- Aug 12, 2019
Nutraceuticals: Compliance is key for long-term growth
Why online merchants need to partner with a payment services provider with a history of working alongside card schemes in this sector in order to scale their business effectively.
The nutraceuticals industry continues to grow both in the US and globally, and this trend doesn’t look like slowing down any time soon. Whether it be health supplements, dieting aids, skin care products, or other natural remedies to enhance a person’s wellbeing, the market for these types of products continues to increase, most notably online.
So it’s of little surprise that many new suppliers are entering this space, and existing merchants are looking to expand their current operations. But to do either, understanding the issues that can be encountered at the checkout in this industry is paramount. This is because accepting payments have traditionally been one of the most difficult hurdles online nutraceutical companies have faced when trying to develop a successful business.
A high-risk vertical
Vendors of nutraceutical products have historically been classed as high-risk businesses by issuers and banks, predominantly due to their propensity to generate chargebacks, either through attracting fraudulent transactions or customer dissatisfaction with products. Merchant bankruptcy is also a factor in why the nutraceutical industry is often viewed in a negative light.
Because nutraceutical vendors are considered high risk merchants, accepting card payments can be a challenge; but not being able to accept these payment methods will almost certainly stifle the growth potential of the business and could potentially make the entire venture unviable altogether.
The role of the right payments partner
Partnering with the right payments service provider (PSP) makes a vital difference in this area, and different PSPs will advocate different priorities when selecting between partners. However, when it comes to partnering with a PSP, for nutraceutical merchants that want to grow a sustainable business the overwhelming priority has to be longevity of supply. To run a steady and profitable enterprise, nutraceuticals need to be assured that their ability to accept card payments is stable and this means partnering with the most secure PSP with specialised knowledge of their market.
The opposite, namely a less scrupulous payment solution that prioritises circumnavigating card scheme rules in order to make payment acceptance cheaper is not only a short term, high risk strategy, it is also not particularly consumer friendly as the inevitable result of facilitating instability into the checkout is the eventual withdrawal of card acceptance services.
This is particularly the case in respect to any potential new card scheme rules released in the near future; PSPs that are not fully compliant already with the existing card scheme rules will severely struggle to continue providing services as this new environment takes shape. PSPs that are already compliant are not only demonstrating their intention to remain onside with the card schemes, they are also better placed to do so once the new rules are published.
How to get it right
So where should nutraceutical businesses turn to assess the strongest PSPs in the market? A history proven delivery in partnering with nutraceutical businesses to accept card payments is the greatest indicator. PSPs with a strong legacy of supporting nutraceutical businesses have not only demonstrated their ability to adapt and thrive as the market evolves, but also have a wealth of experience to draw upon in order to deliver the best-in-class service to merchants.
For example Paysafe has over 20 years of experience of supporting this thriving industry, and through this has developed the banking relationships and risk management capabilities to scale growing businesses. We also work closely with MasterCard to guide our merchants through the new regulatory policies and to make the compliance journey seamless, putting companies’ minds at ease that their payment solutions are stable and have the desired longevity they seek.