Recently, out of the blue, quite a few inquiries have come to us about internet merchant services for dietary supplements and what we have available. Whenever we receive an influx of calls on a particular industry, it usually means that an acquiring bank somewhere has ceased offering merchant account solutions, leaving industry merchants scrambling to find another bank.
We saw it in 2015 when we received more than a dozen calls from Canadian online pharmacy merchants who had been unexpectedly shut down by their banks (fortunately, we were able to help some of them). We’re not certain what’s behind the influx of calls about our payment processing solutions for dietary supplement merchants, but an industry shut-down wouldn’t surprise us.
They happen, usually with little notice or reason. An acquiring bank may one day decide that a particular industry simply carries too much risk, and simply announce they will no longer process payments for it.
Why dietary supplements are considered high risk
In internet merchant services, dietary supplements are about as high risk a business can get. Every acquiring bank is different as far as protocol, but a dietary supplements business is a good example of what and why certain non-negotiable practices and regulations are in place.
- The role of your website: At least for the banking partners with whom we work, the days of straight virtual terminal and MOTO solutions for a supplements merchant are no longer existent. The acquiring bank with which we match your business requires complete transparency, to see exactly the products that a merchant is selling. Just as important, when merchants wish to add products to sell, your acquiring bank needs to be notified. Failure to comply can result in immediate termination of internet merchant services.
We’ve seen nefarious merchants guilty of transaction laundering: operating under the guise of vitamins and supplements to sell illegal and illicit drugs. Such dubious practices are a gateway to legal trouble and even prison, let alone the Terminated Merchant File.
- Know the prohibited substance list: Each acquiring bank is unique with its own policies and procedures, and each bank will provide its merchants, before an approval, of its prohibited substances and products. Among the banned substances we’ve seen include kratom, cat claw, kava and blue lotus, each of which are plants that have psychoactive effects.
- Do not offer free trials: What was once an effective marketing tactic is now considered too risky. There was a time when we could offer solutions with free trials for supplements, weight loss, nutraceuticals and beauty products. Although these are industries for which we offer merchant accounts, free trials are a dealbreaker for us, a mere gateway to chargebacks. In fact, we know of no acquiring bank that can offer internet merchant services for products with free trials.
- Our recommendation — Have a chargeback solution in place: Industries such as supplements, nutraceuticals, beauty products and weight loss are known for high chargeback rates. Such results-driven products always have a population of customers who are unsatisfied, who don’t get the desired outcome from the product or service. Thus, they inform their credit card issuers of their dissatisfaction and desire to file a chargeback. Significantly more often than not, the credit card issuer will side with the consumer.
Thus, it is a proactive measure to let a third party handle chargeback mitigation.
High risk internet merchant services: what not to do
On occasion, we see merchants make innocent mistakes that could actually cost them their business. Recently a healthcare merchant approached us about a CBD merchant account for her practice, informing us that she had been selling it out of her office, with favorable results. We informed her it was against her merchant agreement for her practice, that she could lose her merchant account if the bank had knowledge. Luckily, she halted her CBD sales until we got her an approval for a CBD merchant account.
As we alluded to prior, adding products that are not included in your merchant account agreement, can only be done with the approval of the acquiring bank.
All things high risk…and regulations
High risk internet merchant services from Instabill mean more than launching your online business and accepting credit card transactions online. Instabill merchant service managers remain on hand as advisors for the life of your merchant account relationship. In operation since 2001, we remain on the cutting edge of regulations within high risk industries.
We’re forthright about high risk merchant accounts. Give us a try at 1-800-530-2444.
