A Step-By-Step Guide to Securing a Weight Loss Supplement Merchant Account  - DirectPayNet

A Step-By-Step Guide to Securing a Weight Loss Supplement Merchant Account 


The weight loss industry shows no sign of slowing down. Staggeringly, over two-thirds of the adult population in the United States is classed as medically overweight or obese. That figure is only set to increase in 2022 once the effects of the global COVID-19 pandemic of 2020 and 2021 (which saw many people trapped indoors for months at a time) has been taken into account.

Despite being a mature market worth more than $75 billion annually, the total weight loss market is forecast to grow 2.6% annually through 2023. Thus, there’s never been a better time to be in the weight loss supplement industry. But this is a high-risk vertical. Acquiring banks and those offering credit card payment processing solutions point to issues with chargebacks and fraud, which ruin legitimate nutraceutical businesses’ reputations.

With that in mind, this guide will walk you through what you’ll need to secure your very own weight loss supplement merchant account. It’s not a guaranteed process, but with the right preparation and with some expert help, you can ensure that your merchant account application is a success.

But before we get into that, let’s take a look at why the dietary supplements industry is considered high-risk by financial institutions.

Why Merchant Account Providers View Weight Loss Products as High-Risk

There’s no question that the entire weight loss industry had a problem with fraud and chargebacks. One FTC survey found that weight loss products accounted for as much as 13% of all fraud claims.

It’s not hard to see why there’s such a problem. Customers in this vertical sign up for diet programs and nutraceutical enhancement pills expecting to lose weight. When that doesn’t happen, that’s when the claims of fraud and subsequent chargeback are filed.

Worse still, there have been numerous instances of devious companies making false claims about their products’ weight loss properties, employing deceptive marketing practices, and offering guarantees of success. All of these practices have landed dishonest and deceitful nutra merchants in trouble with the FDA and FTC.

When payment processors and merchant service providers look at these fraudulent practices and the high chargeback ratios, they are put off taking on sellers from this space. Underwriters often judge that the potential risks outweigh the potential benefits of doing business with you.

So what do you need to do to make sure that your online application process is a success? As it turns out, there are plenty of steps you can take.

Thinking of starting a nutraceutical supplement business? From assessing demand levels to staying on the right side of the FDA, here’s everything you need to know about starting a supplement business

5 Steps To Your High-Risk Weight Loss Supplement Merchant Account

Nutraceutical merchant accounts are notoriously difficult to obtain. But by taking the right steps ahead of your application process and drawing on the knowledge of high-risk merchant account experts such as DirectPayNet, you can secure online credit card processing solutions for your weight loss e-commerce business.

Step #1: High-Risk Businesses Selling Weight Loss Supplements Must be Compliant

The first step in the process is making sure that your products and services are compliant. It’s one thing to operate in a high-risk industry, but having products, marketing materials, or a website that breaks laws or regulations is bound to have your online merchant account application denied.

Start by performing a thorough audit of your supplement business and look for any areas where credit card processors feel you have crossed a line. Here’s what you need to be looking at:

  • Do not make any claims that your product can heal medical conditions or guarantee results (see FDA guidance on dietary supplements here)
  • Avoid deceptive free trial offers that violate Mastercard, Visa, and other credit card company rules
  • Set up clear legal terms and conditions, including your refund policy, legal business name, and contact information
  • Have an easy-to-read privacy and cookie policy no more than one click away from your homepage
  • Ensure that your website (including your shopping cart, checkout page, and existing payment gateway) is PCI-DSS compliant

Step #2: Take Action Against High Chargeback Ratios

If you present your business with a slew of chargebacks, no financial institution is going to want to process credit cards for you. The costs associated with frequent chargebacks will simply be too high. Thankfully, you can take plenty of actions as a startup to secure low rates in relation to chargebacks.

Here are just a few of the steps you should take before proceeding with a new merchant account application (regardless of whether this is your first, second, or third account):

  • Implement 3DS2 into your process, it’s a legal requirement for EU transactions, and in the US, it shifts the burden of proof concerning chargebacks onto the customer rather than the merchant.
  • Add the Address Verification Service (AVS) service to your checkout page to match customer’s billing addresses with those held on file by card issuers.
  • Offer superior 24/7 customer support across live chat, phone, and email to ensure that those who want refunds receive them, preventing disgruntled customers from issuing a chargeback.
  • Think about ditching a free trial business model to get rid of freeloaders who never intended to pay for your weight loss supplements in the first place.
  • Make your returns and refund policy as clear as possible across all of your marketing materials. Ideally, requesting a refund from your website should only take a customer a few clicks.
  • Create a high-level chargeback process to ensure you can win disputes quickly and efficiently, without burning through scarce business resources.
  • Utilize anti-chargeback technology software such as Ethoca or Verifi to catch and resolve attempted chargebacks before they go on file.

Step #3: Prepare all Documentation Ready for your High-Risk Merchant Account Application

Underwriters will need to evaluate several pieces of documentation and pour through your bank records and processing history. Here’s what you’ll need ready for your merchant account application:

  • A valid, government-issued ID, such as a driver’s license
  • A bank letter
  • At least 3 months of your most recent bank statements
  • At least 3 months of your most recent processing statements
  • A Social Security Number or Employer Identification Number
  • Proof that your chargeback ratios must are under 2% (ideally, they should be even lower)
  • Website URL and all associated marketing materials

You may be asked to provide further evidence that you operate a legitimate, law-abiding business. However, the above documents are usually required across the board, no matter your specific niche within the weight loss industry.

Step #4: Apply for Several Different Types of High-Risk Merchant Account

Many e-commerce businesses in the weight loss industry are looking for the holy grail of credit card processing. However, don’t forget that there are other specialist types of merchant accounts that could see your business scale either instead of, or in addition to, your credit card processing solution.

One such method used in the US today is the ACH debit network. With an ACH processing merchant account, you can take bank details from your customers and have them pay you via a direct transfer from their bank account to yours. You could also use the ACH network to accept eChecks from your customer. You could also work with a merchant services provider to install a virtual terminal, allowing your customer to buy their weight loss pills over the phone.

Don’t make the mistake of thinking everybody wants to pay with a credit card. Many customers don’t even own one. Better yet, not only is the pricing for processing these payments much more attractive, but it’s also much tougher for a customer to attempt to issue a chargeback using these payment methods.

Finally, expand your reach and processing capabilities overseas by securing an offshore merchant account. The requirements for offshore merchant accounts are often much less strict, and you can open up new currencies and geographical markets within a few days of a successful online application.

Step #5: Get Help From the High-Risk Merchant Services Experts

While following the steps above is bound to set you on the right path towards obtaining a weight loss supplement merchant account, your chances of merchant account approval dramatically increase with the help of high-risk payments experts.

At DirectPayNet, we can work with your weight loss supplement business to identify and shore up any potential weaknesses before helping you through the merchant account application process. We can also support you with ongoing guidance regarding your payment processing, helping your business rapidly scale by unlocking new payment methods and opportunities.

So if you’ve struggled to secure a weight-loss nutraceutical merchant account in the past, or you’re unsure of the best way to grow and scale your startup weight-loss business, it’s time to call in the experts. We have over a decade of industry expertise in securing approvals. By giving us just a few days, we can make a tangible impact on your business.

So what are you waiting for? Pick up the phone or email us today to see how we can help you with compliance, slim down your chargeback ratios, and gain your weight loss supplement business a shiny new merchant account!

About the author

As President of DirectPayNet, I make it my mission to help merchants find the best payment solutions for their online business, especially if they are categorized as high-risk merchants. I help setup localized payments modes and have tons of other tricks to increase sales! Prior to starting DirectPayNet, I was a Director at MANSEF Inc. (now known as MindGeek), where I led a team dedicated to managing merchant accounts for hundreds of product lines as well as customer service and secondary revenue sources. I am an avid traveler, conference speaker and love to attend any event that allows me to learn about technology. I am fascinated by anything related to digital currency especially Bitcoin and the Blockchain.