Nutraceutical Merchant Account: Industry Guide
What Is a Nutraceutical Merchant Account?
A nutraceutical merchant account is a specialized credit card processing account for businesses that sell nutraceutical products. Sponsor banks consider nutra products high risk due to regulatory scrutiny and chargebacks. That is why nutraceutical merchant accounts are offered only by high-risk merchant service providers that understand the industry.
QuadraPay has been providing stable nutraceutical merchant accounts since 2016. Our team has helped thousands of merchants in reducing their credit card processing bills, and now we want you to reduce the fees that you pay for nutraceutical credit card processing. We have created this guide for you, which will help you to find the best nutraceutical merchant account provider and also reduce the cost. Let’s begin.
High-Risk Credit Card Processing for Nutraceutical Businesses
Sponsor banks classify industries in two categories: low and high risk. They consider nutraceutical companies high risk and there are many reasons behind the same. Let us explore some of the prominent reasons.
High Chargeback Rates: Historically, nutraceutical products such as dietary supplements and herbal remedies have been infamous because of unproven health claims. Keep in mind that if results don’t meet customer expectations, then the merchant may face disputes and chargebacks. Credit card processors suggest that nutraceutical merchants should never make false health claims.
Regulatory Scrutiny: The FDA and FTC closely monitor health-related products. Any non-compliance in marketing or labeling can lead to various legal issues, which can have a significant impact on the stability of the merchant account.
Recurring Billing Models: Many nutraceutical businesses use subscription-based sales, and these can trigger disputes and chargebacks. Sometimes customers may forget that they ever signed up for the subscription. In some cases family members may subscribe, and later the cardholder may raise friendly chargebacks.
Fraud Potential: Most of the nutraceutical companies sell their products via ecommerce websites. Online sales combined with aggressive marketing tactics can make the industry vulnerable to fraud.
Reputational Risk: Some companies operate in legal gray areas, like those that sell alternative medicine, CBD, hemp, muscle-building supplements, kava, kratom, and brain-boosting herbal products. Sponsor banks generally do not prefer to be associated with such merchants, as it can hurt their reputation.
Types of Nutraceutical Merchant Processing Solutions
We offer various types of payment solutions to nutraceutical companies. These include online and retail payment processing accounts. Depending on how your business operates, you can make the selection.
Online E-commerce Credit Card Processing for Nutraceuticals
Nutraceutical businesses that sell products using e-commerce websites need online payment processing solutions. With a good nutraceutical payment gateway merchants can accept all types of credit and debit cards. The best payment gateways that we suggest for our nutraceutical merchants include NMI, EMS, and Paysley. These gateways support international currency acceptance and subscription payments. Integration is available for popular content management systems like WooCommerce, WordPress, Joomla, BigCommerce, Shopify, Magento, ZenCart, etc.
Retail Credit Card Terminals for Nutraceutical Shops
For retail stores that sell nutraceuticals, we suggest credit card terminals as the best option. Our brand-new credit card terminals come in various form factors, starting from compact devices to countertop terminals. The best terminals for nutraceutical store are from ValorPayTech and Dejavoo. We recommended the following terminals for nutraceutical shops.
Valor VL500 is best for nutra shops that need fast EMV and contactless payment acceptance. It comes with a touchscreen interface and has a cloud dashboard to track sales. Another recommendation is the Valor VL100. It is best for small stores or mobile supplement sales (trade shows, pop-ups). It’s a compact mobile terminal. Connectivity options include 4G, WiFi, and Bluetooth connectivity.
You may also look at the Dejavoo Z11. It is a good option for brick-and-mortar supplement retailers. It comes with a touchscreen and supports EMV, NFC, and swiped payments. The Z11 is compatible with many high-risk processors for daily in-store transactions. If you need an advanced terminal, then you may also explore the QD4 Android smart terminal.
What Features Should a Nutraceutical E-Commerce Merchant Account Offer?
A nutraceutical e-commerce merchant account should include vital features that support the high-risk nature of the industry. Let us explore some recommended features.
High-Risk Nutraceutical Payment Gateway Support
To process credit cards for your nutraceutical business, you will need a merchant account and payment gateway. It’s better to use a high-risk nutraceutical payment gateway to avoid any challenges. The gateway you choose should come with enhanced fraud detection, recurring billing, and chargeback management.
Recurring Billing & Subscription Support
Most nutraceutical companies sell subscription plans for refills. For this, the payment services provider must allow you to accept subscription payments from your customers. This feature is non-negotiable for those nutraceutical merchants that offer auto-ship programs, trials, or continuity billing models. You should be able to set up custom billing intervals, easy customer opt-out, and retry logic for failed payments.
Chargeback Mitigation Tools
The payment gateway should have built-in chargeback mitigation tools that will help you reduce the risk of disputes and merchant account shut down. Along with that, the payment gateway should come with additional filters such as an address verification system, CVV matching, 3D secure processing, and integration with various chargeback alert services such as Ethoca and Verifi.
Multi-Currency Support
Nutraceutical businesses operate on a global scale, and that is why they cannot be satisfied by only processing payments in a single currency. It is important for nutraceutical businesses to switch to a payment gateway that supports multiple currencies, such as US dollars, euros, AUD, and British pounds.
Real-Time Reporting & Analytics
The merchant service provider should offer you the ability to get transaction-level reports from the merchant panel. The reports that you extract from the merchant panel should include details related to sales, refunds, declines and chargeback ratio.
Quick Payout and Competitive Fees
The processor should make fast settlements to your business bank account. In the nutra industry, most merchants receive payouts every other day; however, some merchants that have bad credit scores may have to accept a weekly payout option. Make sure that you read the terms and conditions before accepting any offer. You should also check the pricing offered by the provider. It will be better if you compare these prices with well-known payment service providers such as Stripe, PayPal and Authorize.net and then make a decision.
How Do Virtual Terminals Benefit Nutraceutical Businesses Offering Mail-Order Services?
Virtual terminals can be a great tool for nutraceutical businesses that accept orders over the phone or by mail. With a virtual terminal, you can manually enter a customer’s credit card information using Internet connected computers without requiring a physical credit card reader. Moto terminals are especially beneficial for those nutraceutical businesses that don’t operate in a traditional storefront environment.
With a virtual terminal, you will be able to process one-time sales as well as set up recurring billing. This way your customers will be able to get a consistent supply of nutraceuticals. Advanced virtual terminals come with features such as fraud filters, customer database and invoice creation. All these features can help you stay organized and reduce the risk of payment fraud. With the virtual terminal, you will be able to take payments from anywhere and process orders quickly as well as manage everything in one place. You can do all of this without spending money on buying costly retail credit card terminals.
What Fees Are Associated With Nutraceutical Merchant Accounts?
The pricing for a Nutra merchant account is generally a bit higher than regular low-risk merchant accounts. This is primarily because the banking industry considers nutraceuticals and related businesses as high risk. One of the main costs involved in processing payments for nutraceuticals is the transaction fee. This generally ranges between 1% and 5% plus a small fixed fee that can be 10 to 50 cents. Keep in mind that the transaction percentage varies based on the provider and also on the card type used. Debit card transactions for nutraceuticals are cheaper; however, business credit card transactions are expensive.
Apart from the transaction fees, you will also be paying a monthly account management fee, which is generally between $10 and $30. Some payment processors also charge a gateway fee, which can be around $10 to $20. Other charges that can apply include chargeback fees, refund fees, statement fees, early termination fees, and batch fee. Most payment service providers will hold a rolling reserve that can range from 5% to 10%. Make sure that you ask your payment service provider to declare all the fees and costs involved before you accept the agreement.
What KYC Documents Are Required to Set Up a Nutraceutical Merchant Account?
To set up a merchant account, you will need to provide some of your business and personal documents to the payment service provider. This is a mandatory step and cannot be ignored. Sponsor banks must verify the key documents to comply with KYC and AML regulations. Let us explore some most important documents that you will have to share with the payment service provider.
Government-Issued Photo ID
Although the merchant account will be under your company’s name, it is important for the payment service provider to know the people behind the company, and that is why you will have to submit the photo ID proof of all the directors of your company. For this you can submit either a driver’s license or the passport. Remember that the photo ID must be clear and should have at least 6 months of validity.
Business Registration Documents
The business registration document can include the articles of incorporation, LLC certificate, DBA certificate, ABN number, company house document, or Canadian number corporation documents. Depending on the country where your business is registered, the company registration document may vary. Keep in mind that we provide nutraceutical merchant accounts to businesses in multiple countries, including the US, UK, Canada, Australia, New Zealand, and all countries in the European Union and European economic area. To know exactly which type of business document you will need for the application process, do not hesitate to contact us.
Voided Check or Bank Letter
The payment service provider can only transfer the funds to your company’s business bank account. At the time of application, you’ll have to submit the proof of bank account. This can be a letter from the bank confirming your account details, or it can also be a voided check.
Proof of Address
Generally it is difficult to get a merchant account with a virtual address, and that is why you will have to produce a recent utility bill that confirms the address of your company as well as the address of the directors. The utility bill for the physical address must be dated within the last 3 months.
EIN (Employer Identification Number) Letter (for U.S. Businesses)
For businesses in the US, you will have to submit the EIN letter. It is an IRS issued document that confirms your federal tax ID. Similarly, in other nations like Canada UK, and Australia, you may have to submit the VAT number.
By submitting these documents to the payment service provider, you’ll be presenting your complete profile, and it will become easy for the processor to evaluate it efficiently. By being honest and transparent with the payment service provider, you’ll improve the chances of your account approval. Submitting any type of manipulated or fake document can not only result in immediate rejection but will also waste your precious time. Once you submit these documents to the payment service provider, they will evaluate and then come to a conclusion whether to approve your nutraceutical payment gateway or not. Keep in mind that they can ask for additional documents if needed.
Integration of Nutraceutical Merchant Accounts
For every merchant, it is important to understand the technical factors related to the integration of the nutraceutical merchant account on your website or how the setup of a retail credit card terminal at your nutraceutical shop. Let’s explore a step-by-step technical breakdown.
Payment Gateway Provisioning.
The payment gateway company activates your account and gives you the API key, username, password, and transaction key. Along with that, you will also receive the details of the sandbox test credentials for trial integration. To implement the integration on your website, you can use the API documentation or ready-to-use plugins. We encourage you to use the sandbox environment before switching to the live credentials. Some of the most common gateways that we recommend for nutraceutical merchants include NMI (Network Merchants Inc.), Authorize.Net, Paysley, and Fibonatix.
Platform-Specific Integration
If your website uses popular content management systems such as Shopify, WooCommerce, Magento, or BigCommerce, then you can install the official payment gateway plugin provided by the PSP. You can input the the API credential into the plugin settings. Most plugins allow you to configure the functionality as per your requirements, such as selection of the card types that you want to accept, transaction modes like authorize and capture and authorize only, and activation or deactivation of 3D Secure.
If your website is built on custom codes like ASP.NET, PHP, or Laravel, then you can use REST or SOAP API endpoints to send payment data securely to the payment processor. You can use JavaScript, CSS and other front-end languages to customize the user interface and collect card number, expiry date, CVV, and billing address.