Nutraceutical Payments: Compliance and Best Practices

The Nutra Payment Challenge

Nutraceuticals and supplements sit at the intersection of health claims, subscription billing, and trial offers - a combination that creates significant payment risk.

Key Risk Factors

1. Trial and Continuity Models

Free trial offers that convert to subscriptions have historically been associated with high chargebacks. Even compliant programs face scrutiny.

2. Health Claim Scrutiny

FTC monitors health claims closely. Exaggerated claims create regulatory risk that affects banking relationships.

3. Subscription Chargebacks

Customers forget they subscribed or struggle to cancel, leading to "friendly fraud" chargebacks.

4. MCC Classification

Depending on product, you might fall under different MCCs with different risk profiles.

Finding Processors

Work with PSPs experienced in nutra/supplements
Be prepared for enhanced due diligence
Expect to provide detailed product and marketing information
Transparent about trial/continuity models

Compliance Best Practices

Marketing

Avoid exaggerated health claims
Clear disclaimers
FTC guidelines compliance

Billing

Clear terms at checkout
Obvious subscription disclosure
Easy cancellation process
Pre-billing notifications

Customer Communication

Clear billing descriptors
Confirmation emails with terms
Responsive customer service
Proactive outreach before renewals

Chargeback Prevention

Verifi and Ethoca enrollment
Clear cancellation process
Flexible refund policy
Customer service accessibility

What to Expect

Processing rates: 4-7%
Rolling reserve: 10-15%
Marketing review requirements
Volume limits until established

Key Takeaways

Compliance drives payment access
Trial programs face extra scrutiny
Clear billing reduces chargebacks significantly
Marketing claims affect banking relationships
Invest in customer service to prevent disputes