Nutraceuticals cover a wide range of industries. They can range from common everyday supplements to actual non-approved FDA drugs like peptides and nootropics. Basically, nutraceuticals vary greatly across the industry. There are domestic options for nutraceuticals but depending on the nature of the business, you may have to go offshore. The two main reasons of having to go offshore are: no history, bad history/credit and the types of nutraceuticals being sold and how they are sold.
Why are Nutraceuticals High-Risk
You may ask yourself why your nutraceuticals company has been declined in low-risk industries. Banks don’t want to touch anything that may cause damage to them. In the case of supplements, new brands can be of high risk because they are a liability. Most small nutraceutical companies don’t have the assets to protect against the liability of a large lawsuit. Unfortunately, not all nutraceutical companies are honest are there are no ways to tell what the companies are adding to the products. Even GNC and Walmart have been busted for this!
Either way, if there is the slightest possibility of a lawsuit, the bank will lump you into the high risk category. So why does the bank care? First off, if there is a product recall by the FDA or any health regulatory system, the company will be required to refund all their products (forcefully or voluntarily) by law. This leaves a huge problem for the bank if the company does not have assets to back it up (which could be in the case of smaller nutraceutical companies). The bank can also be fined by the regulatory industry or government for approving the business depending on the laws and government in the acquiring banks’ country.
The second problem banks have with nutraceutical companies is they don’t necessarily know what you are selling. Many nutraceutical merchants sell unregulated or unapproved drugs. So basically there is always a financial and legal liability held by the bank. In fact, if there is any sort of lawsuit or class action lawsuit, the bank might be sued and partly liable for approving the company in the first place.
Obviously the level of risk will depend on your type of business. You will most likely know what space you lie in. What kind of products do you sell? Are you GMP certified? Do you have liability insurance and assets? Do you have criminal charges, fraud or have been put on the TMF file? These things are all factors that will affect both your rate and whether or not we can place you on a domestic or offshore solution. If you apply now, our underwriters will get busy right away. In most cases, we can have merchants running in 1-2 business days.
Merchants Selling Unregulated Drugs or “Not for Human Consumption” etc…
Merchants selling research chemicals (RC’s) and products sold as not for human consumption fall under a whole other umbrella of risk to the banks. The bank underwriters know when they look at these sites what they are selling at what is the intended use is – and it if appears cloudy they will not even consider you. Many countries including China have harsh laws against unregulated drugs and psychoactive substances. Even if you are a legitimate research or incense company, it may be hard to get credit card processing based on the type of industry you are in.
In most cases if you are one of these types of companies you won’t fall in the nutraceutical category. There are special cases such as nootropics where most of the substances aren’t technically psychoactive. But in almost all of these cases, a specific offshore solution will be required. Luckily, we can approve anything whether you be a nutraceutical company or an RC merchant. The only thing that may change is the rate and where the solution is placed. We take pride in taking on the hardest business types including start-ups. So if you are looking for a solid solution please call us now
If you have filled out dozens or even hundreds of low risk applications maybe it’s time to decide on a high risk processor – as processing is better than no processing. We can support low volume and high volume nutraceutical companies. Fees can range from very low to on the higher end depending on volume business type and the nature of your nutraceutical company.