If you’re a merchant running an e-commerce business that sells products and services with limited or evolving oversight, then your account will be deemed high-risk in the eyes of the credit card associations. As such, you might face several challenges while accepting payments for your online products and services such as a high number of chargebacks, higher fees, and even some hefty fines. A good example is when you’re running a Kratom business.
A tropical tree native to Southeast Asia, Kratom has been sold and used in the region for many centuries. It is primarily consumed as an herbal remedy to deal with many issues including anxiety, insomnia, and fatigue. Much like CBD, Kratom has recently gained a lot of attention in the US as more and more people are becoming aware of all the benefits it has to offer. However, the US FDA and DEA still have their reservations about this botanical herb. This has led to many challenges for merchants looking to sell Kratom online.
How Can a Merchant Acquire Kratom Credit Card Processing?
To start your journey as a Kratom merchant, you need to acquire a high-risk merchant account to be able to send or receive payments. You need to employ payment processing and gateway services that are specifically designed to tackle the nature of your business. These days, it can be very hard to locate and stick to a decent Kratom-friendly credit card processing option, but they do exist.
Why Is Kratom Considered High Risk?
You might discover that operating a Kratom business model hinders the establishment of a strong relationship with your Payment Service Provider (PSP). In case a bank is willing to accept your business for Kratom credit card processing, they might ask you for a considerably high reserve. A reserve can take the form of three different models depending on the situation and the nature of the business.
How Many Reserve Models Are There?
1) Upfront Reserve
An upfront reserve involves retaining a percentage of the merchant’s expected monthly volume upfront. This can be collected by wiring the requisite amount from the merchant’s checking account, holding back 100% of the amount of each transaction until a goal amount is reached, or by asking for a letter of credit from the merchant’s bank.
2) Rolling Reserve
This type of reserve involves keeping a small percentage, typically 5 to 15%, of the account received via a merchant’s cleared transaction. It is among the most common reserve models employed for operating a high-risk merchant account. This amount is held back for a period of six months and then released to the merchant account in the seventh month, and this process continues.
3) Capped Reserve
In this reserve model, a similar percentage of each deposit is retained until a “cap” amount is reached. This amount is determined by the payment processor and is typically half of the merchant’s monthly processing volume. After this cap amount is obtained, it stays reserved and no further deduction is carried out in the future in this regard.
Why are Kratom Suppliers Having Credit Card Processing Problems?
Although many stores, headshops, and vape points have popped up that sell a variety of different Kratom products, Kratom culture lies predominantly online and that won’t change any time soon. People tend to rely on the internet to have their Kratom needs met because online Kratom stores show much more promise than local ones.
As of now, Kratom is banned in six US states; Wisconsin, Vermont, Indiana, Alabama, Arkansas, and Rhode Island. In the remaining states, it is not considered an illicit substance, but there is still a lot of hearsay revolving around how beneficial it is. Many medical and legal issues surrounding this industry are still under study. This, in turn, has led to heightened complications in the process of collecting online payments.
These fast-changing medical and regulatory concerns regarding the possession and consumption of Kratom have made it very difficult for merchants to conduct business with traditional financial establishments worldwide without raising a lot of questions. This poses a huge problem when a Kratom merchant requires a credit card processor for transferring and collecting payments.
What Problems Do Kratom Merchants Typically Face?
Even though it’s becoming increasingly popular each passing year for its undeniably powerful role against PTSD, chronic pain, and opioid withdrawal, Kratom faces high levels of regulation as per the reservations of the regulatory bodies; the US DEA and FDA. Digital transactions have resultantly become increasingly difficult to deal with for Kratom merchants who are unlikely to find domestic banks willing to take on Kratom credit card processing. This often leads them to turn to offshore merchant accounts, adding a whole new layer of complexity to the process. If a Kratom vendor is lucky enough to find a viable e-commerce Kratom payment processing option, they are not willing to disclose the information to maintain their competitive advantage in the industry. So, if you are a Kratom merchant looking for a similar solution, it’s best to conduct your own research.
What Are Some Viable Kratom Payment Options?
There are a few good Kratom merchant account providers out there to help you get started on your journey. Each provider has a proven track record in the high-risk industry, specifically in the e-commerce realm. These include:
- Host Merchant Services
- PaymentCloud
- GreenPay and
- Allied Payments.
These service providers have very low complaint rates and will offer you exemplary customer support around the clock. Generally speaking, as a Kratom merchant, you should be prepared to face heavier transaction charges in any case because of the heightened risk associated with the Kratom industry. You might also come across the occasional fund holds. It’s important to bear in mind that Kratom merchant account processing is built on top of ever-changing rules and regulations. As such, banks can alter their acceptance policies without any prior notice or forewarning to give you a head start.
