Consider this page your comprehensive guide to business success as a nootropics or nutraceutical merchant (assuming you’ve created a great product, we’re just here to discuss the financial side of things):
Table of Contents
- Differences and Definitions
- State of the Industry Today
- Why am I “High Risk”?: Struggles Facing Nutra / Nootropics Merchants (and solutions)
- Industry Tips for Getting Your High Risk Merchant Account
- Commonly Asked Questions
- Additional Resources for Nutraceutical and Nootropics Merchants
Selling nutraceuticals, nootropics, and even run-of-the-mill dietary supplements can be a challenge for entrepreneurs. That’s not to say people aren’t interested in buying such products (in fact, these are each billion-dollar industries).
Instead, the greatest challenge comes from the giant stack of paperwork required to simply apply for their merchant account. Categorized as “high risk” businesses by banks, payment providers are reluctant to approve and open what they consider to be a high risk merchant account.
Motile, on the other hand, has fast and proven solutions for any company operating in a legal industry – regardless of risk. Retailers of nutra products and nootropics are no exception.
Set up your nutra or nootropics account
Read on to find out more about what’s going on in the supplements industry, struggles other owners are facing, commonly asked questions, and tips for getting your account approved.
1. The Differences Between Nutraceuticals, Nootropics, & Dietary Supplements
Supplements are capsules, powders, and tablets composed of different chemicals and food-based nutrients, produced with the intent of enhancing a user’s health and bodily functions.
Unlike drugs which are heavily regulated by the Food and Drug Administration, the FDA instead treats dietary supplements like “special foods.” In other words, they are seen as being a closer relative of your local grocery store produce than the medicine you pick up at a pharmacy.
Unlike drugs which are heavily regulated by the Food and Drug Administration, the FDA instead treats dietary supplements like “special foods.”
Furthermore, while drugs are deemed “unsafe until proven safe” by the FDA, supplements are considered “safe until proven unsafe.” This fairly lax stance of an official government institution toward the regulation of supplements plays a role in how Americans (especially doctors) perceive them – considering such products ineffective at best, and harmful at worst.
Nutraceuticals are supplements made specifically from derivatives of food, taken to boost or benefit your bodily functions and health.
They can be classified as a subgroup of dietary supplements, but are marketed as a “purely natural” way to make your body healthier by many of the companies selling them.
Some would say that nutraceuticals are more than a mere supplement to your diet, and that they help with disease treatment and prevention as well (an appealing notion for Americans since healthcare is so expensive).
Nootropics are supplements designed specifically for mental enhancement and cognitive acuity. They are often referred to as brain supplements or smart pills, monikers that especially resonate among students and millennials.
Classified as a subgroup of dietary supplements (with some crossover into nutraceuticals depending on the ingredients used), nootropics are newer to the game and thus receive greater scrutiny from banks. Their consumer demographic, which appears to be on the younger side (but not necessarily), are notorious for chargebacks, and this scares off many processors as well.
Legal Definition of “Nutraceutical” and “Nootropic” Supplements
The U.S. government has never explicitly defined what a “nutraceutical” or “nootropic” is. From a legal perspective, they are each classified as types of dietary supplements.
Relevant Industry Codes (SIC & NAICS)
Most (if not all) dietary supplements fall under one of six Standard Industrial Classification (SIC) codes – designations established in 1937 by the U.S. government to group businesses into legally defined industries. These six categories include:
- 2048: Encapsulated Nutritional Supplements
- 2099: Coffee and Tea Manufacturing
- 2833: Medicinal Chemicals and Botanical Products (nootropics sometimes falls here)
- 2834: Pharmaceutical Preparations
- 2837: Nutritional, Probiotics, Prebiotics, and Supplements.
- 7299: Miscellaneous Personal Services, not elsewhere classified (weight-loss pills)
If you’d like to dive into the SIC categories to a greater extent, the U.S. Department of Labor has them listed out in their entirety on their website.
Although the SIC is still used by federal agencies to some extent, it has been gradually replaced by the North American Industry Classification System (NAICS). Relevant NAICS codes for supplements include:
- 311920: Coffee and Tea Manufacturing (Nutraceuticals)
- 325412: Pharmaceutical Preparation Manufacturing (Nutraceuticals)
- 325411: Medicinal and Botanical Manufacturing (Nootropics)
- 446191: Food (Health) & Supplement Stores
The NAICS website is a bit out of date in terms of appearance, but it’s still an informative resource for companies trying to figure out which code to use when classifying their business.
2. State of the Industry Today
The US dietary supplement market is large but genuinely hard to size: estimates range from roughly $48 billion (Grand View Research) to $63 to $68 billion (IMARC, SkyQuest) in 2024 to 2025, depending on how each firm defines the category. The honest read: a market between roughly $48B and $68B, growing about 5 to 9 percent a year, with long-range projections near $190 billion by 2035.
Nootropics are the faster-growing slice. Estimates for 2025 span about $5 billion (narrow definitions) to roughly $21 billion (broad definitions), with most sources putting growth at a 12 to 15 percent CAGR. We cite the range on purpose: any provider quoting a single precise figure is likely cherry-picking the source that sounds best.
3. Struggles Facing a Nutra / Nootropics Merchant (and solutions)
Nootropics and nutra merchants encounter many of the same problems faced by other high-risk ecommerce businesses. However, they also have industry-specific challenges to tackle as well. Here are three primary obstacles they regularly need to handle (and actionable strategies to overcome them):
Problem #1. Chargebacks
Chargebacks have the potential to cripple any ecommerce business, but this is especially true for merchants marketing supplements. Nutras and nootropics companies are extra susceptible to chargebacks, and this is due to:
I.) Exaggerated marketing: Many producers of dietary supplements imply substantial results for people who consume their powders, pills, or capsules. When this doesn’t happen to the extent advertised, there is some inevitable backlash (frequently in the form of chargebacks).
Plus, the “free trial” offers (satisfaction-guaranteed-or-you-don’t-pay marketing) are especially prone to being charged back as well, and they’re a common tactic among businesses selling such products.
Solution: Don’t plaster unrealistic claims across your website or on your packaging, and steer clear of the free trial gimmick. Add clearly-labeled disclaimers on the bottle of every supplement. Be honest with your customers to ensure your reputation as a trustworthy brand keeps growing. Don’t promise too much!
II.) The membership model: Recurring billing is the predominant payment scheme for supplement companies. Any individual who purchases a product from your website and doesn’t understand this could end up causing problems – especially if that first charge is significantly smaller than subsequent ones (known as the “continuity billing model,” a common tactic for less reputable companies).
It’s not unusual for disgruntled customers to call their credit card company and refute any charges beyond their first order. Plus, auto-renewals of subscriptions aren’t going to generate much good will either.
Solution: Make the payment process transparent as possible. If it’s not blatantly clear whether a customer is submitting a one-time payment or signing up for a subscription (one that auto-renews, no less), your process will likely get you in trouble.
III.) Working in Ecommerce: Most nutras and nootropics are sold over the internet, an inherently riskier place to conduct business. A combination of online customers generally being fickle and credit card fraud being more prevalent in cyberspace make chargebacks more common for companies selling supplements.
Solution: First, make sure your website is PCI DSS compliant. Unfortunately chargebacks are sometimes unavoidable, but if your website and payment processing channels are secure, you’ll be in better shape to reduce ones due to credit card fraud.
Second, consider providing payment processing via eChecks. One nice benefit to this processing method is that you don’t need to adhere to the (sometimes erratic) card company regulations set forth by Visa and Mastercard, making chargebacks less of a hassle. Plus the process of facilitating chargebacks for eChecks is more comprehensive, and falls within a tighter window – done this way to prevent consumer fraud.
Problem #2. Customer Service Issues
Sometimes, all it takes is one friendly voice on the other end of the phone to transform a chargeback into a loyal customer.
Establishing a solid customer service system is a must for nutraceutical and nootropics companies, because even the most reputable ones still encounter upset consumers on a regular basis. Yet many in the industry don’t prioritize this – which may be due to insufficient funds in certain cases, but is often a result of neglect.
Solution: Channel enough resources into customer service (an amount which hinges on multiple factors, such as your order volume, revenue, and marketed product).
There are three main types of chargebacks, two of which are disputable as the merchant – a trained customer service team can help combat fraudulent claims through your fraud management program, while also working to assuage any legitimately upset customers.
Furthermore, it’s important that it’s exceedingly clear where and when people can contact you. Put this information in the footer of your website’s homepage, have a “contact us” section that’s easy to locate; even include it in the confirmation email after every purchase. Making it easier for customers to call you than contact their credit card company will help you lower your chargeback ratio.
Problem #3. Getting a Merchant Account Closed / Application Rejected
Many banks are wary of taking on nutraceutical and nootropics companies; especially ones that are less established. This is because they’ve been burned by them in the past.
Due to the occasionally vague nature of supplements, unsavory characters have been caught in the past using the “nutraceutical” or “nootropic” designation to launder money and sell illegal substances. Understandably, such cases deter many payment processors out there.
Solution: The key to getting your merchant account opened (and keeping it open) is transparency. Some ways to reinforce the fact that you’re running a legitimate enterprise is to:
- List out the ingredients explicitly for each and every product you’re planning on selling – both on your website and during the application process
- Communicate changes to your provider, so that whenever you begin pushing a new product or supplement line for your ecommerce store, they are the first to know
- Have a fully operational website that is both GDPR compliant and hashes out a clear, user-friendly privacy policy
At the end of the day, no matter how much you try to avoid it, there’s a chance you’ll still encounter banking issues while trying to sell nutraceuticals, nootropics, or any other type of minimally regulated supplement. But if you operate openly and don’t market snake oil, your provider will be more willing to work together and help you resolve issues when they arise.
4. Industry Tips For Getting Your High Risk Account Approved
Tip #1: Embrace Transparency
Payment providers want to see that you’re an honest, trustworthy contributor to society. The best way to accomplish this is by having nothing to hide.
Have your financial statements organized and available for inspection, make sure your taxes are paid in a timely manner, and don’t rip off customers. Establish a social media presence (marketing 101 for ecommerce businesses), and interact with your target audience. Build rapport with your clients and within your company. All of this positivity will resonate with the agent handling your application.
Tip #2: Be Flexible
Not every processor is going to be a home run for your specific business. Due to a variety of factors (volume, industry, specific needs), you’ll be better served by some providers than others.
When you’re out there looking for merchant services, don’t fall in love with one specific company. Keep your options open, so you can find the best rates for your nutraceutical or nootropics website.
Tip #3: Jog, Don’t Sprint
Service providers want to see stability from their high risk industry applicants and account holders. Growth is of course important, but doing so at the cost of appearing volatile could spell trouble for your status with a bank.
Don’t reinvest too much money back into your business, but also be wary of pocketing everything too. Instead, try putting back about 50% of what you earn so that you’re both setting yourself up for the long term, while also not risking everything on the success of your company.
Tip #4: Work With an Agent
An agent will know the ins and outs of your industry, and they’ve probably worked with someone similar to you and your business before. Their expertise will help simplify much of the application process – finding you great rates and a trustworthy processor all without going through the headache of negotiating rates yourself.
Motile LLC is a company founded by a team of veteran agents, and our connections run deep throughout the payment processing industry. We were founded on the idea of providing payment solutions for anyone running a business, no matter the risk (as long as it’s legal). Set up an appointment – we’re ready to help you open an account and spend less on processing.
The Chargeback Threshold Every Supplement Merchant Must Plan For (Visa VAMP)
This is the single most important number for your account in 2026, and almost no competing page has updated for it. Visa replaced its older dispute programs with a single monitoring program (VAMP) that combines fraud and disputes into one ratio. Visa tightened the merchant “excessive” threshold to 1.5% (down from 2.2%), effective April 1, 2026 (Merchant Risk Council, Chargeflow). Thresholds and dates have been revised more than once, so treat 1.5% as a ceiling to stay well below, not a fixed promise.
What that means at 10,000 transactions per month:
- At a 1.5% ceiling: up to about 150 disputes before you risk “excessive” status.
- Prudent target: keep disputes under 1% (about 90 or fewer) to hold a safety margin, because subscription disputes stack up fast.
For a supplement brand running subscriptions, a few dozen disputes is the difference between a healthy account and one heading toward reserves or termination, so the margin matters.
What a Nutraceutical Merchant Account Actually Costs
Most providers write “competitive rates” and stop. Here is the straight version. High-risk supplement pricing is almost always interchange-plus (the card networks’ cost, plus a fixed markup), layered with a monthly account fee, a gateway fee, and PCI compliance. Because underwriters price for risk, effective rates sit above standard retail. Any provider promising a specific low rate before seeing your chargebacks and processing history is guessing.
The rolling reserve, explained (the part nobody tells you about)
A rolling reserve is a percentage of your sales the processor holds back and releases on a delay, as protection against future chargebacks and refunds. For supplements this is typically 5 to 10 percent, held for 90 to 180 days (Chargebacks911). On $100,000 in monthly sales at an 8 percent reserve, roughly $8,000 is held each month until its window releases. It is your money, returned on schedule, but it affects cash flow and you should plan for it. You can usually negotiate the reserve down over time by showing a low refund rate, proof of fulfillment, a clear return policy, and a clean chargeback history.
The Nutra Risk-Tier Rubric: Where Does Your Business Sit?
Underwriters do not see “a supplement company.” They see a risk profile. This is the rubric we use to place merchants, so you can self-assess before you apply.
| Factor | Lower risk (easier approval, lower reserve) | Higher risk (tougher approval, higher reserve) |
|---|---|---|
| Billing model | Straight sale, clear one-time checkout | Free trial into auto-renew, continuity/negative option |
| Marketing claims | Structure/function only, with FDA disclaimer | Disease or “cure” claims, before/after miracle framing |
| Chargeback history | Under 0.9%, documented | Above 1%, or unknown |
| Processing history | Prior clean statements | Prior termination, on MATCH/TMF |
| Fulfillment & refunds | Fast shipping, easy cancellation, visible policy | Slow fulfillment, hard-to-cancel, hidden terms |
| Ingredients | Well-known, clearly legal in target markets | Novel/gray-area ingredients, cross-border legality issues |
Every row you can move to the left column lowers your rate, your reserve, and your odds of a decline.
Free Trials and Subscriptions After the “Click-to-Cancel” Ruling
Continuity billing is where supplement merchants get into chargeback trouble, so the rules matter. Here is the current state, which many merchants get wrong:
- The FTC’s revised Negative Option (“Click-to-Cancel”) rule was vacated by the 8th Circuit on July 8, 2025 on procedural grounds (Mayer Brown).
- That does not mean anything goes. The FTC still enforces under ROSCA and the FTC Act, most states have their own auto-renewal laws, and the FTC filed a new advance rulemaking notice on January 30, 2026 (Crowell & Moring).
- Visa’s own rules bind regardless: at enrollment you must get the cardholder’s express consent to the ongoing subscription, and the first charge after a free trial must carry a billing descriptor containing the word “trial” (Visa subscription policy, PDF).
You can still run subscriptions, but sloppy free-trial flows are the fastest way to blow past that 0.9% VAMP threshold and lose the account.
What You Can and Cannot Say on the Label and in Ads
Under DSHEA, supplements are regulated as food, not drugs, so no FDA pre-approval, but you may only make structure/function claims (with the “This statement has not been evaluated by the FDA” disclaimer), never disease claims. The FTC’s Health Products Compliance Guidance (December 2022) raised the bar: ad claims now require “competent and reliable scientific evidence,” which the FTC defines as randomized, controlled human clinical trials. Testimonials and anecdotes are explicitly not enough.
| Allowed (structure/function) | Disqualifying (disease claim) |
|---|---|
| “Supports healthy cognitive function” | “Treats or reverses Alzheimer’s” |
| “Helps maintain normal joint comfort” | “Cures arthritis” |
| “Promotes restful sleep” | “A proven remedy for insomnia disorder” |
Underwriters read your website. Disease-claim language is one of the most common reasons a supplement application gets declined.
Your Underwriting Document Checklist
Applications move faster (and price better) when you submit a complete file up front. Have these ready:
- Certificates of Analysis (COAs) and full ingredient lists
- Compliant product labels, including the FDA disclaimer
- A live website with clear pricing, terms, refund policy, and contact info
- Subscription and cancellation flow (screenshots), if you bill recurring
- Three to six months of prior processing statements, if you have them
- Chargeback history and any remediation you have made
- Business registration, banking details, and owner ID
Terminated or on the MATCH / TMF List? Here Is the Recovery Path
If Stripe, Square, PayPal, or Shopify Payments dropped you (their terms restrict supplements, so this is common), or you were placed on the MATCH/TMF blacklist, you are not out of options. High-risk underwriting is case by case. Bring your termination notice, a chargeback summary, and proof of what you have fixed (new billing descriptors, tighter cancellation flow, better fulfillment). A specialist can often place a merchant that a mainstream processor would auto-decline (background on MATCH/TMF).
5. Common Questions Nootropics & Nutraceutical Merchants Ask
Question #1: Why did my account get closed?
There are a variety of reasons your account may have been closed, but it’s likely tied to your chargeback ratio. If your ratio eclipses 1% you’re officially in the danger zone, and are at risk of getting your account dropped (or worse – flagged for Mastercard’s MATCH list).
It could also be due to trends in the world of payment processing. More and more banks are pushing away from taking the business of nutraceuticals and nootropics (especially startups), and at this point most low risk providers won’t even look at their application. If you had somehow managed to slip through the cracks and get an account from one of these companies, it’s possible they cut ties after realizing your associated industry.
Question #2: How can I boost my processing volume?
Banks and merchant service providers deal with high risk merchants carefully. Opening up an account for a business only to have it closed within a month (for whatever reason) is not a good investment for the acquiring bank. Levying certain restrictions, such as a processing volume cap, helps safeguard them from abuse.
After working with a processor for half a year, you’re within your right to request a higher processing limit. However, you’ll need to prove you’ve earned it. Things they’ll be evaluating are:
- Your chargeback ratio (it should be low)
- Sales volume (it should be stable)
- Transactions (they should also be stable)
- Account balance (it should be in gradually growing; never falling to a dangerously low level)
Once you’ve proven yourself to your processor and your bank, you’ll likely be able to get your volume increased.
Question #3: Where are other nutraceutical and nootropics companies finding their payment processor?
One thing that’s certain is that they aren’t finding any help from major players like PayPal and Stripe. Large processors, unless they specifically state otherwise, don’t like taking on big risks (which is unfortunately how nutraceuticals and nootropics are categorized for the time being).
There are a variety of ways to find high risk merchant service providers. A simple Google search will yield an array of options, and some websites aggregate many of them plus highlight their pros and cons. However, unless you’re particularly adept with payment processing, working together with an agent to find a tailored solution is your best bet.
Question #4: What are my options for accepting payments?
Even though being a high risk merchant limits your list of willing providers, your payment avenues are (in many ways) just as flexible as those for standard businesses. Nutras and nootropics are sold across the U.S. using:
- Recurring payments facilitated by ACH
- eChecks, Check 21 and other non-credit solutions
- High risk credit card processing with select processors
- Mobile payment systems for in-person and over-the-phone sales
- Ecommerce gateways to drive online business
Why won’t Stripe, Square, PayPal, or Shopify Payments let me sell supplements?
Those platforms are aggregators with broad acceptable-use policies that restrict or prohibit supplements, especially anything with health claims or subscription billing. They can freeze or close accounts with little notice. A dedicated high-risk merchant account is underwritten for your business specifically, which is far more stable.
How long does approval take and what do I need?
With a complete file (see the checklist above), industry-typical timelines run about 5 to 10 business days, sometimes faster. Missing COAs, non-compliant labels, or disease claims on your site are the usual causes of delay.
Can I get a reserve lowered or removed?
Often, over time. A low refund rate, proof of fulfillment, a clear return policy, and clean chargebacks all support reducing the reserve percentage or holding period.
Is it still legal to sell free trials or auto-renew supplements in 2026?
Yes, if done properly. The federal “Click-to-Cancel” rule was vacated in July 2025, but ROSCA, state auto-renewal laws, and Visa’s consent and descriptor rules still apply. Clear enrollment consent and easy cancellation are both compliance and chargeback protection.
What chargeback rate gets my account shut down?
Keep disputes low, ideally under 1 percent. Visa’s VAMP program tightened the merchant “excessive” threshold to 1.5 percent (from 2.2 percent) effective April 1, 2026, and staying well under it protects your account.
Can I get approved if I was terminated or I’m on the MATCH/TMF list?
Frequently, yes, on a case-by-case basis. Bring your termination letter, chargeback summary, and evidence of the fixes you have made.
6. Additional Resources
- Nutraceutical Market Insights
Cursory look at the Nutraceutical market space, with projections into the future. Free sample download available. - Outlook on the U.S. Supplements Industry
Influence of nutras on the U.S. economy (in terms of job, financial impact, and more). Study conducted by the Council for Responsible Nutrition and interpreted by JD & Associates. - Publicly Traded Nutraceuticals
A list of publicly traded nutritional vitamins and supplements on U.S. exchanges. - Nutraceuticals News & Research
A resource for current nutraceutical news and studies being conducted throughout the medical community.
