for Nutraceutical Products?

Nutraceutical products have become increasingly popular as people look for convenient ways to supplement their diets with essential nutrients. However, ensuring these products are safe and properly labeled is crucial. That’s where regulations for nutraceuticals come in. The government requires manufacturers to comply with guidelines for labeling, safety, and advertising claims. This ensures that consumers have accurate information about the products they are purchasing and that they are safe to use. The same regulations and requirements apply whether you purchase nutraceuticals online or in person. The government’s aim is to ensure that consumers can access safe and effective products, regardless of where they buy them.

Nutraceuticals offer a way to supplement your diet with essential nutrients and may also provide additional health benefits. However, it’s important to note that these products are not intended to diagnose, treat, cure, or prevent any disease. Manufacturers & sellers must include this disclaimer on their websites as well as products to comply with regulations and provide accurate information to consumers.

FDA Regulations for Dietary Supplements

What is the MCC for Nutraceuticals?

The Merchant Category Code (MCC) for nutraceuticals is generally 5499. This code represents miscellaneous food stores or convenience stores and covers a broad range of businesses that sell food products. This includes health and specialty foods, which typically sell dietary supplements, vitamins, and herbal products.