The nutraceutical industry — or nutra industry, to which it is often referred — has seen huge growth over the last 10 years. Nutra products can range from oral supplements to teas, tinctures or salves. Many herbal products are also referred to as nutraceuticals. The reasons people purchase these products range from increasing energy, losing weight, reducing pain, and assistance with sleep.
There are, however, hundreds of other uses for nutraceuticals. Many people find that using a nutra product has fewer side effects than a physician-prescribed product, yet still offers the same benefits. Some nutra products have been scrutinized harshly as of late due to their wild claims of benefits and cures. Nutra products are often sold via a “free trial” method. This method can be high-risk since the customer must agree to pay the full amount after the trial had ended, then also agree to a recurring monthly shipment.
Many merchant account providers have moved away from supporting nutra due to this method of sales, as it can cause a high number of customer complaints that can include chargebacks. Companies that deal in nutra should be sure to have a clear refund policy and make the process easy for customers to initiate. Another important factor to retain customer satisfaction is to offer a quality product. Customers will not continue their subscriptions if they feel the products have not lived up to expectations.
When researching various nutraceuticals, one will find that some are very specific in the benefits of the products, while some may be very broad and general. Customers will be much more prone to order if they are purchasing a product for a specific ailment over one that just blankets several disorders.
When choosing a merchant account provider, one should always be sure to ask the right questions — things such as rates, fees and funding time are all very important. However, the first questions to have answered should be about the processor’s experience and tolerance for the nutra business model. If you offer free trials, negative option and recurring billing, be sure the processor supports this method of sales. Also be sure the timeframe for refunds and free trials are in compliance with their regulations. These are important to know before moving forward since your account could be negatively affected down the line if your terms are not specifically approved.
A merchant account provider also may inquire about the agreement you have with your supplier. Often, it will want to see an active agreement before issuing approval. If you do not have this, the merchant account provider may require an invoice from the supplier, or another way to verify you have access to your product line. Lastly, it’s a good idea to be sure the merchant account provider can support your specific product line. Some processors only briefly look at a product line, and this can cause issues with the acquiring bank after a few months.
If you have a product that you know is deemed a higher risk, it’s a good idea to be upfront with your representative. Tell the rep about the product and the challenges you have faced with other banks and processors. This way the rep can be proactive and really make sure the product is fine to process.
Running a nutraceutical business certainly comes with its challenges, but partnering with the right advisers will help make things such as banking, payment and shipping a breeze!