We’ve said it before and we’ll say it again — Stripe for supplement sellers is a bad idea.
And if you’re thinking about or already using Stripe to sell supplements, now’s your chance to take action before it’s too late.
Why So Many Sellers Use Stripe
Stripe is a payment processing platform that allows you to accept credit cards, debit cards, and other forms of electronic payment.
Stripe is used by more than 200,000 businesses around the world to accept payments on the web and mobile. It was founded in 2009 by brothers Patrick and John Collison, who were only 19 and 21 at the time. Today, Stripe is valued at $95 billion thanks to its massive customer base and impressive growth rate.
Easy to Use
The platform provides a user interface that can be used without any coding knowledge necessary. You simply enter your business details, create your account, add payment methods, and start accepting payments right away.
Getting payment processing set up in minutes is a huge draw for online merchants. But that speed comes with its own risk that most sellers don’t know about.
If you’re using Shopify or WordPress as your online store platform, then you’ll have no problem integrating Stripe with it. In fact, there are hundreds of other platforms where Stripe can be integrated seamlessly as well — including BigCommerce and WooCommerce.
Stripe is ubiquitous. Or at least it wants to be. Again, even if it’s everywhere doesn’t mean it’s a good platform to use. That’s not entirely at the fault of Stripe, but of the regulations surrounding online sales. But since Stripe wants to be the face of online credit card processing, it deserves all the blows that come its way.
Why Selling Supplements on Stripe Is Bad
Stripe is also great for small businesses and entrepreneurs who want quick and easy processing without thinking twice. However, if you’re a supplement seller who wants to accept credit cards, there are some major downsides to using Stripe that you should know about before signing up.
Limited Merchant Category Support
Stripe supports a limited number of merchant categories. In particular, Stripe does not support dietary supplements or medical devices (which includes things like hearing aids and pacemakers). If you’re selling a product that falls into one of these categories, then Stripe is not an option for you at all.
Stripe essentially only supports low-risk merchants, like those that have an inventory and sell physical goods. They are making moves towards supporting dropshipping, but it’s not quite there yet.
Payment Aggregator, Not Processor
Stripe payment processing is often confused with what they actually do, which is aggregating. They don’t process your payments. they’re not a bank, and they don’t handle your money.
The ecommerce platform provides you with a payment gateway that allows customers to pay you directly through their bank accounts or credit cards at checkout.
As a 3rd-party payment processor, payment aggregator, or payment facilitator (these are synonymous), Stripe gives you a little piece of their own merchant account. So your business actually lives underneath theirs and they allow you to accept payments via their credit card payment processing partners and financial institutions.
That’s a mouthful, we know. But it’s important for you to understand.
Accounts Suspended on a Whim
Stripe isn’t a bank and doesn’t have any real accountability when it comes to its customers’ money. If you have a dispute with a customer and they file a chargeback against you, Stripe will close your account without any warning or explanation. This means you’ll lose all of your funds in the account — even if they’re legitimate card transactions.
There’s no recourse for this problem except for appealing directly to Stripe’s customer service team (which isn’t always successful). You can also try contacting them via email or phone and providing your Stripe account number but they may not respond or acknowledge receipt of your message.
The problem is a lack of transparency with Stripe’s terms of service. Within the many-paged document, you can find information on what Stripe supports and what they don’t. But it’s not easily accessible, and most merchants don’t find out they’ve made a mistake until they wake up one morning with no funds, not processing power, and no running store.
We get asked, “does Stripe allow supplement sales?” quite often. And unfortunately, the answer is no. Stripe will quickly freeze your funds and shut down your account.
We also get asked, “is Stripe CBD friendly?” The answer is, again, no. CBD is its own category but can also fall into the supplements category. Neither are supported.
What’s The Big Deal About Selling Supplements?
Selling supplements online is a relatively high-risk business. For example, if you sell supplements that claim to cure cancer or diabetes, you will be required to prove that they work.
You can do this by showing the FDA that your product meets their standards for safety and efficacy. However, this is not always easy to do; it usually requires years of testing and clinical trials.
If you’re selling supplements for general health purposes (such as vitamins), then it’s easier to get approval from the FDA. But even then, there are still some risks involved in selling supplements online:
The FDA has special rules that apply only to online sales of dietary supplements.
You may also be required to register with state agencies in order to sell certain types of supplements.
In either case, selling supplements online comes with legal risks that don’t apply when selling other products online.
Stripe, and other aggregators like PayPal and Square, want nothing to do with that. In fact, it would breach the contracts they have with the payment processors and banks they work with.
For supplements, you need a high-risk payment processor.
The Solution: A Real Merchant Account
If you sell supplements online, you need to secure a high-risk merchant account.
If you’re not familiar with the term “high-risk merchant account”, it’s an essential tool for supplement sellers. These accounts are set up specifically for types of businesses that run the risk of fraud and chargebacks due to the nature of their products. The most common high-risk industries include:
- Health & Wellness
- Weight Loss
- Nutritional Supplements (Nutraceuticals)
- Sports Nutrition
With your own, actual merchant account, you can sell supplements without running the risk of a sudden shut down. You’ll also benefit from better rates and fees than Stripe’s flat-rate options.
Don’t Use Stripe to Sell Supplements. They Aren’t Designed to Work with Merchants Like You.
Unfortunately, no matter how good Stripe is at what it does, it’s not ideal for supplement sellers. Because of its various restrictions, online sellers like you will never be able to fully utilize its financial services.
For long-term results, stick with a payment processor designed specifically for supplement sellers.
DirectPayNet specializes in providing high-risk merchant accounts to sellers with business models like yours. We’ll connect you with a payment processor that backs your business so you can scale, no issue (even when you want to expand to cross-border sales). And one that uses the card networks you need, like Visa and Mastercard, or even ACH and crypto.