The global nutraceuticals market is projected to reach $302,306 million by 2022. This is up from $184 million in 2015. It’s very clear as prescription medication prices go up, and the public becomes further health-conscious and invested in optimizing their health through new and innovative ways, nutraceuticals have exploded in popularity. You would think with a river of money flowing into the domain that it would be easy as pie to obtain a merchant account with a quality payment processor. Wrong! Nutraceuticals are considered a high-risk industry despite the rabid demand and explosion of growth.
What are Nutraceuticals?
Nutraceuticals are any product that is ascribed health benefits and is derived from food sources. For example, a high dosage turmeric extract would be considered a nutraceutical. The “nutra” part of the word refers to nutrients, so it can be said that nutraceuticals were formerly known as health supplements. They encompass products such as dietary and medicinal foods. Overall, the term nutraceutical is just a marketing term at the end of the day.
Why are Nutraceuticals High Risk?
As we said before, it’s surprising to many people that such a lucrative and growing field is considered high risk by merchants. This means that not only is it more difficult for nutraceutical companies to acquire a merchant account to start accepting credit and debit payments, but the rates on those transactions will often come at a higher cost to the business.
Nutraceuticals are high risk due to a few factors. For starters, the most obvious reason is that many customers may initiate chargebacks/disputes because they feel the product does not confer the advertised benefits. This is ultimately impossible to prove in a practical sense, but the fact remains that nutraceutical companies are able to make a lot of claims that are not substantiated fully by science or medical knowledge.
This is largely in part because the industry—much like the greater supplement industry, is not regulated by the FDA/government. That’s not to say that all nutraceuticals don’t work, just that with such a large, unregulated industry, there is certainly room for companies to incur legal action for false claims or misleading advertising.
Many of these products are also offered as part of subscription services that have automatical renewals enabled, these types of services notoriously result in a large volume of disputes that stem from a grey zone of culpability. In other words, when a service bills after the first month being free, many customers forget to cancel before then and then dispute the charge on the claim that it wasn’t made clear enough that it would auto-renew or that the trial period was ending soon.
Merchant Account for Nutraceutical Businesses
Business—especially new businesses need to be flexible and quick to adapt and scale. Nutraceuticals are a hot market right now, and many shops have opened up just to sell them alone to great success. The success of any high-risk industry hinges on acquiring a merchant account quickly and getting decent rates. We’re happy to say we provide all of those, and we approve 98% of our applications. Due to our extensive connections in banking, we can get these accounts approved faster than just about anyone else!
If you have any questions or concerns about acquiring a merchant account, contact us here.