Peptide Merchant Account: Important Things You Need To Know
According to Grand View Research, peptide sales are expected to peak at 48.4 million US dollars by the year 2025. Unfortunately, this high projection still does not ease the process of being approved for peptide merchant account services from banks.
Most of the banks from the US, EU, and UK are not for the peptide industry and supplements in general. In fact, they consider the peptide industry as high risk, which makes it more difficult for merchants to own one. For this reason, credit card processing is not possible for peptide sales.
Let’s take a closer look at peptide credit card processing and all there is to know about it.
What are Peptides?
By definition, a peptide is a kind of amino acid which has a distinct characteristic of being a short length protein. It is often used commercially as a skin care product, an aid to weight loss, is anti-aging, and used as an anti-inflammatory supplement.
A common example of peptide in the global market are glutathione-based products. These products are said to be effective as antioxidants and skin lightening agents.
While these are legal to own and sell in the United States, they are technically still not allowed for human consumption. This has been the biggest problem of the industry by far because it has made peptide merchant transactions difficult especially online.
There is high demand on the product, however, and it still remains in the gray area of the US legal system. So, what options do merchants have?
Types of Merchant Accounts Area Available
In lieu of card payments, Electronic Check (eCheck) and Automated Clearing House (ACH) payments are found to be the best peptide payment processing solutions. Why is that? This is because peptide merchants can process transactions and proceed with the payments for said transactions on their website, in person, or even over the phone.
Let’s get into details of what eCheck and ACH are and how they work.
- eCheck - is a type of online payment which is in a way similar to paper check payments. The amount paid from the payer’s checking account is withdrawn and transferred through the ACH network then deposited to the payee’s own checking account. This transaction can be authorized by the payer in a few ways; one is by accepting the eCommerce site’s “Terms and Conditions” another way is by signing a contract, and lastly through a recorded conversation between the payer and payee.
- ACH payment - is another form of electronic payment but does not involve credit card networks or wire transfers, hence it is known as direct payments. Two common examples for this are direct deposit payrolls and recurring bill payments. This automated payment is faster and convenient for customers with a fixed billing cycle.
Why Credit Card Processing Isn't Available
As previously mentioned above, peptide merchant services are on the gray area with the law. And this status doesn’t sit well with card banks. In fact, there is virtually no US acquiring bank that willingly accepts peptide merchants.
An option considered by some merchants as alternative to credit card processing for supplements and peptides is getting an offshore account. But this would involve longer settlement periods and larger reserve amounts. So, what is the best option in the absence of peptide credit card processing? This rounds us back to the available merchant accounts, particularly electronic checks.
eCheck - Best Alternative for Online Sales
What makes electronic checks a good alternative? Here are a few reasons to consider:
- The settlement time of electronic checks can be as short as 24 hours or can last up to 72 hours. This would depend on the volume of payments a merchant transacts, among other factors.
- In some eCheck processing companies, a voice verification system can be utilized by the merchant to cut incidents of fraud and other forms of merchant cybercrimes.
- eCheck processing does not have interchange fees, making it considerably cheaper than credit card processing.
- Electronic check payments are highly secured because it directly links the consumer to the merchant. Secured payments help boost sales in general and protects buyers since the sale is authenticated in real time before the transaction is credited.
What Documents are Needed for Merchant Account Application
Know Your Customer (KYC) is a crucial requirement in compliance to the existing US Anti-Money Laundering (AML) Laws. This deals with precise customer identification as well as business identity. This aims to flag and identify possible suspicious activities of customers and the business itself.
For merchants to be approved of an account, they would need to submit an accurate information of the following in their application form:
- Smallest and largest ticket size
- Number of sales every month
- Monthly sales volume
Along with those details, these KYC documents would be needed to complete the merchant account application:
- Processing statement for the last six months, especially when expecting a high monthly sales volume.
- Identification and proof of address of the merchant and their business partners
- A letter of good standing from the business bank with the statement of account
- Proof of business registration
- Current business plan
- A list of well-known clients
- Agreement letter (contract) with the supplier or any applicable licenses
It’s also important to know that website compliance for peptide merchant services matter to processors. How does one peptide merchant comply with the website requirements?
1. The general structure of the website should look credible and professional. This includes a clear and transparent terms and conditions page, privacy and refund policy, payment and pricing, and cancellation policy.
2. Product descriptions should also be clear and not deceitful. Failure to mention important facts or misrepresenting a product sold can be grounds for legal consequences.
3. The site itself should be up and running by the time the merchant submits their account application. No website means no automatic approval.
4. Categorize the products accordingly. Underwriters will evaluate the website if it reflects the business model submitted. The products shown should be what is actually being sold, or as described.
5. The number of days it takes for shipping should be clearly stated on the shipping policy on the website, and should be written in simple language.