In business it takes a considerable amount of attention and planning to become successful. For some industries it can be a little harder to get off the ground especially for Nutraceutical & Supplement companies. This is the result of the difficulties involving running a successful business, also satisfying customers while still preserving full compliance of industry laws and regulations. Nutraceutical & Supplement business often relies on the ability to take credit cards from customers as a form of payment. To insure growth for your business and deliver services clients need without delay; Nutraceutical & Supplement merchants need a solution for online credit card processing on their websites. At Choice Funding we specialize in Nutraceutical & Supplement accounts to make sure you are up and processing quickly.
Nutraceutical & Supplement Merchant Accounts
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Concerned as a High Risk Processing Business?
With current and growing regulation looming in the Nutraceutical & Supplement industry it makes operating a business challenging for their owners. Regulations, restrictions and also rules for merchant account providers can put more pressure on operating successfully. Because of these many challenges, finding a processor that will approve a merchant account to a Nutraceutical & Supplement company is extremely problematic. Banks often brand Nutraceutical & Supplement companies as high-risk industry for a range of reasons. Most merchant processors do not fully understand how the industry works. This results in many banks considering them high risk or not approving them at all. Choice Funding will have you approved quickly! If you’ve had trouble acquiring a credit card processing account online or at your business location Choice Funding can help. Let us tailor a solution to your business today!
Apply Today for Your Nutraceutical & Supplement Merchant Account
Having a card processing solution that keeps your top interests in mind lets you get back to concentrating on what’s most important and that’s your business. Choice Funding makes it simple to set up a merchant account and our pricing plans are designed to insure you are paying the lowest possible rates with the top PCI security standards. Our USA based tech support department provides simple guided integrating into your pre-existing online system. We are compatible with nearly every website shopping cart so your customers can continue to conveniently place orders. All transactions are run safe and securely so you will have a lower risk of fraudulent occurrences that end up costing you more! Contact Choice Funding today and speak to a Nutraceutical & Supplement merchant account specialist for more information. Choice Funding makes choosing and merchant processing company more simplified!
Nutraceutical Industry Profile:
- Global total annual revenue for the nutraceutical industry totals $181.4 Billion (2015), and is projected to reach $204.6 billion by 2017.
- Domestic (US) total annual revenue for the nutraceutical industry totals $74 Billion (2015), comprising almost 40% of the global market.
- The industry is growing at an annual rate of approximately 6.3%.
- Dietary supplements dominate the segment with a 37% market share.
Everything a Nutraceutical Business Needs to Know About Chargebacks
Merchants in the nutraceutical industry have to closely watch their chargeback ratio, because more than anything else, a high chargeback ratio is what gets your merchant account shut down. The following are some frequently asked questions and information about chargebacks specific to the nutra industry.
How do I Calculate my Chargeback Ratio?
Your chargeback ratio is calculated as total monthly number of chargebacks divided by total monthly number of transactions. This is the Transaction Chargeback Ratio which is what Visa and MasterCard track, and thus what your payment processor is watching most closely. There is also a Volume Chargeback Ratio which is the total monthly dollar amount of all chargebacks divided by the total monthly sales volume. In theory, your payment processor will look at this ratio too, but it’s significantly less important. Thus, what matters, is the quantity of chargebacks relative to the quantity of monthly transactions. So, if your nutra business has 100 transactions in a month, and 3 chargebacks are initiated, you have a 3% chargeback ratio for that month. That’s regardless of whether you win, lose, fight or don’t fight those chargebacks.
Why does a high risk payment processor care what my chargeback ratio is?
Visa / MasterCard can fine your payment processor (and their sponsor bank) for continuing to process transactions for a merchant that exceeds the permissible chargeback ratio, 2%. Those fines are generally in the tens of thousands of dollars and they invite the further scrutiny of Visa / MasterCard, thus, there is generally no chance they’re going to let you continue processing if you’re regularly exceeding the chargeback threshold. So keeping your chargeback ratio below 2% is absolutely essential for a nutra business.
Why do nutraceutical businesses get lots of chargebacks?
Nutraceutical businesses typically receive more chargebacks than a typical online business, and certainly more than a retail or card present business. And largely, those chargebacks are what cause a nutra business to need a high risk nutraceuticals merchant account instead of qualifying for a low risk account. Here’s a few reasons why…
- Many nutraceutical businesses, particularly startups, believe that by offering a good product, at a fair price, and by being up front with all of their terms, that all of their customers will be happy. That sense lulls them into complacency and then they’re blindsided by chargebacks.
- Experienced nutra businesses know about all of the chargeback management tools available, and use them readily. Unfortunately, managing chargebacks isn’t something that a lot of businesses do from the get-go, so they usually find out about them after it’s too late to save the MID.
- Many nutra businesses use a membership, continuity or recurring billing model. There is always some percentage of customers who do not fully understand that they will be billed in the future, and when it shows up on their credit card, they initiate a chargeback
- Many nutraceutical customers are unsophisticated and do not know to call the customer service number listed in the payment descriptor on their credit card statement,
- Some nutra businesses promise or insinuate dramatic results for their product, which when it doesn’t end up working, leaves the customer feeling duped
- Many nutra businesses are small businesses without a strong brand name. Thus, dissatisfied customers may not be presented with all of the refund opportunities they would from a larger company, nor have the name recognition of their service provider prompting the customer to contact the merchant directly,
- Similarly, many nutraceutical businesses are small businesses, and so do not have a robust customer billing service call center setup to handle dissatisfied customers, thus more dissatisfied customers than necessary turn into chargebacks.
How do I keep my chargeback ratio low?
In a lot of high-chargeback e-commerce industries, the key is to quickly identify stolen credit cards, or bad and fraudulent sales before they happen. While that is certainly important in nutra, it isn’t enough. Rather, you have to make sure that you make it incredibly easy for an unhappy customer to contact you directly as opposed to their issuing bank, and when they do, respond in a friendly and quick way, in many cases with a full refund. And finally, keep your transaction count high enough so that when you do get a spike of chargebacks they don’t throw your chargeback transaction ratio over the limit. Some specific ideas that our nutraceuticals merchants are using are:
- Send order confirmation emails: This one is obvious, but when a customer places an order, they should receive an electronic receipt. If you’re using a robust CRM they can handle this for you, if not, you can use your gateway’s functionality. The Choice Funding gateway is pre-configured for this, and we make sure that the footer lists the appropriate customer service number. For nutra merchants, this receipt should either include or be followed by a shipping notification with a tracking number.
- Send customer satisfaction emails: Sure one goal is to find out if the customer likes the product, but another is to time these emails to go out at the same time that the customer is reviewing their credit card statement. The goal being to make contacting your company, as opposed to the issuing bank, to complain or request a refund, the easy option.
- Receive and Refund Customer Pre-Chargeback Alerts: There are a number of third-party services that will alert you in a customer calls their issuing bank to begin a chargeback. Typically these services give you a 48-72 hour window to issue a full refund in which case the chargeback will not occur. Our Chargeback Alerts with Integrated Handling works the same way, except that we automatically issue the refund for you according to pre-set rules, removing the hassle for the business owner.
- List a Separate Billing Support Hotline, and Answer It: Make sure to use consistent messaging, by stating loudly in all of your documentation that you’re committed to 100% customer satisfaction or the customer can get a full refund. Then provide a dedicated email and phone number, and actually make them responsive. The fear, for a nutraceutical business owner is that by doing so you’re going to increase the number of refunds requested, but the truth is, by burying your head in the sand those same people are just going to redirect and initiate a chargeback.
- Full Refunds are a Cost of Doing Business:
A nutraceutical business has costs, sometimes so high that the marginal profitability of a sale is below 10%. So issuing a full refund means taking a significant loss on the sale. But change your mentality, and that of your company. Build into your budget that you will issue a consistent % of full refunds each month, then it won’t hurt nearly as bad when you do, and staff members won’t feel like they’re letting down the company when they issue a refund, and thus will be more likely to do so rather than unnecessarily trying to fight the customer which ultimately results in a chargeback.
- Maintain high transaction counts: Your chargeback ratio is largely determined by the number of monthly transactions, so a nutraceutical business that only has a couple of hundred sales a month is much more vulnerable to a chargeback spike than one with a few thousand. Obviously, you can’t simply will your company to 10x its size for the simple purpose of increased processing stability, but it’s important to keep your transaction count in mind, particularly in months when you know you have chargebacks, as that isn’t the time to shut down sales for a vacation for example.