How To Set Up an Online Pharmacy Merchant Account
The rapid shift from brick-and-mortar to online commerce has created tremendous opportunities for business leaders across the world. More and more people have determined how to create online businesses in non-traditional areas, including pharmacies. These opportunities have also given individuals more and more consumer choice, helped drive down prices and led to greater convenience for anyone with access to the Internet.
When it comes to the creation of online pharmacies, things can get complicated for pharmacy owners, and cause many to wonder just what is an online pharmacy merchant account. Every business needs access to a variety of tools of the trade that will allow them to successfully compete. This can get tricky. Pharmacies and pseudo-pharmacies – meaning businesses that sell products that may have health implications – may often struggle to gain access to credit card services. This is because these businesses come with some inherent risks. One of the results of this risk is a business obtaining a “high-risk” classification. Being classified as a high-risk merchant isn’t fatal, but it does make the cost of doing business much more expensive. There are many things that online pharmacies can do to mitigate their risk, lower their fees, and gain access to other critical services.
What Is a High-Risk Merchant?
As you may already know, a high-risk merchant is a business that has a greater risk for fraud or chargebacks. Merchant account vendors ultimately make this determination, and it can be costly for businesses affected.
A chargeback is when a credit card company has to refund a charge incurred on it by a consumer. The reason for this refund can vary, but it may have to do with customer dissatisfaction with a product, confusion over the reason for the charge, or outright fraud.
Generally speaking, a business is a high-risk merchant if it meets multiple criteria. These criteria can include:
- Higher-than-average risk of fraud.
- Extensive use of foreign currency or offshore accounting.
- Limited credit history, meaning that a business hasn’t been in business for a long enough time to have built a credit history.
- Use or sale of products that have questionable legality. Alternatively, individuals can use or abuse these products in some way that goes beyond what they were originally intended for. The use of these products may result in serious harm to the user or others.
- A business has an extensive amount of card-not-present transactions, meaning that the business will never physically see the card. This makes a business more likely to be a victim of fraud.
What is an Online Pharmacy or Pseudo-Pharmacy?
You should understand that the high-risk nature of your merchant account is very dependent upon the categories of medication or drugs that you sell. There are two types of online pharmacies: A regular online pharmacy and a pseudo-pharmacy.
Regular pharmacies are accredited online pharmacies that meet the legal definition of an online pharmacy. They’re accredited and licensed by all the necessary legal and medical bodies and have all the standard checks that you would expect in any other brick-and-mortar pharmacy. This means that they only give medicine a doctor provides them with. It also means that they have appropriate checks that prevent an unauthorized individual from receiving the medicine.
Pseudo-pharmacies are different. They may sell drugs that have some sort of medical claim but do not actually give out prescription medication. These include CBD, weight-loss supplements, and more. These are products that have some sort of health impact but are not controlled substances in the same sense that a regular pharmacy may sell or fill prescriptions. They may also involve the sale of over-the-counter drugs, such as Tylenol or Advil.
It’s important to realize that these definitions are not necessarily exclusive. A regular pharmacy may sell CBD products, and this may result in a high-risk tag.
Remember, the type of industry and products sold has a lot to do with a high-risk classification, but it’s not everything, and many other factors go into the categorization of high-risk. Some processors won’t consider a business to be high-risk if the amount of medication or over-the-counter drugs sold is limited or more ancillary to the business purpose.
What is an Online Pharmacy Merchant Account?
An online pharmacy merchant account will allow pharmacy owners to set up merchant accounts for online pharmacies. This will give them access to credit card processing, eCommerce, and more. Like any other merchant account, an online pharmacy merchant account will have to pay fees associated with these accounts. An online pharmacy may find it more expensive to set up such an account because of a high-risk designation.
As such, the answer to the question, “What is an online pharmacy merchant account?” is a relatively easy one to answer. However, creating merchant accounts for online pharmacies can be tricky.
What is an Online Pharmacy a High-Risk Merchant Account?
If you have ever wondered, “What is an online pharmacy merchant account?” you’re not the only one.
Merchant account vendor services will usually consider online pharmacies to be high-risk for reasons that are specific to this industry. This leads to higher fees, more financial requirements, and an increased cost of business for many business owners. This categorization occurs for many reasons, including:
- Potential for abuse: Unfortunately, prescription drug abuse remains a real challenge in the United States. While the vast majority of pharmacies do everything they can to limit this abuse, many individuals still find ways around the robust checks that these pharmacies put in place.
- Extensive government oversight: The pharmaceutical business is heavily regulated by the government. This adds to the cost of doing business and increases the risk for all parties involved.
- Use of pseudo-pharmaceuticals: This industry is generally classified as high-risk as a result of its quasi-medical claims and place within the United States regulatory scheme. Many of these drugs do not have a good reputation and have had FDA warnings issued against them.
- Card-not-present transactions: These transactions – which are common in online sales – often result in a higher risk of fraud or chargebacks.
Can I Still Access Merchant Account Vendor Services?
Yes. You’ll still be able to create merchant accounts for online pharmacies and use all of the products and services that come with it. This won’t necessarily be inexpensive. If you’re a high-risk business, you’re going to have to pay more money in fees and set-up costs. This can get expensive and may cut into your profit margins. Unfortunately, this is just one of the many problems associated with merchant accounts for online pharmacies.
It’s important for any online pharmacy merchant account owner to understand that a high-risk tag isn’t fatal to your business. In fact, quite the opposite is true: Finding a high-quality merchant account vendor can provide you access to many services. These services can not online help you manage and reduce your risk, but give you access to a variety of other critical business tools.
How Can a Merchant Account Provider Work With This Industry?
As someone looking for an online pharmacy merchant account, you need account services that can handle a large number of transactions every day, one that can do so in a secure manner, and one that can keep your fees to a minimum. Thankfully, there are a wide variety of high-quality vendors available, and while it may take some research on your part, you should be able to find such a merchant account provider.
You must find a provider who can give you a high-risk payment gateway. This means that your vendor should be able to manage these transactions for you, helping you to set up a payment gateway either online or in and brick and mortar stores. This vendor should be able to handle the integration of multiple transactions, including checks, eChecks, and other credit card processing.
Depending on your specific needs, you may need additional services. For example, many businesses – including online pharmacies – are expanding well beyond the standard needs of commerce and credit cards. Acceptance with cryptocurrency has become much more common and depending on your business plans and the types of products that you sell, you may find yourself in a position where you need to learn how to accept crypto payments.
One of the most critical things for any online pharmacy merchant account is the integration of and merchant account provider software with your already existing software tools. This integration is necessary on multiple levels:
- If you run a business that has a retail component, you’ll need software to develop that integrates smoothly with your already existing retail software. For example, does your merchant account vendor process payments both online and in-person? What is the difference in fees for online transactions, in-person transactions, and card-not-present transactions?
- Depending on the drugs you sell, you may need to specifically track where your drugs go and how many units you move. You may also need to retain records for any prescriptions that you fulfill. As such, your merchant account vendor must figure out ways to help you maintain all of this information. You may also need to create your own API that helps you track all of this information, and this means that your merchant account vendor must have the necessary experience to help you do so.
- How does your merchant account software integrate with your accounting software? Does it do so at all? The goal of any merchant account must be to make your life easier, so if a vendor requires extra work on your part when it comes to tracking income, expenses, and taxes, you need to find a new vendor.
What Else Should I Look For?
Finding a high-risk merchant account vendor is obviously vitally important for the success of your business, but you should also find out what sort of industry-specific experience a vendor may have. Have they worked with online pharmaceutical businesses in the past? If you’re a high-risk business, are there things you can do to get you out of that category and into a less expensive one?
Integration of online and retail sales is complicated, particularly when your business considers the need to use physical equipment. When you’re selecting a merchant account vendor, do they also provide you with the appropriate point of sale equipment? If the answer is yes, what are the fees for purchase and set-up? If equipment breaks down or gets stolen, will they provide replacements? Will they upgrade the device? And how does all of this integrate with your overall accounting software?
What additional services can your merchant account vendor provide to you? Can they also help you manage gift cards or loyalty programs? If you sell other goods SNAP or EBT covers, can your merchant account vendor process those payments for you?
It’s also worth asking whether or not your merchant account vendor can help you do more than just process credit cards. Do they offer you some sort of chargeback protection? Can they help you weed out fraud? Can they work with you to help you reduce your risk exposure? Do they have robust security measures that can help ensure you’re only shipping medication to individuals who have a valid prescription? If you’re looking to expand your business, do they have access to financing for credit tools that can help you get the resources you need to fund such an expansion? If you have a brick-and-mortar store, can they help you process checks? Can they help you purchase ATMs for your customers? If yes, what are the fees associated with those ATMs?
As you’re unquestionably aware, managing an online pharmacy isn’t easy. You have to manage a variety of regulations, promote your business, care for a heavily regulated inventory, and more. The last thing you need to worry about is making sure that your credit card company is giving you a fair deal. At Bankcard, we believe our role is to empower you and your business to help you succeed. If you’re looking for high-quality merchant account services, we’re here to help. Contact us today, and learn more about how we can partner with you to help your business grow and thrive.