Have you noticed more advertisers selling nootropics online lately? If you have, it’s not a coincidence. In fact, you are likely the ones pushing these promotions. Smart drugs, brain supplements, brain enhancers, memory enhancers – however, your market describes your nootropics products – are big business.
The nootropics market is expanding rapidly. The market is expected to top 5.3 Bn dollars by 2026, especially with an annual growth rate of 13.2%. So, making the right choices now about how you accept online payments can save your business in the long run.
Now, given the repercussions of having all your eggs in one basket, it’s time to think about diversifying your nootropics payment gateway. Once you’ve reached USD $25,000/month in processing volume, you should get ready to take this step. Let’s face it, the ramifications of not doing so are severe. It’s best to take your time and assess your options, versus scrambling to get a payment solution if you have no other alternative because Stripe or some other payment provider froze or closed your account!
Why a second – or even third – nootropics merchant account makes sense
Like nootropics, e-cigarettes were once unregulated by the FDA. Now, look at e-cigarettes and CBD where public opinions, consumer complaints, and government regulations have changed the industry almost overnight. Now, what if the same happens to nootropics? Would you be prepared? If you say yes, then that is good. It means you’re already following best practices outlined by the Food and Drug Administration (FDA) and the European Food Safety Authority (EFSA).
If not, then consider making changes today.
Now, the same question for your payment channel. If you were to receive a barrage of chargebacks – or even just one chargeback for a massive bulk sale – wouldn’t that put your nootropics payment gateway in jeopardy? And if it does, do you have a backup plan or alternative to keep doing business?
If you say no, then continue reading.
6 key strategies to diversify payment channels for your nootropics business
As you would have seen with the pandemic, the ability to sell your products online is critical. So, having the resources at hand to facilitate online payments is critical.
Follow these strategies. By doing so you quickly ensure a successful path. This includes adding additional merchant accounts to your business, spreading risk, and giving consumers more options for doing business with you.
1. Product Positioning
In developing your business, positioning strategies were likely part of your business plan. As a business plan isn’t a static document, now is the time to revisit and explore how your nootropics products are positioned to drive differentiation and improve chances of approval for another merchant account or alternative payment gateway.
In a competitive market rife with underhanded tactics, it’s best to step away from the masses. For example, selling loose powders. These are brain enhancers, not a protein powder, after all. So, illustrate that you’re selling an approved food supplement in the way you package your product for market.
It’s time to upgrade to bottles, containers, or other attractive packaging instead of loose powder sales in pouches. Because, unless you are operating a large company and have extensive processing history, this is a strike against you when applying for payment processing approval.
2. Marketing Position
The free trial marketing strategy has long been a staple in this and other high-risk industries mainly selling supplements and nutraceuticals. But, issues inherent in a free trial often lead to high chargeback rates. Consumers forget to cancel the trial and their cards get charged. They submit chargeback requests. Then your fraud and chargeback ratios begin to exceed the allowable limits set by the card companies. As a result, card companies through various policy changes have taken steps to reduce this. They’re now requiring that merchants get explicit cardholder approval before they start billing at the end of the trial period.
Plus, free trials and freemium models often attract freeloaders. It’s even harder to get unpaid users to cross that threshold into paid subscribers to your nootropics products. Furthermore, it’s harder than you think to find merchant accounts permitting free trial features for high-risk businesses.
Instead of pursuing these routes, try other novel approaches to get consumers enthusiastic about sampling products. Consider selling bundles of the same nootropic products. Or, pair them with other complementary products to make buying them feel like an awesome deal for your customers.
3. Payment History
This should be a given if good accounting practices are followed. Unfortunately, too many nootropics merchants come to us looking for additional merchant accounts but have little to no sales history for their current merchant accounts.
Payment processing history is a critical component of an application. And if it’s favorable, it will definitely boost your chances of opening another merchant account with competitive pricing.
So, you will want to keep a history of processing on a month-by-month basis. This should be 6 months ideally with low chargebacks for at least 3 consecutive months. (If you’re experiencing a high level of chargebacks, go back to point 2 and see if it has anything to do with your free trials or freemium plans).
4. Business Compliance
When you’re selling through an aggregated marketplace like Amazon, it leaves the door open for a lot of underhanded tactics that can get lost in a maze of other sellers.
But, if you’re serious about growing your nootropics business, you’ll want more control of how and where you sell. And a major part of establishing that brand credibility is compliance.
Consumers are more educated now than ever before. Prospective buyers are encouraged to read labeling information. They’re aware certain claims must be proven to the FDA before they can be placed on your product labeling. They also know to look for or ask for your Good Manufacturing Practice (GMP) certificate in your business name. And even better, they love asking for third-party certificates of analysis before buying nootropic products.
And if the product labeling, GMP and CoA certificate information don’t match up? You best believe there will be repercussions. You can expect negative reviews on sites like Better Business Bureau (BBB) or complaints to the FDA. Both areas are assessed for merchant account applications, and you always want your nootropic business to look its best.
3D-secure (3DS) is a payer authentication security protocol that works to prevent card-not-present fraud for online credit and debit card transactions. Be open to implementing these protocols (whether it’s Visa Secure or MasterCard SecureCode) if you have not yet done so.
This extra method of online authentication reduces chargeback, fraud and refund rates. And one thing a merchant account processor loves is a low chargeback and fraud ratio. You will be in an even better position to access additional merchant accounts to expand your business.
Don’t worry about the extra layer of protection potentially turning away customers. MasterCard and Visa have been educating their users on the benefits of 3D-secure protocols. Plus, they are probably not the type of customers you want on your books in the first place.
6. Complementary Processing Systems
Save and convert more customers when you provide ACH and e-check payment processing options on your nootropics website. This is especially useful for sales from individuals or businesses that want to buy in bulk. It reduces incidents of fraud. It also protects you in the event of large purchase disputes where you lose both your product and payment.
Plus, there are other advantages. For example, the transaction fees are significantly lower compared to card payments. And as we’ve noted before, ACH and e-check payments are one of the best alternatives to a merchant account, especially in your industry.
To secure your place in this billion-dollar market, you need to take action now to improve your chances of gaining additional merchant accounts. If you’re looking for online gateways that offer great value for your investment and carry ACH and e-check options, then we can help you. DirectPayNet works with nootropics merchants to secure quality merchant accounts and other payment channels.