Investing Risk

A pharmacy merchant account is risky for several good reasons. Many merchant account services are hesitant to set up accounts for firms that sell medications online. Though this really is a global practice there are many ways in which incidents of fraud and criminal activity can be committed through such accounts. Below is actually an breakdown of the potential risks and why merchant banks frequently are reluctant to open up accounts for high risk pharmacy businesses.

Sales from Abroad

Many U.S. residents purchase their medications from online pharmacies located in other countries. This is successfully done to save cash and obtain the absolute best prices on medications. However, sales to people in the U.S. may be subject to certain regulations and those regulations may change rapidly.

Credit Card Fraud

There are lots of types of credit card fraud that could possibly occur with transactions that occur without a card swipe. One kind of fraud occurs when a charge card is stolen or the number is stolen from a valid owner. Once the owner of the card realizes the card is missing or the number is being used fraudulently, the thief may have charged thousands on the account. A different type of fraud occurs when fake credit card numbers have been produced. If there is no verification of a real account a merchant does not have any way of knowing if the number is real or not.

Illicit Sales of Medications

Those who use stolen cards or even their own cards may buy medications online to sell on the street. Various online pharmacies aren’t linked like traditional pharmacies. A customer may purchase medications from a variety of online pharmacies then turn around and sell them on the street. In the U.S. and in other countries there is a demand for illegal use of prescription medications. The online pharmacy is at risk of inquiry and inadvertently becoming a part of an illegal drug sales operation.

As with any credit card processing a service that’s designed for high risk businesses such as the online pharmacy uses several means of verification for credit card purchases. This will help to ensure the user is providing a legitimate account and is the true card holder. There are several ways of verification. The easiest way to verify and actual card number is to ask for the CVV2 code which is usually a three digit number next to the signature on the back. Verification by expiration date is also widely used. For further verification the card holder may very well be asked to supply billing information including address and phone number. This helps ensure the card holder is the user, instead of a thief or somebody who has stolen the card number. Additionally, it cuts down on the likelihood that the card will be used to make several purchases of medications to sell on the street. A purchaser who’s name and contact information is verified can be easily tracked.

There are many merchant banks that will not approve accounts for high risk businesses like pharmacies. However, there are a few that are going to and can offer protection from fraud and charge backs.