Shopify Pseudo Pharmaceuticals and the Stripe Payment Processor

Some Online store owners have been tripped up by the policies of Shopify and Stripe when selling Pseudo Pharmaceuticals (The likes of Vitamins and minerals, CBD products, and ingredients in beauty products). The result in which they received an immediate ban on using the payment gateway. This is gravely concerning since this interruption in sales/conversion directly impacts the whole business. Here will be discussing the fine line between policy, the practice, and the options some of the businesses that have been affected had to take.

Pseudo Pharmaceuticals

It is best to better elaborate on what is understood by Shopify and Stripe and what they deem "offensive or disqualifying" in this space. The main contention is a claim for Pseudo Pharmaceuticals would cure, and without ambiguity deliver an intended result. This is of course pointing to biology, and Pharma labs and where it is claimed to deliver a benefit. The department at Shopify that deals with these issues are called the "Shopify Risk Analysis Team". However, Stripe has an internal evaluation team and acts upon an "almost" duplicate policy with a slight variation.

Shopify Risk Policy: "Pseudo Pharmaceuticals - Pharmaceuticals and other products that make health claims"

Stripe Risk Policy: "Pseudo Pharmaceuticals - Pharmaceuticals and other products that make health claims that have not been approved or verified by the applicable local and/or national regulatory body"

"We are unable to accept payments for pseudo pharmaceuticals (meaning any product that makes a health claim including things like supplements, vitamins, skin brighteners and whiteners, teeth whitening, skin peels, and lightening products, and products that contain hyaluronic acid, retinol, glycolic acid, kojic acid, vitamin C serums, and hydroxy acids), as outlined here: (https://www.shopify.com/legal/terms and https://www.shopify.co.uk/legal/terms-payments-us)"

This is concerning at best, and yet their policies go beyond federal law as well as local ones. So what's the reality and the fine line to not be overstepping?

Strategic Ambiguity

When it comes to walking the fine line, your content has to be strategically ambiguous with "may perform" and "some cases have shown" when it comes to making or describing the benefits of a Pseudo Pharmaceutical. When it comes to Vitamins for example, where Google will give you the same ambiguity on any benefits, it will at least allow for the key areas where the benefits can be targetted. Articles such as blogs can describe these with the same tone of ambiguity on the ingredients contained, which can assist a visitor to decide if they want the item in their shopping cart. However, the stipulation by Stripe that is "approved or verified by the applicable local and/or national regulatory body" creates a new level of an issue - since now you have to prove the verification.

In this particular case, the credit card processing company (Stripe) imposes an additional stipulation that just by the category of your products, they require that verification - which will then place you to only be able to take on a different processor with higher costs than Stripe.

Payment Processors

If the reality of this misaligned policy is in place then the only strong reference that Shopify provides is regarding CBD Oils. Shopify has decided to have a clear path for CBD oil vendors and to avoid issues, they have covered the subject from the moment you set up your online store with a website builder to selling your products with recommended credit card processors.

The issue with accepting credit cards from one payment processor to the next is the issue of "chargebacks" and dispute resolutions. If a customer disputes that this product did not deliver what was promised, or suggested, then the claim inputs into the risk of the product. One could argue that any product does not deliver perfectly at 100% to the expectations of any consumer, however, Pseudo Pharmaceuticals fall into an ambiguous category as they take time to show any effects, and partial effects aren't measurable. What this means is that payment processors have different tolerances for claims, and when taking online payments they try to reduce the risk to maintain a certain operating cost. With this in mind here are the 3 payment processors that fit the Pseudo Pharmaceutical industry best:

• DigiPay

• Pinwheel

• Authorize.net

These will take credit cards and debit cards. Their rates will be higher than Stripe which has to be taken into account. For the likes of broad-spectrum CBD Pseudo Pharmaceutical products where ambiguous claims of pain relief are made, selling online is ultimately decided by the credit card processor where the eCommerce platform would have a more lax requirement. In the case of BigCommerce for example, their policy is based on "what's legal", while Shopify is more stringent than BigCommerce.

eCommerce website strategy

Now that the problem that you might be facing if your products fall under this Pseudo Pharmaceutical category, it is best to plan ahead to ensure continuity of sales, and avoid marketing spending that takes customers to a non-transacting website. Your Shopify Pseudo Pharmaceutical products should be set up with a Payment Processor that is at the very least in line with the policy of the eCommerce platform. When doing your SEO and content marketing, keep the strategic ambiguity alive in all the benefits that could be seen and assisted, and when appropriate list the studies and articles on the sources of these "observations" (not claims). Search engines will pull up content from your pages as well as others maintaining consistency in this area.

Several Online Stores have been "bit" by this issue where beauty products may contain Vitamin C serum or Hyaluronic Acid that hasn't been approved by the right agencies and got terminated without warning, and appeals have not shown to be successful when posting their concerns.

Conclusion

Due to the age-long snake oil sales of the past and lawyers piling on and regulating the risk of the industry it has made the Pseudo Pharmaceutical space a payment processing nightmare - making them risk avert and only allowing the best products to be supported based on low-chargebacks. Banks are the ones pushing back since they have to process the chargebacks, and it is always the small business online store owner that takes the hit regardless. There is no reward for small businesses for them to take the risk or merchandising the products they sell other than their customers being very satisfied - however, being categorized is enough for payment processors to exclude you from their system. There is no budge in their policies, so it is best to choose well and wisely right from the start.