High Risk Merchant. Who Can Help

lltravel on 25/10/2018 - 11:40

Hello ozbargainers!

I am in need of some help

I currently sell custom made pre workouts / supplements ( 3rd party manufacturer)

I have a huge client base internationally and pulling in a decent figure. Most of my client base is word of mouth and haven't really setup a website. Even when I had a website it made no difference in sales.

I had a merchant with PayPal, stripe and square but all were terminated because they deemed it too high of a risk. Paypal actually held 4k for months before i had to get FOS involved. Stripe did the same thing and square held $600 for 3 months.

I had a 1% chargeback rate and always refunded without any questions / queries as its just easier to make a small loss as my profit margins are pretty high

I have even approached 2 banks, cba and nab and both were denied with no reason given. I even gave them history of payments and chargeback records.

Any idea who would be able to help? I am losing sales daily and its extremely frustrating. Why is it so hard? How are these supplement companies selling with a merchant account? Most of my sales are international.

Financial

Comments

  • dcep on 25/10/2018 - 11:43
    +1

    bitcoin

    • lltravel on 25/10/2018 - 11:43
      +1

      I have considered that but people are hesitant. Its much easier for them to use their CC.

      • dcep on 25/10/2018 - 12:01

        there should be payment gateway for merchant to receive bitcoin from payment by credit card

        but what do i know , you might want to look more into it

        • EightImmortals on 25/10/2018 - 13:07

          Something like this? https://www.livingroomofsatoshi.com/

          • dcep on 25/10/2018 - 13:10

            @EightImmortals: i think it's the other way round

            customer pay direct to OP bitcoin address by credit card

            • EightImmortals on 25/10/2018 - 13:27

              @dcep: Rightio. :)

              I also found a bitcard which you can load up with BC and then use like a normal CC to buy stuff but I guess that's no good for the OP either. If the banksters are giving him a hard time though it might be worth the effort to at least offer a BC address on his website? I'll ask around and see if I get a solution. :)

  • rompastompa on 25/10/2018 - 11:54
    +5

    Is it the supplements that the merchants have an issue with, or is it the amount of chargebacks?

    If it's the supplements, perhaps diversify with some additional products and rebrand to 'Gym equipment'. Supplements are a risk for the unknown, due to the amount of potential illegal substances.

    If it's the amount of chargebacks, then you may need to change the way your terms and conditions are delivered to prevent a lot of the chargebacks from happening. Having a website where your customers accept the terms and conditions, rather than CC via email/phone, may help the merchants to gain faith in your business model?

  • pantsparty on 25/10/2018 - 11:59

    I don't understand why your business is too risky for them - lots of websites sell workout supplements and have payment facilities available.

    • rompastompa on 25/10/2018 - 12:01
      +5

      Probably because they have a website with terms and conditions stated and accepted, instead of word of mouth that product A will be delivered.

  • HighAndDry on 25/10/2018 - 12:32
    +3

    I agree with rompastompa, this is probably the issue:

    Most of my client base is word of mouth and haven't really setup a website.

    The banks and payment services literally have no idea what you're doing and what the money is for. The fact what you're selling is "supplements" that basically every first world country has incredibly long and complex regulations about probably doesn't help either.

  • lltravel on 25/10/2018 - 12:34

    Thanks all for the replies

    I set up a website specifically because they wanted to see what I was selling

    I even had all the ingredients listed. These were legal in Australia and most of the countries i was shipping to.

    Website is no longer live as I didnt want to pay the hosting costs anymore. I can relaunch it if someone can find a good merchant for me.

    • zoombie on 25/10/2018 - 12:44
      +4

      If your product is selling like hotcakes, why wouldn't you keep the website? A website legitimise your operations, it gives people a chance to leave feedback and an opportunity to upsell.
      Relaunch the website, sign up with a new PayPal account. If that doesn't work, maybe put your product on eBay/Amazon to legitimise the operation.

      • payton on 25/10/2018 - 12:50

        and your customers may even tell their friends about your website, bonus!
        esp if its easy to remember or type to

    • Flanders on 25/10/2018 - 20:32

      These were legal in Australia and most of the countries i was shipping to.

      So only legal in most of the countries. So you're shipping illegally to countries the ingredients are illegal in. Maybe not such a good idea. Not sure exactly the legal ramifications given the ingredients are legal in Australia, I would be checking with lawyer as to what you might be in for if you get caught shipping to countries where product is illegal in, and also ramifications for not being fda approved etc, shipping items for human consumption with absolutely zero permission or testing in that country.

  • John Kimble on 25/10/2018 - 12:40
    +2

    Who can help? No one really.

    I had a 1% chargeback rate and always refunded without any questions / queries as its just easier to make a small loss as my profit margins are pretty high

    This is the reason.

    You need to improve your KYC or verification processes or look into getting a fraud detection system or something, because a 1% or greater chargeback rate is unacceptable for a merchant facility to operate at. This is set by Mastercard and Visa, so the banks won't offer you a facility anymore because they get fined.

    Surely they would have sent you warnings as you were approaching the 1% threshold and they would cancel if you got to it? Pretty sure you get on the radar at 0.5%

  • Geoff897 on 25/10/2018 - 13:04

    I knew someone who was selling Electronic cigarette liquids who could not get an eft terminal from the banks, They ended up telling them it was for a soap business and was give a terminal the next day. Maybe something similar to supplement business

    • John Kimble on 25/10/2018 - 13:10

      Yep, but if/when the banks find out, his facility would be cancelled.

      Doubt that is what the issue is here.

      • Geoff897 on 25/10/2018 - 13:23

        Yeah possible, Was just a client complaining to me i didnt go into details

  • Gronk on 25/10/2018 - 14:41

    If you're talking about suppliment merchants in Australia then they're most likey getting serviced because they have a physical and / or an online presence.

    Custom Suppliments could be literally just about anything, especially if the words 'propietary blend' appear on the packaging and with the amount of smoke and mirrors in the suppliment game at the moment it's not really surprising that banks are hesitant.

    Have your suppliments been tested and proven to be effective by any established medical body in Australia? Do you posess knowledge or qualifications in an area that's relevant to the type of suppliments you're selling?

  • [Deactivated] on 25/10/2018 - 18:06
    +1

    If you're selling items for human consumption in commercial quantities, do you have food safety data to back you up?

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