Payment Tips

Negative Option Billing Merchant Account

Negative Option Billing can be beneficial for your nutraceutical merchant account
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Kolby Nielson
August 31, 2022


A negative option billing merchant account provides trial nutraceutical companies with the ability to accept credit card payments. Due to the high amount of chargebacks in this billing model, negative option is considered high risk. Nonetheless, there are many payment processing options available for companies who utilize it.

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What Is Negative Option Billing?

Negative option billing is a method of charging customers for purchases by continuing to bill them if they don’t decline the ongoing charge. For example, if you order a free trial of a vitamin supplement and give your credit card information with the intention of triggering a purchase if you keep the item.

A main distinction with this type of purchase is that the customer has to take action in order to stop payment. In addition, they are often given a product or service for free so psychologically it may feel as if they’re going to not have to pay. Chargebacks often occur when the customer forgets to cancel payment and doesn’t receive a refund when they request one.

Is Negative Option Billing A Good Business Model?

Negative option billing can be a very successful way to grow your business quickly. This is especially true for new products who want to get their name out and their goods in the hands of new customers. Regardless of how you look at it, people like free trials. Even if they make an agreement to pay later, they still receive something quickly at no cost.

The downside is that if people opt-out there’s a chance that you will lose the investment you made in creating the product. Luckily, only about 18% of transactions are canceled after customers sign up for the product. So as long as you have a healthy profit margin, you’ll likely see a large number of purchases successfully transacting after any trial periods or free offers.

nutraceutical negative option billing can help your business get started quickly

Nutraceutical Payment Processing

In the payment processing world, negative option billing is found most frequently with nutraceutical merchant accounts . These are by far the number one industry that implements this charge as a business model. Selling nutraceuticals is an interesting business. These products are often vitamins, or mixtures of herbs that claim to assist with a desired outcome.

Outside of negative option billing, nutraceuticals is under scrutiny by low-risk banks. These banks offer merchant accounts to companies they consider safe bets. Vitamins, supplements, and health remedies are not regulated by the FDA, and have to carefully work towards selling their products. Some payment processors will review your website and make you change any direct medical claims or certain terminology they don’t approve of.

Continuity Billing And Subscription Merchants

Continuity billing is a similar type of payment model, but is slightly less risky. Often, subscription businesses have continuity billing which just means the payment continues over time. This can be weekly, monthly, or yearly payments that show up consistently on credit card statements. In contrast, this type of billing model is opt-in so customers choose to charge a payment on a regular basis.

If you’re a subscription merchant such as a company that creates monthly boxes , or a software vendor that charges each month, it’s important to make customers aware of the purchase. The most common way these merchants deal with chargebacks is because their refund process is inefficient or their policies for reimbursing customers are too strict. Be sure to set up a refund and chargeback plan to keep your account processing.

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Kolby Nielson is a dedicated sales representative at Zen Payments, specializing in approving merchants and assisting businesses in their payment processing needs. His expertise and commitment have made him a trusted partner for countless businesses, ensuring smooth and efficient payment solutions.


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