People are increasingly turning to holistic and alternative modes of healthcare. This has resulted in an explosion in vitamins, supplements, and other products to improve people’s health without using medications or surgery.
Nonetheless, since this is such a modern and emerging market with so many factors, many merchant service providers hesitate to provide payment processing for businesses in this field.
As a result, most nutraceutical firms would need to work with a partner specializing in high-risk merchant services. Here’s a closer look at the nutraceutical industry and the high-risk merchant services available.
Common Types of Nutraceuticals
About the fact that the nutraceuticals industry has taken off, a few factors are impeding its development.
Nonetheless, since this sector makes products known for supplementing the diet or promoting physical well-being, or tackling different health conditions, many people are flocking to products in this field.
The following are some of the more widely used nutraceutical products:
- Dietary Supplements
- Dietary Fiber
- Probiotics
- Herbs
- Minerals
- Vitamins
- Medical Foods
- Farmaceuticals
What Makes Nutraceutical Companies Labeled as High-Risk?
Since the nutraceutical industry is much younger than other forms of medicinal therapies, banks often regard it as a high-risk industry in terms of merchant services.
Here are some of the reasons why nutraceuticals are known as high risk:
Lack of Regulations
Regardless of the FDA evaluation’s legitimacy and consistency, many people see it as a promise of protection in the pharmaceutical industry.
The FDA shall not test or sanction nutraceutical products. Many consumers view this as an advantage of this group of goods because regulatory failure allows faster growth and more opportunity for consumers to optimize their wellbeing.
However, the lack of oversight will also suggest that not all products are safe or reliable, ensuring that an experienced manufacturer has to consider the risks and make correct recommendations.
Issues About Consistency and Oversaturation
While many businesses offer high-quality products, the fact that this business is so profitable and has so little oversight has made it possible for a wide range of companies to enter it. Not all of them are ethical and honest regarding their products and marketing practices.
Legal Requirements for Nutraceutical Companies
While specific nutraceutical industry sectors remain mostly uncontrolled, some legal directives are essential for entering the industry.
Legal directives are as follows:
- Labeling
Products should state the intended use of all beneficial ingredients and describe any ingredient that may not help or negatively affect those who take the substance.
- Classification
It is essential to distinguish nutraceutical products accurately. All provisions in respect of classifications provided by the FD&C Act must be complied with.
- Traceability
Nutraceutical items have a kind of unique identification on the packaging to make them easily traceable.
- Recording
Furthermore, manufacturers should build and retain comprehensive records of all implemented procedures and manufacturing structures.
- Good Manufacturing
Though they are not supervised explicitly by the FDA, it is essential to develop nutraceutical companies’ requirements and recommendations for all business fields.
- Preventive and Corrective Action
Nutraceutical firms must also develop a plan in which cases of non-conformity can be prevented, corrected, and addressed.
- Notifications
Nutraceutical firms require notifications of supplements with new ingredients.
Online Sales for Nutraceuticals Products
You must be prepared to comply with such rules if you market nutraceuticals online. Firstly, health statements that you cannot endorse with facts are not allowed (scientific studies).
There is also a list of products stating that you cannot claim anyone. However, if your product’s contents and advantages are approved by science, they should be included on your website.
High-Risk Nutraceuticals Merchant Services
You would usually need the following to register for a high-risk nutraceuticals merchant account:
- A merchant processing application (MPA) that is signed and completed
- Proof of settlement bank account
- Proof of business entity
- Proof of ownership
- Supporting financial documents
- Proof of third party vendor agreements
- Website
The underwriting process starts after this detail has been submitted. The firm will check the past of your company’s payments and new businesses focused on factors such as third-party suppliers and the total financial power.
Additional documents can also be requested if required. The merchant account is established until authorized.
Chargeback Protection for Nutraceutical Merchant Accounts
The probability of charging is substantial in the nutraceutical merchant accounts. This is primarily due to the lack of market oversight.
Claims made by vitamins producers and other nutraceutical products shall not be tested or restricted in any way, such as to allow false claims about the advantages of their products for manufacturers and merchants.
Nutra merchants that use sample-based or free trial market models are also at a greater risk of chargebacks – even more so than pure selling Nutra merchants. Customers will often sign up for a free trial of a commodity in this situation, promising to have their credit card credited at a later date after their trial ends.
When the free trial period ends, consumers often fail to cancel before the charge deadline and decide to escape paying by filing a chargeback with their credit card provider.
Nutraceutical merchant accounts can offer real-time chargeback notices as part of chargeback security. This enables retailers to handle chargebacks as soon as they are needed. When chargebacks look fraudulent or unfounded, merchants can file an immediate objection.