Creating an online pharmacy store is like hitting two birds with one stone:
You fulfill your entrepreneurial dream while getting the satisfaction of helping people lead a healthier and better life.
Setting up an online pharmacy is centered on providing a broad choice of non-prescriptions over-the-counter (OTC) drugs, giving prescriptions, delivering in time and making your patients’ lives easier.
Online Pharmacy: An Underexplored Industry
Online pharmacy store is largely an under-exposed industry even today.
In the year 201, prescription drugs made $158 billion online in the US alone. When compared to the entire pharmacy market, estimated at a little over $100 billion, online sales only stand a mere 0.15 percent of the entire pharmacy industry.
This proves that online pharmacy is a huge untapped potential.
Startups are bringing in several changes in order to introduce various levels of value additions.
For example, while most online pharmacies require their patients to submit a prescription online, some startups already arrange to have the prescription collected physically from the patient’s locations.
Apart from this value addition, this method should allow pharmacies to better verify the authenticity of the prescription.
Reasons Why People Buy Medicines Online
- Cheaper Prices: The online pharmacy seller may be from anywhere in the world. The medication may be more affordable and cost-efficient, especially if it is from developing countries. Pharmacies from Philippines, Thailand, Australia, and Canada are famous for cost-effective medicines.
- Ease of Purchase: People don’t need to travel and buy medicines online. Just a simple tap on their phone and it can be delivered right to their home. This saves both money and time.
- Faster Order Processing: The online payment processing of online pharmacies are straightforward, saving you time in getting change or any other issues related to cash flow.
- Anonymity: Sometimes people hesitate to tell a pharmacist about their medicinal needs. For instance, a young man might be too embarrassed to ask for an erectile dysfunction medication. For online pharmacy, you can buy anonymously and buy all the medication you need with confidence.
Guidelines for Opening an Online Pharmacy Merchant Account
When a pharmacy merchant decides to launch an online pharmacy site, they should acquire a pharmacy merchant account to receive debit/credit card payments from their clients. Because these accounts will handle a majority of the pharmacy’s financial transactions, it needs to belong to a reliable institution. It should not only process the payments in time but also provide security protection of the pharmacy store.
Since an online pharmacy needs to open a high-risk pharmacy merchant account, they need to follow certain guidelines.
- First, they need to ascertain their exact requirements from a debit/credit card processing solution. This needs to be done by assessing the processing requires in addition to the volume of processing since some providers place limits on the volumes.
- When designing a pharmacy website, a merchant needs to be realistic about the expenses. These expenses include high fees incurred for opening a high-risk merchant account. These should be taken into consideration especially while putting forth your profits projections.
- A comparison between the different providers should use the TT-time tested method of choosing the best provider. An important yardstick when comparing is the TT-time taken for them to reply to a simple query sent by a customer.
- After choosing a provider, the online pharmacy merchant needs to prepare to come fort all personal and financial details about himself and the company. Also, they need to read the document provided to them in order to avoid confusion and misunderstandings later.
Features of an iPayTotal Online Pharmacy Merchant account Solution
Here at iPayTotal, we provide a customizable and ideal merchant account solutions for any legal pharmacy business. Our pharmacy merchant account features:
- Real-time payment processing
- Weekly payouts
- Easy to use Virtual terminal
- No volume restrictions
- Support most popular shopping carts
- Low processing fees
- Support multiple currencies
- Transaction fraud scrubbing
- Repeat or recurring billing
- Hosted payment page and API integration
- A detailed report of chargebacks, refunds, sales, and fund settlements
Approval Timeline for A Pharmacy Merchant Account
The time it takes for an online pharmacy merchant account is approved will depend on the type of solution you choose.
- Domestic internet pharmacy merchant accounts can take up to 2 weeks.
- Offshore startup internet pharmacy merchant account with or without payment processing history can take 5 business days up to 2 weeks’ time.
List of KYC Documents For an Online Pharmacy Payment Gateway
Here is a list of the required documents for an application of an online pharmacy merchant account. Take note that the list of KYC documents requires may be a bit longer than the following.
- Vendor/Supplier Agreement
- Business License
- Business Plan
- Copy of Address Proof of Owners
- Copy of National ID of all Owners
- Utility Bill of all Directors
- A non-expiring user id and password of the website
- Cancel check or a Letter of Good standing From Their Corporate Bank
Transaction Rates For an Online Pharmacy Payment Gateway
For US-based merchants, the rate of transactions ranges from 5 percent to 10 percent. For those outside the US, the rate can go from 10 percent to 13 percent.
Keep in mind that most of the processes charge a per item fee. This can go up to $ per transaction. Also, the processor may charge a fee for insufficient fund transactions as well as returns.
Is There a Rolling Reserve For an Online Pharmacy Merchant account?
Each high-risk business needs to accept a rolling reserve. And this is particularly true for online pharmacies merchant accounts.
Most online pharmacies need to pay 5 percent to 10 percent of the rolling reserve. In some cases, it can go as high as 20 percent. This rolling reserve aids the payment processing company in paying for any future chargebacks.
Challenges in Obtaining An Online Pharmacy Merchant Account
Getting medicines online is now available. As per statistics, the global online pharmacy market is expected to reach $130 billion by 2023.
An Online pharmacy will need a merchant account as well as payment gateways in order to do business easily. With credit or debit card processing accounts, internet pharmacies can grow universal.
However, the Online Pharmacy Industry is a high-risk business. Thus, it is hard to get an approval for a pharmacy merchant account. The sole reason is due to the rejection of banks and merchant account service providers that has the tendency to give the business frequent chargebacks.
This increased risks of chargebacks and refunds can make a lender too cautious in approving an application for an online pharmacy merchant account. And it’s not like they do not want to give you service, but they need to be cautious about their money.
However, you can convince them to trust you in having lower volumes of chargebacks. Show them your sales, credit card history and chargeback track records to win their trust.
Why Online Pharmacies Are High Risk?
First of all, it is related with an individual’s health. Any item or product that human consumes gets more analysis from government regulators than any other products. This means that there is a high requirement for these products in order to make it into a virtual or even an actual store shelf.
Also, it is because of the very nature of the industry. The online, notorious sale of narcotics.
In addition, online pharmacies usually draw high chargeback rates and friendly frauds that make acquiring banks cautious of taking a monetary risk.
In Online Pharmacy Merchants, there are kinds of chargebacks:
- Friendly Fraud: A customer purchases medicine online with his or her credit card, received the medicine, then slyly notifies their credit card issuer that they never received their order.
- Customer Dissatisfaction: When a customer purchases on the online pharmacy and dissatisfied with the product, rather than contacting the merchant for a refund, they directly contact the credit card issuer and file a chargeback.
Lawsuits are another issue for an online pharmacy merchant. If you’ve ever seen ads for law firms that look for patients who took specific products, these firms claim that the medication causes serious side effects.
Regardless of the truth, the idea that medication is creating health issues can push patients to act. They will want a refund if they took the drugs.
In such cases, the pharmacy will face an investigation from the credit card provider. While the provider looks into the claims, the online pharmacy will have thousands of dollars to hold. Consumers like the ability to ask for refunds. However, this process can provide a lot of stress for merchants.
How To Maintain A Long-Term Online Pharmacy Merchant Account
This is not easy, but possible to do.
First, you will need to void high chargebacks and stay within the required chargeback limits. In general, a chargeback ration needs to be below 2 percent. Otherwise, there’s a high chance of your account shutting down.
Next, you need to always work in the guidance of government and FDA rules. This should make sure that you follow lawful procedures and keeping your account safe.