Nutraceutical merchant accounts can be difficult to find and are often littered with hoops to jump through. Sometimes the hoops are even on fire! Then after all the work of getting approved for a nutraceutical payment processing account business owners often times find their accounts closed without notice. It seems that you cannot turn on the TV without seeing celebrities endorsing nutraceuticals and supplements, yet, just about every national bank will turn their back on you as soon as they find out what your product is. This is due to the fact that most banks consider the nutraceutical industry as high risk because there is a lack of governmental regulation, sometimes questionable results, recurring (continuity) billing and a tendency to have a relatively high chargeback ratio. So, if you are a nutraceutical business seeking a merchant account to accept credit cards – how do you find a dependable high risk merchant services provider? After all, it seems that most high risk merchant service providers don’t seem interested in anything else other than taking as much from your business as possible.
The first step to finding a reputable high risk merchant account for your nutraceutical business.
Ignore the mailers, cold calls, and door knockers! All too often these are just salesmen trained in persuasion and are out to gouge your business for as much as they can, never to be heard from again… Your business deserves a high risk merchant account provider that is as passionate about your business’ success as you are. Find them by looking for high risk merchant services providers who employ ETA Certified Payment Professionals, good BBB ratings, and who work with at least 5 acquiring banks. The first question you should ask is if they have direct experience and current clients within nutraceuticals and supplements industry. Make sure to ask if they utilize domestic or offshore payment processors and which banks they would work with.
Step 2 to getting approved for a nutraceutical merchant account.
Once you have identified the high risk merchant services provider who is best for your business, request the application. Before spending too much time completing the application identify the rates and terms of the deal. Make sure you are comfortable with the rates and any potential early termination fees. Keep in mind that high risk merchant services will be more expensive than traditional merchant accounts. Competitive high risk merchant accounts tend to average about 0.60% per transaction more than traditional merchant services. This number can go up or down depending on your business’ payment processing history, processing volume, and product.
Next find the terms and conditions of the requested reserve account. A good high risk merchant account provider will help to negotiate the best terms for your business. Look to see if it is a capped reserve or a rolling reserve and what the percentage of sales and total amount to be held are. Take those numbers and make sure that your business will have sufficient cash flow to support the reserve.
Step 3 Complete the high risk merchant services application
Once you have determined that the costs associated with your nutraceutical merchant account are acceptable complete the application. It is important to note that you should only complete ONE application. Do not complete multiple applications because this can hinder your ability to get approved for a high risk merchant account. Next review the requested supporting documentation and assemble all or as many documents as you are able into a single package. Then simply send it in and request confirmation that it has been received. Here is a list of items that could be requested in addition to your high risk merchant account application:
1) Completed Pre-Qualification Form.
2) Articles of Incorporation showing directors, shareholders and beneficial owners.
3) Business License.
4) Voided Check/Signed Bank Letter of good standing. (NO STARTER CHECKS)
5) Copy of owners/directors Driver’s License or Passport. (Must be valid)
6) 3 – 6 months of previous processing statements. (Excel sheets/screenshots are not acceptable)
7) 3 – 6 months of business bank statements. (Excel sheets/screenshots are generally not acceptable)
8) Recent utility bill less than 3 months old.
9) Screenshots confirming domain ownership of websites.
10) Marketing Material.
11) List of products sold with pricing. (If applicable)
12) Descriptive overview of business model.
13) Supplier agreement contract if you are reselling a product.
14) NEW BUSINESS ONLY – Business plan including 6 months sales projections and marketing plan.
15) NEW BUSINESS ONLY – 3 – 6 months personal bank statements required.
The approval process for high risk merchant accounts is much more thorough that with traditional payment processing. You can expect the process to take between 2-7 business days. In the meantime make sure to be available to address any questions or concerns that the underwriter may have. Nothing raises a red flag more than business owner who takes days to respond to a question! Besides once there is a question on an application the approval process is halted until that question is addressed so it can significantly affect how long it will be before you can accept credit cards.
Step 4 Start Selling! Manage Chargebacks and Provide Superior Service
Great, you have been approved for your nutraceutical merchant account and integrated your preferred point of payment solution. Now it is time to start selling! However, a merchant account is a living part of your business and needs to be attended to just like every other part of your nutraceutical business. Here are a few things that will ensure you never awake to the rude surprise of having your account shut down or to discover that it is choking your cash flow!
Pay attention to your statements and notices! A reputable high risk merchant account provider will not raise your rates, however, for many merchant account providers increasing rates with little to no notice is common. Without paying attention to your statements every month you will have no way of knowing that the cost of your high risk merchant account is on the rise.
Manage Chargebacks. Chargeback management is an unfortunate but highly necessary part of any high risk merchant account. Especially in the nutraceutical industry where it is common to have a subscription or trial based sales model. A few important steps to help reduce the number of chargebacks you incur are:
- Clear communication. Especially, if your business employs a trial method of selling where the customer gets a free sample followed by an automated subscription. Clearly communicate the terms of your service. Don’t try to deceive or hide the cost of the subscription, shipping, or terms of cancellation. You have a great product so there is no reason to hide your business model from your customer.
- Pre monthly payment notification. If you are billing your customers at regular intervals make sure to provide them with a pre payment notification that also allows them simple ways to adjust or cancel if they so desire. By not taking anyone by surprise your likelihood of getting a chargeback is greatly diminished.
- Provide quality customer service. Make it easy for your customers to contact your customer service whether it is via phone, email, or website to have their questions or issues addressed quickly and easily.
- When there is a complaint handle it with expedience. Don’t put “problem” customers at the back of the line. This is not just good business but it will also help to avoid chargebacks.
- Keep good records. Make sure that every customer file has a good record that they did indeed purchase the product and were provided and agreed to your terms of service. When a chargeback comes in you will need to provide the card issuing bank with this information.
- Finally, if you are unable to keep your chargebacks at 2% or less ask your merchant account provider what chargeback management programs they offer. This additional cost could save your business a lot money in the long run as well keep your high risk merchant account from getting shut down.
With Nutraceuticals being one of the fastest growing segments of our economy as people continue to seek out more natural methods to manage their health concerns your business stands a great chance of being a success. Bankcard Brokers is here for you, providing world class service, unbeatable high risk payment processing rates, and stable solutions that your business can count on.
Our staff of ETA CPP (certified payment professionals) are here to offer educated guidance for the life of your account and can recommend steps to prevent fraud, manage chargebacks and increase your bottom line.