Want to accept credit card payments at a pharmacy?
It sounds like an easy task. But here’s the problem…
Pharmacies are high-risk merchants by definition. You cannot get past that classification by banks and payment processors. Moreover, to make things worse, there are strict healthcare regulations, HIPAA requirements, as well as the nature of the pharmaceutical products being sold.
Approval is the only way a pharmacy can continue its business in this digitalized world. On the other hand, the related regulations are subject to change.
The good news?
Knowing what processors look for and how to meet those requirements dramatically increases your approval chances. Pharmacies that know how to prepare for approval are getting their accounts at the shortest time while others fail to do so. And some fail to prepare for the long-term post-approval maintenance.
Table of Contents
Why Pharmacies Are Classified As High-Risk
Visa and Mastercard classify the pharmacy merchant category codes 5122 and 5912 as high-integrity risk. As a result, acquiring banks and processors enforce additional scrutiny on these pharmacy merchant accounts.
But why exactly?
- Regulatory Complexity. Pharmacies are under strict healthcare regulations. This involves the HIPAA requirements as well. As a result, there are many compliance layers that processors must verify for account approval.
- Chargeback Exposure. The pharmacy industry has one of the highest chargeback rate growth levels. Chargeback Gurus research found that drug stores and pharmacies were among the retail segments with the highest chargeback rate growth, according to their study, from 2021 to 2023. As insurance billing disputes and delivery problems occur, these pharmacies became liable for chargebacks.
- High-Value Transactions. Prescription drugs usually have high costs, increasing the transaction amounts. The high ticket size means higher risks for processors.
- Online Operations. Pharmacies may encounter card-not-present risks if they offer online ordering. Transactions of this kind usually have higher fraud rates than in-person sales.
- Product Liability. Dispensing medications that cause adverse health reactions increases liability concerns. This can lead banks to be more careful with pharmacy accounts.
Understanding how to get approved for pharmacy merchant account processing should begin by acknowledging the risk factors here. Processors need to see assurance that the pharmacy can handle these risks.
The Financial Regulations Affecting Pharmacy Payments
Financial regulations related to pharmacy payments processing are ever-changing, and those that regulate pharmacies need to be updated continually.
What pharmacy owners need to know here…
- HIPAA Requirements. The Health Insurance Portability and Accountability Act 1996 are the US national standards on protecting patients’ health information through payment transactions. In December 2024, HHS published modified retail pharmacy standards for electronic transactions to clarify retailers’ responsibilities for compliance with certain provisions. Businesses have until April 2028 to be fully in compliance.
- Card Network Rules. Visa, for example, makes pharmaceutical-related MCCs register their products. The cost is currently $500 annually and needs to be renewed every year. While the processor usually handles the registration process, they still pass the registration fee to the business.
- State Licensing. Pharmacies need licensing by the pharmacy boards in states where they operate. Processors are expected to verify the licenses during approval, while account termination will be the consequence of lapsed licensing.
- Controlled Substance Regulations. Pharmacies that dispense controlled substances will be exposed to additional DEA requirements. Processors will evaluate a pharmacy’s compliance history with these requirements when underwriting.
The game continues to change by the day, and knowing what lies ahead is half the battle. Mastercard’s 2025 report projected that global chargeback volume is expected to increase 24% by 2028 from the volumes in 2025.
Key Requirements For Approval Success
Getting a pharmacy merchant account approval should not be taken lightly. There are numerous and thorough evaluations on different factors to be done by processors during underwriting.
Business documentation. It is required to have the following when it comes to the specific business documentation: detailed information including the structure of ownership, a business history, financial statements, and all pharmacy licenses. Complete documentation will result in the approval process being finalized in a short time.
Compliance track record. Processors also need to see a long history of compliance with federal and state pharmacy regulations. It is clear that any previous violations or regulatory issues become immediate red flags during a review.
Chargeback management. Demonstrating an ability to identify and prevent chargebacks already happening will also support approval chances. Processors want to see that the pharmacy already has some sort of monitoring and management of disputes.
Secure payment infrastructure. A 100% HIPAA-compliant payment system is not negotiable here. The payment gateway and the terminal must pass the healthcare security standards on protecting customer information.
Processing history. Processors also look at the previous payment processing statements in order to identify risks. It is critical to show a clean history and a low chargeback ratio to support the application.
Some additional tips to make sure the approval is successful…
- Work with processors that are high-risk pharmacy accounts specialist
- Be transparent with the products being sold and the business model
- Prepare refund and privacy policies before starting the application
- Fraud prevention tools should already be in place before applying
Approval time frame can vary depending on the underwriting. But the majority of pharmacy merchant accounts can be approved within 3 to 7 business days when the necessary documentation is complete and thorough.
How To Maintain Compliance After Approval
Approval is a half a battle. Long-term compliance is what is going to keep an account active and not closed down in the most expensive ways.
- Monitor chargeback ratios. Card networks have thresholds in place for acceptable chargeback levels. Failure to remain below these thresholds will place the account under a monitoring program and possible termination. Most processors require ratios below 1%.
- Stay current on regulations. Healthcare payment regulations change on a regular basis. The recent modification to the HIPAA retail pharmacy standard will require your attention towards the new compliance dates between 2024 and 2028.
- Maintain licensing. Keeping all pharmacy licenses up-to-date is a very critical as well as necessary task while notifying the processor of any changes is even more. Lapsed licensing is one of the most common causes for account closure.
- Implement fraud prevention. Address verification, CVV matching, and 3D Secure authentication are vital fraud prevention measures that should be already in place to minimize the number of fraudulent transactions. These not only protect the pharmacy business but also its customers.
- Document everything. Retaining the records of all compliance efforts, training, and policy updates will be an inevitable task for a reason. The very reason is that this information can be extremely handy if questions were to be raised during an account review.
- Regular account reviews. Periodic reviews of processing statements and chargeback data are also important. Problems are easier to be avoided if they are identified earlier, and chances are they won’t become something that will threaten the account itself.
Bringing it together
Getting a pharmacy merchant account approval is challenging yet possible. The purpose of this guide was to provide you with information on the following points.
Pharmacies face high-risk classification due to a combination of factors including the strict healthcare regulations, chargebacks, and product liability. These influence the related financial regulations that are still evolving through 2028.
Approval success requires the possession of the complete documentation as well as the compliance history. The long-term active account is only possible when the business maintains that same compliance.
Key takeaways:
- Pharmacies are high-risk due to regulations, chargebacks, and product liability
- Financial regulations are continuing to change and that will be through 2028
- Complete documentation and compliance history are what is driving approval success
- Ongoing compliance keeps active accounts in the long-term
