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January 27, 2024
FDA’s determination that β-NMN (beta-nicotinamide mononucleotide) is excluded from being lawfully marketed in dietary supplement products has caused a tumultuous ripple effect, particularly when it comes to payment processing and commerce platforms.
Since FDA’s decision came to light in the fall of 2022, brands have faced tremendous challenges in establishing relationships with merchant services providers who will support the sale of the ingredient. To focus less on the ethics or legality of FDA’s decision — the subject of a citizen petition filed with FDA — and more on the impact on commerce, let’s backtrack to March 2023.
A few months after FDA’s determination, commerce juggernaut Amazon notified all NMN sellers that the ingredient could no longer be sold as a dietary supplement without FDA approval for OTC sales. Amazon’s actions were not a surprise to many as a similar story developed in May 2021 with the dietary ingredient NAC (N-acetyl-L-cysteine). Considering the Amazon ban, brands had one major channel to shift to: their direct-to-consumer websites. However, that solution was short-lived.
In mid-March 2023, Shopify followed suit, forcing brands to remove NMN products or find a new payment processor. This caused brands to pivot once again, seeking specialized high-risk merchant providers.
Typically, nutraceuticals are in a gray area of support by most mainstream processing options such as Shopify Payments. Digging deeper into the restricted industries list on Shopify Payments reveals that “pseudo pharmaceuticals” are prohibited. Shopify defines “pseudo pharmaceuticals” as “nutraceuticals, pseudo-pharmaceuticals and other products that make health claims that have not been approved or verified by the applicable local and/or national regulatory body.” Under this definition, Shopify’s support for nutraceuticals in general is unclear.
Having worked with many brands in the NMN space, it appears that finding the right provider for payments has become increasingly difficult. Many NMN brands have experienced unexpected merchant account shutdowns, withheld funds and ambiguity, further straining their operations. That begs the question: How can NMN brands find the right payment provider?
My recommendations are below.
Evaluate the boarding process. For merchant accounts specialized for nutraceuticals, there is no such thing as an instant approval. If the prospective payment processor is requesting little detail about a business, it’s very unlikely the proper information is being relayed to the sponsor bank on the back end that supports every merchant account. This is a huge warning sign. Any provider interested in facilitating payments of an NMN brand or other supplement business should spend significant time understanding its needs, challenges, business model and the ingredients that are being sold. This is crucial for long-term account reliability.
Dig into the fine print. As previously discussed, many mainstream payment options are not specialized for nutraceutical businesses. It is crucial to research the “restricted industries” guidelines or speak thoroughly with the prospective processor regarding its knowledge and support of the industry. Beware of any long-term contracts or hefty early termination fees.
Evaluate the provider’s reputation in the industry. When considering a payment partner, it is important to consider its reputation. The best option is to work with an organization that has been well established for many years. Seek an account manager educated on the current landscape of nutraceuticals. Having a direct relationship with a reliable representative specialized in the industry is the best way to ensure top-tier service.
Focus on reliability over rate. Many providers will entice merchants with “low rates.” Initially, this may appear attractive, but if it jeopardizes the sustainability of the account, is it worth the trade-off? Keep in mind, every day that a brand cannot accept payments adversely impacts its reputation and sales.
Choose the right web platform and host. Always consider any product or payment restrictions prior to choosing a web services provider. Choose a web platform that will not limit a brand’s offerings or its payment provider. Be aware that some web platforms will even charge a business for using a third-party payment provider, regardless of whether that payment provider supports the business’s products.
The hurdles imposed by FDA's decision have reshaped the landscape of NMN commerce, pushing brands to adapt. As we await further clarity from regulatory authorities, the key for NMN brands lies in creating beneficial partnerships.
By carefully selecting payment providers attuned to the unique demands of the industry, vetting providers and prioritizing reliability over cost, brands can find the right long-term payment partner.
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