Category: STRIPE

“Stripe Froze My Account” & Other Nutra Seller Payment Problems
One of the biggest issues supplement merchants have is when they write us saying “Stripe froze my account.”

If you’re operating in the nutraceuticals industry, you should be concerned. Account freezes happen frequently.

Imagine waking up one day to this message … “Unfortunately, your business can’t use Stripe because it doesn’t meet our terms of service.”

Maybe you’ve been a faithful client of Stripe for months. Perhaps you grew your supplements store to $20,000 a month, diligently – you thought – adhering to their terms.

And then … boom.

Suddenly, payments cannot be collected. Stripe was your only payment processor. With it disabled, your e-commerce business is halted. And, revenue is no longer wired to your bank account. You’re now left scrambling to find an alternative payment method quickly to maintain your online business.

Sadly, that’s been the reality of many nutraceutical sellers, especially in the past few months.

So, our advice to you is this – get out now when you can plan your exit strategy. Or, wait to be thrown out when you have no contingencies in place.

Here’s why.

Stripe froze my account. Why?

Simply put, Stripe is not a fan of nutraceuticals. In fact, neither is Shopify, and PayPal (in some cases). They do not support supplements, nootropics, and similar products that aren’t outright FDA-approved pharmaceuticals.

So, why would sellers continue using the payment platform?

We know that the low transaction fees are attractive. The flat rate of 2.9% + $0.30 per successful card charge for volumes under $1 million per year is pretty tempting. Those low rates are extremely enticing.

But those rates are low because payment aggregators like Stripe cater to low-risk businesses. And they tell you that quite clearly on their Stripe Restricted Businesses page. Pseudo pharmaceuticals (of which nutraceuticals are the first noted) are not supported.

Now you may say that the FDA has verified your nutraceutical products. But you can still face the possibility of a disabled or suspended Stripe account. Some of the small infractions would not even raise a flag on some conservative merchant processing companies, much less a high risk one.

So, despite verification by the FDA (and we know most nutra merchants have not gone that far), you can end up with a suspended Stripe account for the smallest of reasons.

Here are just a few which you can easily encounter just because you’re a business that accepts online payments.

Simple reasons for a suspended Stripe account.

Single product supplement site offer. You may have a store with a variety of other products, but add one supplement to your inventory, and you could lose your entire account.

Three or four chargebacks. This may not necessarily equate to a chargeback rate of 1% from Visa, Mastercard and other card networks. But payment aggregators can set higher standards if they want. So, chargebacks from customer disputes could be a deal-breaker.

Poor anti-fraud filters. Most payment service aggregators may not have as stringent anti-fraud prevention or detection tools as you can integrate with an independent payment processing system. You operate in a high-risk industry. Thus, you’re naturally more targeted for fraud by cardholders. Without better fraud protection tools, you can face a high chargeback ratio. Catch-22.

Other issues with Stripe accounts
- Holding payments for as long as 14 days. While the typical payout for new Stripe accounts is seven days. But, Stripe can choose to hold your funds for up to 14 days depending on your business model.
- Reserve funds requirements of up to 20%. Stripe has a high reserve fund requirement to address disputes and refunds. Now while they are often temporary, a temporary hold on 20% of your earnings can seriously hamper early cash flow.
  Problems getting products accepted. As one Redditor noted, his client has an 8-figure store for which he processes payments with Stripe via Shopify. Even then, he was having problems adding other products to his store.
- No chargeback disputes. With a merchant account, you have mechanisms in place to dispute chargebacks, especially of the friendly-fraud kind. With payment aggregators, this is often not possible.
Another Redditor commented on a thread regarding “Stripe banned me for selling supplements” … “Sadly a lot of these processors are one chancers … so if you lose it you lose it forever.”

And that is most accurate.
Some small businesses are told their account is “suspended.” Others hear their accounts are “disabled.” Often, this isn’t a temporary situation. It’s permanent. Once you lose your Stripe account, it’s hard to get a new one. A lot of entrepreneurs struggle getting in touch with customer support in an effort to get their account re-enabled.

And as most online complaints show that Stripe support is very unresponsive when it comes to suspended or terminated accounts.

Now we’ve long declared services like Stripe to be problematic for high-risk merchants. In fact, if you review the Stripe Better Business Bureau page, you’ll notice that most of the negative customer reviews relate to suspended Stripe accounts without warning. The rest deal with some of the problems we outlined above. The negative reviews on Trust Pilot also address similar concerns.

So, what’s the alternative?

Supplement offers need a robust payment solution

DirectPayNet helps high-risk business owners affected by Stripe to find better payment gateway alternatives.

Without a reliable long-term payment solution that supports your nutraceutical offer, it will be difficult to scale. And if Stripe has terminated your account and labeled you high-risk, it’s time to pivot.

Now, before you go off searching for a high-risk merchant account, you need to do some internal checks first. Remember that nutra offers are subject to declines for payment processing. It doesn’t matter if you have history from Stripe, Shopify, or even a high-risk merchant account provider.

So, make sure you aren’t making any of these following mistakes that could lead to your application for a merchant account still being declined.
- Making health claims that are unverified by a regulatory body such as the FDA.
- Products with ingredients or substances banned in your target market.
- Incomplete labels or failure to list ingredients in a text format on your website.
- Poor payment processing history (or where there is no history, poor credit rating for the primary applicant).
Contact one of our team members in the next 24 hours to find out your options post-Stripe.

What to do about preventing a suspended stripe account?

Or if you want to set up your nutraceutical business on the best footing.

1. Avoid getting your current Stripe account suspended

Now, if you didn’t realize all the implications of running a nutraceutical business on Stripe, then here’s what you can do right now.

If you currently have a Stripe or Shopify account, do everything you can to prevent a shut down and keep it going until you have an alternative. Some options available to you now include:
- - Keeping chargebacks low
This can seem like a difficult feat. We know chargeback fraud is worsening during this pandemic due to desperate scammers. But be clear on your brand’s benefits, terms and cost of your offer. Also, don’t give misleading information to your customers. Always maintain a low to no chargeback ratio. Make your policies clear and offer refunds to limit scams.
- - Staying out of sight … as much as is possible
Be careful of the product titles and descriptions that you use. This could cause your business to be flagged for review and end up with a suspended Stripe account (as one Redditor encountered).

Keep sales steady. Any irregular spikes may prompt a review of your account. By avoiding a suspension of your Stripe account, you can continue business as usual as you seek out and implement additional payment methods in the event of a problem.
- - Watching your marketing
You can sell more products/supplements that often never given a second look. It’s about how you market the item for sale.

For example, if presented in the right way, a supplement product supporting nootropics brain enhancement or libido function can actually be approved for credit card processing. Weight loss pills (especially from new merchants) are not well-liked by processors. But more merchant service providers are approving keto and adrenal fatigue products.

This is not to say that you’ll be providing misleading information. If you don’t make your own supplements, then ensure to source from manufacturers that use current good manufacturing processes (cGMP). And that they do appropriate testing.

2. Apply for a high-risk merchant account

While you maintain your Stripe account, get ready to apply for a merchant account, especially one meant for high-risk card transactions.

To start, you need good processing history (little to no chargebacks + good monthly sales like $20K and above). This is vital to get an account to scale your brand and process more sales (e.g. $100K per month). You can even be in a position to negotiate rolling reserves to as low as 5% or even none at all.

You need to pass Know Your Customer (KYC) and other compliance requirements from the underwriting departments of acquiring banks and other payment providers. Our blog carries a few posts on how to prepare when applying for a high-risk merchant account. But it also helps to have a knowledgeable merchant services provider assist with the process.

Final thoughts

As a high-risk merchant, being unable to accept credit card, debit card, and ACH payments is basically a death knell to your business. And if you’re only using Stripe for payment processing, you’re the one sounding the bell.

Supplement sellers generally avoid merchant accounts because of high fees associated with them. Some merchant processors will gouge you if they think you have no alternative.

But high charges do not have to be your reality. If you have a suspended Stripe account, it’s not the end.

DirectPayNet will work to get your new payment setup approved. We look for and pair you with solutions that integrate with your checkout. This will ensure you get back up and accepting payments in no time, without interruptions.

Email the DirectPayNet team today and let us help you secure a more robust payment processing service.
September 30, 2020
Online Payment Options For Your Remote Learning Business
If you’re reading this blog post, chances are you’re looking to accept payments for your remote learning business.

The fallout of COVID-19 has reshaped many industries and aspects of our lives. And the remote learning industry has undergone significant changes.

As you know, the market is booming in light of new technological and behavioral trends. Many businesses and schools remain closed during the school year. Some educational institutions are adopting a hybrid model of education. In all scenarios, e-learning tools have become more important than ever.

But it’s not just educators and schools that are leveraging technology for online education. Entrepreneurs are offering online courses, webinars, distance learning software, and remote teaching services for retraining and to help employees upgrade their skills in the workforce.

However, you might not know that your payment processing options could be holding you back. We’re here to explain why merchant accounts are a viable solution. Today we will help you explore how to maximize your sales with your credit card payment options for the ever-changing online learning landscape.

The current state of the remote learning market

Obviously, the Coronavirus pandemic has dramatically affected human interaction. Student engagement with the online learning environment has transformed. Many students of all grade levels now rely on video conferencing software such as Zoom or Microsoft Teams to connect with teachers. Some parents are even using remote learning tools to deliver lesson plans in the wake of school closures.

But increasing demand for online learning resources is not limited to pre-k and high school children. Adults needing professional development have been turning to webinars and distance learning options. In the last few years popular platforms like Lynda and Udemy have seen a number of people signing up for online courses. That has obviously increased in 2020.

Both freelance instructors and merchants in this business vertical have been enjoying the demand. The value of online education market in the US is supposed to increase by $12.8 billion in value by 2024. However, COVID-19 has reshaped payment processing within this industry.

Traditional payment methods aren’t feasible anymore

Many tutors were once paid through traditional methods like cash or check payments. Today, those methods aren’t as feasible. Online learning customers avoid the bank to withdraw cash, given the risk to their health. Furthermore, since face-to-face contact is no longer desirable, sending cash or checks through the mail is not a risk many are willing to take. This is especially important given problems with government-run postal services.

With that in mind freelancers are making use of remote learning tools and services. Creators and owners of e-learning software platforms and other business owners are getting creative with online learning environments and learning management systems. All participants need to consider developing a robust digital payment channel. However, not all payment options are made equal.

Platforms like Stripe are good starter solutions for distance learning merchants, but don’t stay there forever. (Photo by Andrea Piacquadio from Pexels)

What payment options are available?

Are you offering software for virtual classrooms? Do you operate an online tutoring platform or create online lesson plans? Ultimately the end goal is the same. Users of your service need to pay you in the most efficient manner.

For instance, you may offer remote teaching based on an hourly rate. By contrast, you may offer online learning tools, virtual classrooms and lesson plans to assist schools and teachers for a flat fee. Other companies capitalize on the shifting landscape after COVID-19 and offer a recurring billing distance learning platform to either supplement or replace physical learning.

Zoom and Cisco Webex offer free access to use their platform. Besides the free account they have several paid subscription packages. Some software services are priced at basic, pro, enterprise or other levels. You probably offer similar models and prices.

So, what digital payment options are available if you want to scale your distance learning business on the back of growing demand? Options include third-party payment aggregators, ACH or e-check and merchant accounts.

Third-party payment platforms are good to an extent

It’s no surprise that Square, Stripe and PayPal dominate in online payments popularity. They are great solutions if you’re a startup or generate US $10,000 or less in revenue. However, sales above that amount is where you might get into hot water.

Some remote learning platforms may experience spikes in demand. When sales jump, it unfortunately invites scrutiny from these payment platforms. If they don’t understand your business model or seasonal trends, it could spell trouble.

Stripe may be alarmed over a high volume of recurring transactions. Also, let’s say you’re not a standalone remote high school tutor. Perhaps you offer computer science courses online that cost $1000 or even higher. This could create significant concern from Stripe and PayPal.

You need more than a low-risk payment solution

The reality is they are third-party platforms and cater to low-risk sales. If transaction amounts at checkout are $300 or more, they may not understand why, and they may not even care. To them, sales of that size are high risk. Their concern is whether enough funds will be in your account in the event of chargebacks.

It’s important to offer a seamless checkout experience with the convenience that online purchasers are used to. There’s no denying the popularity of third-party payment aggregators such as PayPal or Stripe as a payment gateway. Other app-based learning experiences are also relying on mobile wallets such as Google Pay.

In the end, you best payment option is to have your own merchant account.

It’s time to gravitate toward merchant processing

A merchant account provides more flexibility and support for your e-learning business. Even if you only add it as a complement to your existing payment setup. You can enjoy lower credit card processing fees on larger transactions. And you’re in control of your own destiny about payments.

You can analyze transactions in greater detail with this payment method. It’s valuable information for owners of virtual learning software or online tutoring services of various grade levels. You can also build up sales history for higher processing limits in the future (e.g. from $100 to $5000 per transaction).

Make sure there’s no friction between your website and a third-party solution

Third-party setups are fast and easy to install, without question. Yet there are a whole host of issues associated with this option. Rolling reserves can be as high as 20%. Stripe and PayPal don’t offer dedicated merchant accounts. You’re actually processing sales in their master account, which is shared with many other merchants. If anything goes wrong with your orders, you can get blacklisted for too much high-risk activity.

Know this: Stripe isn’t always easy to integrate. Seamless connection depends on your website’s backend. And, if you use third-party anti-fraud software, it isn’t guaranteed to synchronize. Worse, as you scale third-party platforms will take an increasing slice off the top in real terms.

At least with merchant processing reserves can go as low as 5%. You can also process more transactions per month. So, instead of a processing limit of up to $15,000, you can go as high as $100,000 per month if you get approved to do so. This flexibility works well if you’re serving large groups or corporate clients.

There is a way to take payments from international students

It’s one thing to serve domestic students in real-time, but what about people in other countries? Cross-border payments from a domestic merchant account have some friction. Unfortunately, it’s due to the technology and infrastructure of banks in different countries. Credit cards do better than debit payments, but there’s no guarantee transactions will be approved.

If your students live in the same country as you, then a domestic merchant account is a good option. Even ACH and e-check is great for business owners with clients that prefer to debit directly from a checking account.

However, if you operate outside of domestic office hours and cater to international students and clients, an offshore merchant account is a great option. For example, an EU student paying for your online course routed through your EU-based merchant account will have an easier time than paying you through your US account. You can also add a separate merchant account through your US provider to add on specific currencies you will need for any global students.

All distance learning merchants, regardless of niche, should keep a watchful eye on chargebacks. (Photo by Polina Tankilevitch from Pexels)

Protect current payment gateways from bad users and students

Entrepreneurs in the distance learning vertical must adopt changes to avoid running into any issues further down the line. Use best practices now. This way you can scale your payment processing. Additionally, you can take advantage of the current beneficial market conditions in the online distance learning environment.

For starters, you should always keep detailed processing history. Maintain records of interactions with students. Keep copies of all communication between your company and the payers. You will need this for refunds or chargeback disputes. It’s also good to have for approval on future merchant account applications.

All distance learning merchants, regardless of niche, should keep a watchful eye on chargebacks. High chargeback volumes can completely derail your payment processing. No matter how well your business is doing. If refunds and chargebacks increase, you need to fight back. Invoices and communication with the payer are indisputable evidence of the delivered service.

Other useful evidence for refunds and chargeback disputes include:
- Copies of completed lesson plans;
- Login activity related to the use of learning tools;
- Time-tracking applications that prove session lengths; and
- Invoices for any learning resources that were purchased.
The above are all examples of data you should be recording to present in the chargeback dispute process. A tough stance on chargebacks helps stamp out fraudulent repeat offenders. You will also protect your payment processing moving forward.

Finally, make sure your website and order page are PCI compliant. If users chat or engage in virtual classes on your website, security is crucial. If educational online tools are available (e.g. long or short videos), then have a privacy policy. This will help exercise control over that content. Work with your developer to encrypt your data. They can also help you select third-party tools that are PCI compliant.

Often, you can outsource the storage of credit card data to a PCI compliant third party-hosted payment gateway. It will save you the burden and hassle of keeping data secure. PCI compliance is a standard required by many acquiring banks and payment providers. Thus, PCI compliance failure isn’t an option.

Choose the right payment processing platform for your remote learning business

There’s no doubt that COVID-19 is driving demand for distance learning and remote learning tools. However, it will be a short-lived success without the right payment infrastructure.

Third-party processors can help you to get your business off the ground. However, the fact remains that they are a dangerous choice long-term. The best solution for your remote learning business is to take control of your payments by opening a dedicated merchant account capable of accepting credit and debit cards both domestically and overseas.

DirectPayNet has helped businesses set up merchant accounts for over a decade. As a knowledgeable merchant services provider, we know how to help you secure credit card payments for remote learning businesses.

So, don’t delay. Take advantage of our in-depth knowledge and contact us here.
September 23, 2020
FAQ Fridays: I Launched A Lead Generation Business. Now What About Payments?
Q: I finally transitioned from affiliate to merchant and launched my own lead generation business.

My buddies told me this is the worst idea ever. They think the lead gen business model is dead.

Look, I was a successful affiliate with over six years of experience. I ran my own email marketing lists, PPC, Google ads, content marketing and social media campaigns for other merchants, but only made a fraction. So now I’m doing my own thing. I wouldn’t do this if I didn’t believe I know my shit when it comes to marketing tactics.

I have a few niches like real estate, health and home insurance that I’m focusing on and already have a few clients. My website is the ultimate B2B lead gen funnel. My team created a solid landing page with a sales funnel that captures the usual inbound info (e.g. name, company, email…). So far conversion rates are great.

After that, I promote my client’s products or services online. Basically, I’m replicating everything I do for merchants on search engines and social media directly instead of through an affiliate program. And for much more money.

I’m using Stripe for payments, but my friends are warning me I’ll get banned. So far that hasn’t happened and I’m getting quality opportunities. In my opinion this small business is already a success, but a few people are urging me to get other payments and I don’t see the need. What do you think?
A: Congratulations on your lead generation business. We know many affiliates who make the transition to merchant and launch their own offers all the time. It’s a lot of work but some do end up becoming a success.

First, a point about your business model. We understand where your friends are coming from. The lead generation business and pay-per-call centers were hot in the mid-to-late 2000s, but then got pretty saturated. Plus many people found cheaper labour in offshore SEO agencies and support agents. All that aside, it sounds like you’ve honed in on a good digital marketing agency model that works for you.

It’s good that you’re targeting a few niches under the lead gen umbrella. Diversifying is a good thing. But it’s the niches you’ve chosen that might pose a high risk from the payments angle. Not all payment providers are alike. You might find some that are open to lead generation business models and others who are turned off by it. And the niches you’ve chosen might not go over well with some payment providers.

Your friends are right about Stripe

The reason you’re getting warned about Stripe is because they probably know it’s synonymous for freezing and suspending accounts. Your friends have probably already gone through that. Which is why you might want to hear their side of the story.

Lots of newbie business owners sign up to Stripe without even looking at the restricted business list. If you look closely, they frown on real estate opportunities.

It sounds like you run a legit lead gen company, but unfortunately Stripe’s underwriters sometimes overlook details. Depending on the business, the risk team might not care about differentiating between B2C and B2B lead generation models in general much less lead gen for real estate. It’s also likely their staff won’t care about distinguishing between affiliate marketing, telemarketing, digital marketing and social media marketing. They definitely dislike business models that involve selling fake followers and leads.

Some business owners use dishonest marketing tactics to make money. That’s what Stripe is afraid of. They don’t want the risk and liability that could lead to a wave of refunds, chargebacks or complaints from Visa and Mastercard.

Examine your website before applying for credit card payments

We need clarity on a few things. How are you charging your clients? Are you charging them a monthly retainer like a standard marketing agency? Or are you charging them on a CPL basis whether they’re any kind of new lead, a qualified lead or some other criteria? Are you focusing on local lead generation and local businesses and do you have a customer support or sales team?

These may seem like irrelevant questions. But, that’s the type of questions you get when applying for a merchant account for your business. Your future payment processing provider will want to know your target audience. They want reassurance that transactions will be domestic. Cross-border transactions don’t have a high approval rate so it’s in your best interest to stick to local business.

Ultimately, there’s no easy way to get a payment solution for your business. Your best bet is to go to high-risk providers. It’s best not to go empty handed either. It helps to have good sales history for at least three months. If the volume isn’t above US $50,000 per month at the very least, you can try supplying bank statements or personal tax returns to help seal the deal.

Don’t overpromise or under deliver leads

Your big focus should be the presentation and marketing strategy for your lead generation business. You want to stay away from being a typical run-of-the-mill lead generation website. Your merchant account application could be declined, especially if there’s signs potential customers aren’t getting what they were sold.

Perhaps do away with any content or messages overpromising and under delivering like many lead generation businesses do. And, don’t just pay attention to the message on your homepage, but be consistent on the inner pages as well.

Aim to deliver high-quality leads and be transparent about what you offer to clients. Too many times companies get sucked into buying leads online and have no phone number, name or other contact information to follow up. That leaves business owners with the idea that they’ve bought some bad quality leads or email list.

We hope this has helped you in some way. If at any time you want to get help finding a solid payment solution that will accept your lead generation business, don’t hesitate to ask us for help.

Do you have a question for our FAQ Fridays segment? Email DirectPayNet and let us know how we can help you avoid mistakes. Send your question to our team here.
September 18, 2020