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Merchant Accounts For Diet Programs & Weight Loss Supplements
The Skinny on Diet Programs and Weight Loss Supplement Merchant Accounts
More than 65% of adults in the United States are overweight or obese, according to the National Institutes of Health’s Office of Dietary Supplements. Of those adults, 45% of overweight Americans and 67% of those who are obese are trying to shed pounds. Health professionals support a healthy diet that includes a reduction in calories and a regular exercise routine to achieve long-term weight loss.
Since losing weight and changing lifestyle habits are so tough, people turn to popular diet programs and weight loss supplements to help them beat the battle of the bulge. Approximately 15% of U.S. adults have used a weight-loss dietary supplement, resulting in Americans spending about $2 billion a year just on diet pills.
The diet program and weight loss supplement market is a place ripe for entrepreneurs since people will try almost anything new to slim down. Unfortunately, banks don’t make it easy for startups and smaller businesses to process credit card transactions. Traditional financial institutions consider weight loss businesses as risky as those in the nutraceutical sector. Their reputations for excessive chargebacks makes it difficult for them to get fairly-priced payment solutions. This is when eMerchantBroker.com (EMB) comes in and approves diet programs and weight loss supplement merchant accounts for businesses.
EMB is known as a credit card processor that specializes in providing high-risk merchant accounts for diet pill, weight loss, diet program, and related businesses. By offering personalized payment processing solutions for all types and sizes of companies, EMB helps businesses grow and thrive.
The tips here offer answers to the most frequently asked questions about obtaining and successfully maintaining a diet programs and weight loss supplement merchant account. Apply online today to begin the process.
Merchant accounts for a variety of weight reduction-related businesses
Consumers are expected to spend about $66 billion a year on diet soft drinks, health club memberships, dietary supplements, and other weight loss products, according to Marketdata Enterprises. To effectively sell their products and services, merchants must be able to process credit card transactions efficiently.
EMB offers merchants accounts to online and bricks-and-mortar businesses that offer the following products and services:
- Diet and weight reduction center memberships
- Exercise and fitness programs
- Health and fitness consulting
- Weight control services
- Weight loss supplements
In addition to working with high-risk merchants, EMB works with new and established businesses of all sizes, businesses that have had their accounts terminated by other credit card processors, as well as retail and online merchants with no credit, bad credit, or a history of excessive chargebacks. Get approved within 24 hours by applying online with EMB now.
What’s needed to apply for a weight loss supplement merchant account
To apply for a diet programs and weight loss supplement merchant account, a business can fill out EMB’s fast online application today. Along with the application, merchants must submit the following items for their review:
- A valid, government-issued ID, such as a driver’s license
- A bank letter or a pre-printed voided check
- 3 months of the most recent bank statements
- 3 months of the most recent processing statements, if applicable
- A SSN (Social Security Number) or EIN (Employer Identification Number)
- Chargeback ratios must be under 2%
In addition to the above-mentioned documents, e-commerce businesses must have secure, fully-functioning websites.
Though no approvals are guaranteed, EMB promises merchants a simple, quick application process. Once processors and underwriters have this information, merchants can get approved within 24 to 48 hours. Apply online now.
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What to expect when applying for a weight loss merchant account
Underwriters jobs are to determine each business’ risk to credit card processors. Merchants that are considered high risk means processors are taking on a greater potential financial burden. The underwriter process begins by ensuring diet programs and weight loss supplement merchants operate legitimate, law-abiding businesses.
Some of the factors that influence a business’ risk include:
- A history of high chargeback (credit card transaction disputes) ratios
- Bank statements
- Credit card processing history
- Credit scores
- Negative bank account balances
- Unpaid bills and late payments
Also, a failure to post clear, credible refund and privacy policies on its website, can also can negatively impact a merchant’s risk.
There are several ways for merchants to put themselves in better positions from an underwriter’s perspective. Businesses should pay any outstanding bills and debts and have some money in the bank. Also, a principal in the business with the best credit history should apply for the merchant account.
In the end, underwriters don’t want to see anything suspicious or questionable during their reviews. They don’t want processors to take on unnecessary risk when they approve an account for a diet programs and weight loss supplement merchant account. Handling these issues prior to underwriter review will likely be more likely to get approved without limitations on credit card processing volumes.
Excessive chargebacks in the diet program and the weight loss supplement industry
When an industry has a strong interest from consumers, greater incidences of fraud often arise. The Federal Trade Commission’s most recent fraud survey, showed that weight-loss products accounted for 13% of fraud claims. Fraud is one of the most common causes of chargebacks.
Diet programs and the weight loss supplements are prone to chargebacks because these types of products aren’t as tightly regulated by the U.S. Food and Drug and Administration (FDA) as prescription drugs. The FDA regulates dietary supplements in accordance with the Dietary Supplement Health and Education Act of 1994. Weight-loss supplements are not classified as drugs, like prescription and over-the-counter drugs are by the FDA. Therefore, weight loss supplements do not require the FDA to review it before it goes to market or get any type of approval. Manufacturers of supplements determine whether their products are safe and that the claims they make on their labels are true and don’t mislead customers. However, supplement manufacturers are not required to submit any evidence or clinical trial information to the FDA. If a supplement is not safe or an illegal ingredient is discovered, the FDA can take products off the market or ask makers to recall it. All nutritional supplements, including those for weight reduction, cannot contain pharmaceutical ingredients.
Since the claims manufacturers make don’t require any evidence, often are not supported by clinical trials or scientific evidence, these products have higher instances of chargebacks from customers who are not satisfied with the results. Due to unproven claims, there have been many reports of weight loss supplements not containing the ingredients or the correct amount of substances that are marketed on their labels. Whether it is due to a mistake or fraudulent practices, complaints from customers lead to recalls, potential legal issues, and chargebacks. When they don’t any changes in their appearances, buyers dispute credit card transactions.
Also, oftentimes, consumers start a program or product during a free trial period. This becomes a problem once they get credit card statements and see what they are paying for the weight loss services or supplements. Whether customers decide the products aren’t working as they should or they didn’t understand what the items would cost, it often ends up as a chargeback.
Most importantly, it is illegal to sell or ship weight loss supplements to certain countries. It is prudent that merchants know and understand these regulations. To avoid reshipments and eventual chargebacks, merchants should make sure items can be shipped to the country where it was ordered and that the shipping information is accurate. This will save a merchant from some chargebacks, prevent unnecessary shipping costs, and avoid merchandise being lost or confiscated.
Processors lose when merchants can’t slim down chargeback ratios
Excessive chargebacks can lead credit card processors to drop merchant accounts like hot potatoes. Merchant account providers can be left holding the bag when retail or online businesses don’t have the cash cover refunds or chargeback costs.
Also, the relationships credit card processors have with their sponsor banks and credit card brands, like Visa or American Express, can suffer when merchants can’t maintain low chargeback ratios. If credit card processors continue to process purchases for businesses that have excessive chargebacks, they can be hit with fines from credit companies.
A damaged relationship and hefty fines outweigh any profits that credit card processors earn from merchant accounts.
Tips for reducing chargebacks
Traditional financial institutions continue to decline weight loss supplement and diet program businesses due to the industry’s background and history, a previously terminated account, and their inability to manage chargebacks.
Businesses are encouraged to reduce chargeback ratios because they are bad for business. Credit card processors can terminate the merchant accounts of businesses that that have a more than 3% chargeback ratios. It is an uphill battle for a merchant to get approved again once they have been terminated in the past.
First, businesses should get to the root of their chargeback problems. Most times, poor customer service, a lack of transparency and communication, and a flawed business model are the causes. Offering full refunds, communicating with patrons, and have a skilled customer service team are easy ways to keep chargeback ratios below 2%.
Customer service representative should be trained to offer full refunds immediately to dissatisfied customers. When merchants look at the big picture, they find refunds are more cost-effective than excessive chargebacks.
Since many chargebacks in this industry are due to customers failing to recognize the name associated with the charge on their credit card statements, merchants are encouraged to make sure customers know how the purchases will be billed. By clearly display their business names and contact information on all emails, websites, promotional material, and receipts, they are preparing clients for what they will see on their credit card statements.
In addition, sending an automatic email receipt once a transaction is complete or a customer satisfaction survey are other smart moves to avoid chargebacks. Letting customers know that merchants want them to be pleased with their purchases can mean a lot to them and provides another opportunity to remind clients of purchases.
Slash chargeback ratios by 25%
Merchants that don’t actively work to prevent chargebacks are hurting their businesses and their abilities to conduct business in the future. If chargeback ratios are not kept below 2%, processors can shut down diet program and weight loss supplement merchant accounts.
Chargeback mitigation programs are some of the best ways to avoid a significant number of chargebacks. EMB’s chargeback mitigation program can help a business cut its chargeback ratio by one-fourth. Therefore, the program can mitigate four out of every 12 potential chargebacks.
EMB has created an elite alert and prevention system for high-risk merchants, such as diet program and weight loss supplement businesses, by partnering with Verifi and its new Cardholder Dispute Resolution Network (CDRN) and Ethoca’s alert system. CDRN works with card issuers and banks, which allows businesses to resolve credit card transaction disputes directly. Using this system allows merchants to achieve the highest rate of chargeback resolutions.
Diet programs and weight loss supplement categories
The United States and other countries, including the United Kingdom, assigns four-digit numerical Standard Industrial Classification (SIC) codes to businesses. These codes identify the primary purpose of businesses.
Businesses that sell weight loss products often exclusively fall into the 5499: Miscellaneous Food Stores SIC code. Merchants that offer professional diet programs fall into the 7222: Miscellaneous Personal Services, not elsewhere classified SIC code.
Visit the United States Department of Labor to view a complete SIC list.
Federal statistical agencies classify establishments, which are used to collect, analyze, and publish statistical information about similar types of businesses, uses a list of six-digit numerical codes known as the Northern American Classification System (NAICS). The data gathered is used to determine the way they impact the economy in the U.S.
Retail and online merchants that offer professional weight loss programs often fall into the 812191: Diet and Weight Reducing Centers NAICS code. Businesses that sell weight loss products often are categorized under the 446191: Food (Health) Supplement Stores. Other relevant NAICS codes include:
729934: Weight Control Services
729906: Exercise and Physical Fitness Programs
729901: Health and Fitness Consultants
Visit the United States Census Bureau’s Northern American Classification System to view the complete NAICS code list.
Finding the right diet program on the internet can feel like finding a needle in a stack of needles. Consumers seeking magic weight loss miracles online find the internet inundated with cheap promises and little substance. For a start up business seeking to rise above the expanse of weight loss babble, having a verified electronic payment process is vital.
However finding a merchant account can be tricky due to the high chargeback rates from unsatisfied customers seeking a weight loss revolution without the requisite effort and sweat required to keep the pounds off.
If your business deals in diet programs and weight loss supplements you may have encountered the problems associated with merchant services deemed as high risk.
We are experienced working with the diet industry, and eager to help you obtain the merchant account your business can rely on.
If your business can keep chargebacks and disputes below 3%, than we can have a merchant account opened for you in no time!.
Ready to get started?Fill out your application today!
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