How to Get Approved for a Nutraceutical Merchant Account

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Nutraceutical companies offer a lot to their consumer base, which includes anyone looking to improve their health or beauty—so, everyone. These products include dietary supplements, weight-loss aids, colon cleansers, skin care products and anti-aging products. Despite the money-making potential for nutraceutical businesses, companies are having a hard time getting approved for a merchant account due to their industry’s widespread label as “high-risk.”

Banks and financial institutions tend to stay away from anything that could be risky in terms of financial liability. However, there are still account providers willing to work with nutraceutical companies, but even they have standards. This post outlines a few ways nutraceutical businesses can increase their chances of getting approved for a high-risk nutraceutical merchant account—which are essential for business success and growth!

Do what you can to provide fantastic customer Service

One of the first things an underwriter will do upon receipt of your application is search customer reviews of your company online. Too many negative reviews of your products or services indicates that your company may be vulnerable to an especially high rate of chargebacks, or that your financial success may be only fleeting. After all, consumers trust other consumers more than they trust advertisements or sales techniques.

What should you do when you get negative reviews?

Your company should be monitoring popular review sites, like Yelp, Google Reviews, Amazon, etc. to analyze common complaints and any patterns among dissatisfied customers. You should also take the time to address customer complaints directly when you can. Respond to reviews left on your website, and if there are complaints about a procedure that you could feasibly change, make the change.

Establish company history

High-risk merchant account providers tend to deny start-ups a merchant account. You have to prove your reliability and viability as a company. Account providers don’t want the financial responsibility left behind by a failed business, and most young companies are doomed from the start. After your company has proved viable, assuming there are no other red flags attached to your operations, you will have a shot at getting approved for your merchant account. To grow even further, you need to be able to process card and ACH payments—you can’t run on PayPal forever.

Decrease your rate of chargebacks

The number one detractor from a business applying for a merchant account is the rate of chargebacks issued against it. In fact, a likelihood of chargebacks is probably what’s stopping your business from ever being approved for a standard-risk merchant account. Chargebacks are typically initiated by credit card companies on behalf of their customers in response to a purchase that may not have been authorized. Though consumers aren’t supposed to request chargebacks for dissatisfaction with products, there isn’t much stopping them from doing so.

This is another area in which quality customer service proves worthwhile. If you can satisfy a customer’s complaint, and do so before they feel they need to resort to calling their credit card company, you should! Also, maintain your records, employ fraud-fighting techniques (discussed below) and remain transparent about the products your clients will be receiving (also discussed below).

Carefully consider business model

Certain business models add risk to businesses applying for a merchant account, especially those already operating in an industry known as “high-risk.” These are some of the more common billing methods that might require you to be extra cautious regarding chargebacks and customer satisfaction:

  • Deferred billing: The longer between billing a customer and providing the service, the more vulnerable you are to chargebacks.
  • MOTO: MOTO stands for “mail-order, telephone-order,” but the term just encompasses all card-not-present transactions.
  • Continuity billing: This puts you at risk of chargebacks from customers who may not realize they are going to be billed regularly or who forgot they signed up for a regular service. Nutraceutical companies that use this business model in conjunction with free-trial offers must be especially clear about the terms customers are agreeing to.

Decrease the risk of fraudulent transactions

Identity theft is one of the top causes of chargebacks, and security measures should be taken to ensure that all card transactions are valid. The right merchant account provider should also be able to provide you with more fraud-fighting and chargeback prevention tools to secure the reliability of your finances even further. These measures should include:

  • Requiring a CVV code from customers: the three-four digit number on the back of most credit cards helps to verify that the customer actually has the physical card with him or her and not just a stolen credit card number. CVV verification is free, and the number cannot be stored anywhere at any point during a transaction, so it is more difficult for identity thefts to obtain.
  • Manually reviewing suspicious orders: Don’t approve any large orders that haven’t been manually reviewed. You can always follow-up with the customer to verify the order they’ve requested, or ask if they might have another credit card number they can use. It is up to your judgment to decide when this might be necessary—as you might upset a genuine customer.

Be Transparent

Above all else, present clear and accurate terms to your customers. If you are perceived as operating in a deceitful manner, it will be highly difficult to get approved for a merchant account with a quality provider.


Your application for a merchant account needs to prove reliability and success in mitigating the risks associated with your industry. Once you successfully obtain a merchant account, your business will have access to more tools and resources to fight fraud and prevent chargebacks, and you’ll be able to offer your customers more payment options.

Remember, if an account provider advertises unrealistically low transaction fees or rates, or guarantees approval of all applicants, they probably aren’t trustworthy. A quality high-risk merchant account provider will need to trust your business just as much as you will need to trust in them.

Coca Cola spends over $3 billion in marketing each year, and because the beverage industry is so competitive, this kind of expenditure on brand-recognition marketing is necessary for the company to remain at the top of the industry. Many businesses choose to spend their marketing budget on brand recognition, but in doing so, these companies can miss the mark on advertisements, and not know why, resulting in a constant guessing-game of what will be effective and what will not (remember this Pepsi/Jenner faux pas?)

Direct response marketing, on the other hand, elicits a specific action from the consumer, in response to an advertisement. This “action” could be to sign up for a subscription to a service, to fill out contact information or to purchase a product. Direct response marketing campaigns can be delivered through the mail, radio, TV, magazines and newspapers, among other channels of communication.

The most obvious benefit of this marketing approach is that your marketing department can fine-tune its advertisements based on measurable responses to the ads. Perhaps certain special offers improve response rates or your target audience is more likely to watch your commercial at 11 p.m. rather than midnight. Through analyzing and perfecting your marketing strategies, your business saves money to be used only on what’s effective.

There are endless possibilities for direct response marketing campaigns, but none of them will be effective if your business cannot qualify for a merchant account. Direct response marketing merchants are considered “high-risk” by the great majority of merchant account providers, but without an account, your business cannot grow, and cannot process a high volume of payments. Direct response merchant accounts are considered “high-risk” in part because of increased vulnerability to fraud and chargebacks.

What You Can do to Mitigate Risks

Your company doesn’t have to be identified solely as a “high-risk” business. There are merchant account providers that specialize in high-risk industries, that can help you mitigate risks and improve your business’ success. Your efforts, combined with a dependable merchant account provider, can lower your risks and grow your business.

First of all, open multiple merchant accounts

If you process all payments through one merchant account, with one bank, the whole account is vulnerable to high chargeback ratios, fraud or other unforeseen circumstances that could threaten your company’s viability. Multiple accounts should be established to spread your business’ risk, protecting more of your money.

You should consider opening an offshore account if your business processes payment volumes higher than your domestic merchant account allows. Offshore accounts also offer your business more privacy, and a higher likelihood of account approval.

Use fraud-prevention methods through your merchant account provider

Fraud prevention is imperative for your business because direct response marketing merchants are especially vulnerable to fraudulent transactions (that may later be charged back by the card owner.) Card thieves need to test the cards they obtain, to see if they work, before making larger purchases. Direct response marketing businesses are easy targets for this because most transactions are processed over the phone, online or by mail, so it’s normal for the card not to be present for an order.

There are multiple tools necessary for fraud protection that also help to lower chargeback rates. PCI-DSS (Payment Card Industry Data Security Standard) compliance, for example, is a standard for any business processing payments from major card companies. This first line of defense helps you to identify bad transactions before they are charged back or can’t be settled, and protects your customers’ payment information.

Your merchant account provider should also offer you ID verification services, and should also check CVV codes and AVS (address verification system) for credit card purchases. CVV stands for Card Verification Value, and helps determine whether the customer using the credit card number is holding the physical card. CVV’s, the small three or four-digit numbers on the back of cards, are harder to see, and therefore steal by card skimming. CVV’s are protected digitally because they are not allowed to be stored anywhere and can’t be stolen in a data breach.

Address verification works by checking the address provided by the customer against the address on file with the customer’s bank. These efforts provide an extra layer of security for payment processing, but they are not immune to fraud.

Lower Your Risk of Chargebacks—Use E-checks and Keep Records

Chargebacks are the bane of any business’ existence. And standard-risk merchant account providers and financial institutions are only getting stricter with the allowable number of monthly chargebacks. There are several ways you can lower your chargeback rates due to the risks of MOTO and online payments.

E-checks are one of the most effective ways to prevent chargebacks. E-checks, processed over the ACH network, are payments made with bank account information, rather than credit card information. These numbers are not updated very often, but credit card numbers are, so if your business operates with recurring payments, e-checks will prevent from having to request updated information from your customers.

E-check payments are also more difficult to charge back. Credit card issuers will initiate a chargeback on your behalf after a single phone call, but banks require that their customers have proof that a purchase made through an e-check was fraudulent. Customers have six months to initiate a chargeback for a credit card purchase, but they only have 40 days to initiate a chargeback for a purchase made with an e-check.

If your business decides to fight a chargeback, you will need sufficient documentation to prove that the purchase was valid, making thorough documentation and early alerts imperative to your success. From the initiation of a chargeback, you only have a few days to make your case and win the dispute.

Even after establishing a partnership with the right high-risk merchant account provider, there is one chargeback dilemma that your business has to decide how to navigate. When should you fight a chargeback, and when should you let it go to protect customer satisfaction? You should consider the likelihood of your business winning the dispute, and the value of your relationship with that particular customer (for example, are they likely to order from you in the future?)

Finally, to avoid other customer service-related issues, maintain transparency in what your customers are paying for, and how much they are paying. If your orders and transaction process are shrouded in mystery, your customers are more likely to try to initiate a chargeback due to dissatisfaction with your business, not to mention the negative reviews they might spread about their experiences.


Direct response marketing has many possibilities and opportunities to make your business money. Unfortunately, much of the payment processing industry has labelled direct marketing as a “high-risk” business, preventing merchants from getting approved for a merchant account. Without a merchant account (or multiple accounts), your business can’t grow to process a high volume of transactions, and will be stuck with low profits.

Your business does need to manage risks, but an effective high-risk merchant account provider can help you mitigate those risks and protect your business. Chargebacks and fraudulent purchases plague many high-risk industries, but with extensive fraud fighting tools and chargeback prevention, you can focus more on your business and marketing, and not just your transactions.