An online pharmacy merchant account isstill encompassed to the rules and regulations of the Food and Drug Administration (FDA). For one, medicines that are considered to be “controlled” are expected not to be sold on your online drug store. Doing so could result in the business being blacklisted and ordered to be permanently closed. Many banks see this as a risk too high which results in difficulty in setting up this type of merchant account.

online pharmacy merchant account

How Does an Offshore Pharmaceutical Merchant Account Benefit You?


Every transaction made in e-drug stores are set up in a convenient way. Buyers search for the medicine they need, add them to their cart and expect their order to arrive in a short time. That said, you would need a merchant account to be able to benefit from the following:

  • Accept Credit Card Payments – as with most online transactions, the credit card payment option is expected in your online pharmacy. With an offshore merchant account, it’s easier to process credit card payments under major companies like Mastercard and Visa. This also allows long-distance purchases which increases your chance of a sale.
  • Process Multi-Currency Transactions – in terms of higher sale, being able to accept different currencies is another advantage on your end. Within your merchant account, the foreign payment is already converted at the fairest rate before it is credited to your account. Offshore accounts charge lesser fees in contrast to banks who have very steep rates.
  • Track and Manage Sales – a high number of incoming and outgoing transactions can make you easily lose track of your sales process. With an offshore account, you can easily view every on-hold, declined, returned, and successful transaction in one go.

What You Need to Know About Starting a Pharma Merchant Account

While high-risk merchant brokers are more lenient towards high-risk merchant accounts, you are still required to procure several requirements. Every provider has their own process and requirements but generally, you may be asked to do or provide these things:

  • A valid business license for your online pharma
  • A copy of your business model
  • Valid identification of all business directors
  • Business or personal banking statement for the last three months
  • Voided check or a good standing letter from your current bank
  • Proof of ownership of the business

Sometimes, high-risk account brokers will also require the following:

  • Detailed description of medications available in the store
  • A licensed pharmacist to review the order before delivery
  • Import-export permits from suppliers
  • Other necessary licenses required by the government

The timeline for the processing of online merchant accounts also varies per provider. It can take as early as 48 hours to get your merchant account cleared, or it can also reach a couple of weeks.

Medications That Are Prohibited in Online Pharmacies
As mentioned previously, you can’t sell medicines that were tagged by the FDA as prohibited. Here are some of the popular drugs that can’t be sold on your e-drug store.

  • Morphine
  • Codeine
  • Oxycontin
  • Fentanyl
  • Vicodin
  • Acid
  • Depressants
  • DXM
  • Hallucinogens
  • Inhalants
  • Opium
  • PCP
  • Stimulants

The Biggest Roadblock to Online Pharma Merchant Accounts


pharma merchant accountOne of the biggest problems faced by online pharmacies is the high chargeback rate. What contributes to this are incidents when a customer is dissatisfied with the medicine they bought and file a chargeback. However, even customers who simply changed their minds may also file for a chargeback citing a different reason. This is a common form of friendly fraud in the industry which puts you and your supporting bank to a very difficult position in the long run. This can result in a big loss in your profit and investment.

High chargeback rate also reduces your credit score. It makes your business look bad to many banks and credit card providers. This is why many credit card companies often stir clear from online pharmacy businesses. On the brighter side, there are industry partners that can help you acquire a pharmacy merchant account with less effort. Offshore merchant accounts are the solution to this dilemma.

What Can You Do To Lower Down Chargeback Rates?
Every problem comes with its own solution and for chargeback rates, there are a few for you to consider.

  • Offer a return policy – as opposed to customers filing chargebacks, it’s more favorable on your end to accept customer returns instead. Train your customer service in handling returns especially with the shipping process. You can also set this up ahead on your online platform so customers can easily do this before they could even think about filing a chargeback. A return label also puts up a good impression that their satisfaction is always thought about.
  • Give away incentives – errors in orders are inevitable in any business even in online pharmacies. What you can do to appease your customers is to offer a rebate on their next purchase, a small gift card, or offer free shipping. This makes up for the mistake which might even turn into a profitable business opportunity.
  • Set up an efficient customer service center – having a trained team to accommodate customer complaints as soon as they are addressed is highly important to keep your chargeback rates low. There is a narrow period before your customers file in the chargeback and within that time, you need to ensure that whatever their concern is, it is handled well.

The limit to chargebacks, even to e-commerce pharmacies, is a maximum of 1 percent. Considering that this high-risk industry has a very high chargeback rate, it is really vital for you to come up with ways to keep your rate down. A steady rate keeps your business safe from revenue loss and even account closure.

There are many factors that are taken into consideration when a business is applying for a pharma merchant account.  Many banks and payment processors have exited the industry due to the high risk nature of online medication sales.  Some merchants have even decided to forgo credit and debit cards and opted for online pharmacy check processing services. Though pharma echeck processing is smaller in comparison to payment cards, it can be an affordable and secure alternative.

Finding payment processing solutions for online pharmacies continues to be difficult for some merchants.  Understanding many of the underwriting requirements and common problems surrounding businesses can help merchants looking for approval.  Merchants searching for an online pharmacy payment processor are encouraged to contact Allied Payments for more information.  Our team is more than happy to discuss the different options available to pharma businesses today.