All There Is to Know About Getting a Nutraceutical Merchant Account

Nutraceuticals are tricky businesses to find merchant accounts for due to lack of health regularization by the government. While it is a thriving industry, the companies are considered high risk due to the chance for legal action in such a loose and unregulated market.

Blair Thomas EMB Co-Founder

Every year, more than two-thirds of American adults take dietary supplements, many of which do so to fill in the gaps in their nutrition, according to a 2016 economic impact report funded by the Council for Responsible Nutrition. With consumption at its highest, so are revenues. The dietary supplement industry contributed $121.6 billion to the U.S. economy, created 754,645 jobs nationwide, and paid $38.4 billion in wages.

These numbers continue to climb as more and more individuals opt to open their own businesses. Unfortunately, nutritional supplements are not highly regulated in the United States, so it easy for manufacturers to make false claims about their ingredients in their effects. The questionable benefits surrounding dietary supplements make banks nervous when it comes to working with businesses in this industry. Since the nutraceutical industry has a reputation of being a high-risk for credit card processors, banks don’t like to approve merchant accounts for these businesses.

Legitimate businesses that want to accept credit card payments can turn to (EMB). An online or retail business can get started with a nutraceutical merchant account quickly and efficiently with EMB. Fill out EMB’s fast and easy online application today. The experts at EMB will provide businesses with unique payment solutions that meet their needs and exceed their expectations.

Though approvals are not guaranteed, EMB does promise not to decline nutraceutical merchants simply due to the nature of their business. Apply now and get approved in as little as 24 hours.

Types of businesses in the nutraceutical industry

Companies in the nutraceutical industry develop and manufacture vitamins, dietary supplements, herbal remedies, and other natural health products that promise better health and wellness. Both large and small companies can thrive in the sector. Small companies compete effectively by specializing in niche nutritional products while large companies often benefit by focusing on manufacturing, research, and marketing of products.

EMB offers nutraceutical merchant accounts to companies that sell the following products:

  • Dietary supplements
  • Medicines made from botanical ingredients
  • Multivitamins
  • Natural male enhancements
  • Nootropics, such as cognitive enhancers
  • Weight Loss supplements
  • Workout and sports performance supplements

Additionally, EMB has a long history of working with startup and established businesses of any size, merchants rejected or shut down by other credit card processors, as well as retail and online merchants with no credit, bad credit, or high chargebacks. Fill out an application and get approved within 24 and 48 hours.

What’s needed to get a nutraceutical merchant account

Applying online is so easy, an online or retail business can begin the process to obtain a nutraceutical merchant account today. Merchants can begin by filling out EMB’s fast online application. Along with the application, merchants will need to submit the following items to processors and underwriters:

  • A valid, government-issued ID, such as a driver’s license
  • A bank letter or a pre-printed voided check
  • 3 months of the most recent bank statements
  • 3 months of the most recent processing statements, if applicable
  •  A SSN (Social Security Number) or EIN (Employer Identification Number)
  • Chargeback ratios must be under 2%

In addition to the above-mentioned documents, online businesses must maintain secure, operational websites.

EMB promise a fast, streamlined application process. Once processors and underwriters have this information, merchants can get approved in as little as 24 hours.

What to expect during the merchant account application process

Determining risk is the single most important job of underwriters. They want to ensure that approving a merchant account will not cause them any financial harm. Underwriters begin the process by ensuring nutraceutical merchants are running legal, stable businesses that follow all necessary regulations and rules.

A merchant’s credit scores, credit card processing history, bank statements, and its website are some of the factors that impact a business’ risk. A failure to post clear, solid privacy and refund policies on its website, can also add to a merchant’s risk level.

Other factors that negatively impact a merchant’s application include:

  • A negative bank account balance
  • Unpaid bills and late payments
  • A history of high chargeback ratios

Satisfying outstanding bills and debts, having a substantial sum of money in the bank, and having a business partner with the best credit history apply for the merchant account are the best ways to put a merchant in the best way to prepare for an underwriter’s evaluation. In other words, anything that looks suspicious should be handled way in advance of an underwriter’s review.

In the end, underwriters need to see that processors are not taking any undue risks when they approve an account for a nutraceutical merchant. Online and retail businesses that take these steps are likely to get approved while skirting restrictions, such as a lower rolling reserve or caps on credit card processing volumes.

Why do nutraceutical merchants end up with so many chargebacks?

Nutraceutical companies are vulnerable to chargebacks because dietary supplements and similar products aren’t tightly regulated by the government, and the claims they make on their products are not substantiated by a regulatory body. Since the claims often are not supported by clinical trials or scientific evidence, many impulse buyers who take the supplements without making any lifestyle changes have buyer’s remorse. These buyers are often quick to blame the merchant and its supplements instead of their lack of exercise or change in eat habits. This result in a chargeback.

Additionally, due to the way nutraceutical products are ordered and paid for, there is a higher risk of disputed credit card transactions. For example, dietary supplements and vitamins are often sold to customers as free trials and then, their credit cards are charged for a supply after the period is over. Whether customers decide products are not effective or that they did not understand how they would be billed, they end up filing a chargeback.

Unproven claims about nutritional supplement benefits and fraud are rampant in the nutraceutical industry. There have been many reports of dietary supplements not containing the ingredients or the doses that are marketed on their labels. This leads to recalls, potential legal issues, and a host of dissatisfied customers. An unhappy customer equals a disputed credit card transaction.

Since some nutraceutical products cannot be sold or shipped to certain countries, merchants must know and understand these regulations. Otherwise, shipping can become a big problem for nutraceutical merchants. The best way to avoid reshipments and eventual chargebacks is to ensure that the item can be shipped to the country where it was ordered and that the shipping information is verified for accuracy. Taking these small steps will not only save a merchant from chargebacks, but it will save money on lost or confiscated merchandise and unnecessary shipping costs.

Chargebacks cost credit card processors money

Credit card processors are quick to drop a merchant with excessive chargebacks because they end up paying for them. Merchant account providers know that if businesses don’t have the cash to pay refunds to dissatisfied customers or chargebacks for disputed transactions, these funds could end up their responsibilities.

Also, high chargeback ratios also endanger the relationships credit card processors have with their sponsor bank and credit card companies. Merchant account providers that continue to process purchases for businesses that can’t maintain low chargeback ratios also may face fines from the credit card companies. Damaging a relationship with a bank or financial penalties are must more expensive for credit card processors than any profits they can make from merchant’s business.

Combat chargebacks

Quite simply, too many chargebacks are bad for business. That is why businesses are encouraged to take steps to lower their chargeback ratios.

Issuing refunds is better than racking up excessive chargebacks. When a dissatisfied customer contacts a merchant, the customer service representative should immediately offer a full refund instead of explaining the charge and that the customer agreed to it.

A large volume of chargebacks is often due to customers not remembering or recognizing transactions on their credit card statements. Therefore, merchants are encouraged to use billing descriptions that clearly display a merchant’s name and contact information, including phone number and email address. Transparency and communication also can reduce chargebacks. The way the business name will appear on a credit card statement also should be clearly noted on the merchant’s website, as well emails, receipts and promotional materials.

Also, it is a good idea to send an automatic email receipt once a transaction is complete or a customer satisfaction survey. Letting customers know that merchants want them to be pleased with their purchases can mean a lot to them.

Chargeback mitigation programs, like Chargeback Suite offered by EMB, can shave up to 25% off a merchant’s chargeback ratio. By partnering with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system, EMB has created an elite alert and prevention system for high-risk merchants, such as nutraceutical businesses.

The dispute network operates with banks and card issuers, enabling merchants to resolve credit card transaction disputes directly. With direct involvement in the process, merchants achieve the greatest rate of chargeback resolutions when using the system.

Merchants that don’t actively fight chargebacks are doing a disservice to their businesses. If chargeback ratios aren’t kept low, nutraceutical companies can cost themselves revenue and, ultimately, their merchant accounts.

Chargebacks are bad for business

The reason for a chargeback doesn’t matter to processors or credit card companies. They care about the bottom line – does a merchant have a chargeback ratio higher than 2%.

Unfortunately, many startups and small businesses don’t realize why maintaining a low chargeback ratio is vital for their long-term success. The thing is that merchants will lose their merchant accounts if chargeback rates are too high. Businesses that have a more than 3% chargeback ratio can have their merchant accounts terminated by credit card processors. After a merchant loses a merchant account, it is very difficult time for processors to approve another. A second approval may come with much stricter terms and conditions.

Nutraceutical categories

Standard Industrial Classification (SIC) codes are four-digit numerical codes given to business establishments by the United States and other countries, including the United Kingdom. These codes aim to identify the primary purposes of businesses.

Businesses that sell products and services related to nutraceuticals use one of the following SIC codes:

  • 2833: Medicinal Chemicals and Botanical Products
  • 2834: Pharmaceutical Preparations
  • 2099: Coffee and Tea Manufacturing
  • 2837: Nutritional, Probiotics, Prebiotics, and Supplements.
  • 2048: Encapsulated Nutritional Supplements
  • 7299: Miscellaneous Personal Services, not elsewhere classified (weight-loss supplements)

Visit the United States Department of Labor to view a complete SIC list.

The Northern American Classification System (NAICS), which is a list of six-digit codes used by federal statistical agencies to classify business establishments, aims to gather, analyze, and publish statistical information about similar types of businesses and their impacts on the U.S. economy.

Nutraceutical products and related items typically fall into one of these NAICS codes:

  • 325411: Medicinal and Botanical Manufacturing
  • 325411: Pharmaceutical Preparation Manufacturing
  • 311920: Coffee and Tea Manufacturing
  • 311119: Encapsulated Nutritional Supplements
  • 812191: Diet and Weight Reducing Centers (weight-loss supplements)

Visit the United States Census Bureau to view the complete NAICS code list.

Nutraceutical Merchant Account

Find the healthiest merchant account option today for your nutraceutical business. The nutraceuticals industry can depend upon a reliable merchant account.

Experience is Key

Simple and straightforward, our merchant services can be tailored for your business matching your needs. Our application process is easy and our team can show you how to maximize the efficiency of your business’ credit payment processing.

To get approved for a nutraceutical merchant account in 24 hours Get Started Now or call 1-800-621-4893


Blair Thomas EMB Co-Founder