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Understanding Merchant Services for Medical Device and Supply Companies
Medical device and supply companies have unique needs when it comes to managing payments. From handling high-ticket transactions to navigating regulatory complexities, the industry’s requirements differ significantly from other businesses. Merchant services for medical device and supply companies involve managing credit card processing, alternative payment methods like ACH and eCheck, and handling the risks associated with these transactions.
Unique Aspects of Medical Merchant Services
High-Risk Classification: Banks often categorize medical device and supply companies as high-risk due to factors like high transaction values and stringent regulatory scrutiny. This classification can complicate the process of obtaining a merchant account.
Regulatory Compliance: Medical transactions must adhere to healthcare regulations such as HIPAA, necessitating robust data security measures to protect patient information.
Chargeback Vulnerability: The high cost of medical devices and supplies can lead to increased chargeback rates, posing financial risks for both merchants and banks.
Why Are Merchant Services for Medical Device and Supply Companies Considered High Risk?
Medical merchant services are often classified as high risk by underwriting banks for several reasons:
- High Ticket Transactions: Medical devices can be expensive, leading to higher potential losses in the event of chargebacks or disputes.
- Regulatory Complexity: Medical devices and supplies are subject to strict government regulations, which adds to the compliance burden.
- Higher Chargeback Rates: Because of the high-value transactions, chargebacks can be more frequent, particularly when products don’t meet customer expectations or compliance standards.
- Healthcare Fraud: The industry is also vulnerable to fraudulent activities, including unauthorized billing or non-compliant products, which can make banks wary of underwriting these accounts.
Given these factors, many banks categorize medical device and supply companies as high risk, making it more challenging for these businesses to secure traditional merchant accounts.
How Medical Device and Supply Companies Can Obtain a Merchant Account?
Despite the challenges, medical device and supply companies can still get a merchant account with the right approach. Here’s how to do it:
- Work with a High-Risk Merchant Service Provider: Partnering with a provider like Durango Merchant Services, which specializes in high-risk industries, is essential. These providers understand the complexities of your business and can help you navigate the process.
- Prepare Documentation: Be ready to provide comprehensive business documentation, including financial statements, compliance certifications, and a detailed description of the products or services you offer.
- Risk Assessment: Banks and processors may conduct a risk assessment of your business model and products. Having a clear compliance strategy can help mitigate concerns.
- Processing History: If you have a clean processing history with low chargeback rates, it can improve your chances of approval.
Durango Merchant Services can help guide you through this process and connect you with a payment processor that’s the right fit for your business.
What Features Are Needed in a Payment Gateway for Medical Credit Card Processing?
For medical device and supply companies, the payment gateway plays a crucial role in securing and managing transactions. Here are key features your payment gateway should offer:
- Security Features: PCI DSS compliance, tokenization, and encryption to protect sensitive data.
- Recurring Billing: Some medical services, like subscription-based home healthcare supplies or long-term patient care services, may require recurring billing.
- Fraud Detection and Prevention: Advanced fraud tools such as 3D Secure and Address Verification Services (AVS) can help reduce the risk of fraud and chargebacks.
- Multi-Currency Support: If you operate internationally, the ability to process payments in multiple currencies is essential.
- Customizable Invoicing: Invoicing tools that can be adapted to specific products or services in the medical field.
Durango Pay Gateway, NMI, Fluidpay, and Authorize.net all offer these features and more, making them excellent options for medical merchant services. These gateways provide flexibility and security, allowing businesses to offer a smooth experience to their customers while reducing risk.
The Value of ACH and E-Check Processing for Medical Firms
Offering multiple payment options can significantly benefit medical device and supply companies. ACH (Automated Clearing House) and eCheck processing are particularly useful for these reasons:
- Lower Transaction Fees: ACH and eChecks typically have lower fees compared to credit card transactions, which can be beneficial for high-ticket purchases like medical devices.
- Recurring Payments: These payment methods are also great for recurring billing, which is common in long-term care or subscription models.
- Convenience for B2B Clients: Many businesses and organizations prefer paying via ACH or eCheck rather than credit cards for larger orders, as it simplifies the payment process.
Similarly, firms like immigration services can benefit from ACH and eCheck processing, as it allows clients to easily make payments without needing access to credit cards.
Point-of-Sale (POS) Systems for Medical Device and Supply Companies
If your business operates from a physical location, like a medical supply store or clinic, having an efficient point-of-sale (POS) system is essential for handling transactions on-site. Durango Merchant Services can help:
- Integrate with Your Current POS: Whether you have an existing system or need an upgrade, Durango can integrate with most modern POS systems.
- Upgrade to Modern Technology: If your current POS system is outdated, Durango can help you upgrade to the latest technology to better meet your operational needs.
- Flexibility Across Devices: Modern POS systems can process transactions on various devices, including tablets, smartphones, and traditional registers.
By having an integrated and updated POS system, medical device and supply companies can manage inventory, process transactions faster, and improve overall customer experience.
Can Medical Device and Supply Companies Use Aggregate Services Like Stripe, PayPal, and Square?
While platforms like Stripe, PayPal, and Square are popular, they may not be the best fit for medical device and supply companies. These aggregate services often have strict risk management policies, and because medical businesses are considered high risk, your account could be flagged or even frozen for review. Here’s why this can be problematic:
- Frozen Funds: If your account is flagged or frozen, you could lose access to your funds, which can create cash flow issues.
- Limited Support for High-Risk Industries: These platforms are not designed to handle the complexities and regulatory requirements of medical merchant services.
- Higher Rates for High-Risk Accounts: Even if you manage to get approved, you may face higher processing rates than with a provider specializing in high-risk industries.
What to Do If Your Account Is Frozen, Suspended, or Closed
If your medical device or supply firm experiences account issues with stripe, paypal, square or shopify, the first step is to contact your payment processor and try to resolve the issue. In the meantime, Durango Merchant Services can help by:
- Assessing the Situation: We’ll work with you to understand why your account was frozen or suspended.
- Providing a Backup Solution: If you need to switch processors, we can quickly set you up with a new merchant account to minimize downtime.
- Preventing Future Problems: We’ll help you develop strategies to avoid chargebacks and compliance issues that can trigger freezes in the future.
How Durango Merchant Services Can Help Medical Device and Supply Firms with Credit Card Processing
Durango Merchant Services specializes in high-risk industries like medical device and supply companies. Here’s how we can help:
- Custom Payment Solutions: We provide tailored solutions for medical credit card processing, ACH, and eCheck payments.
- High-Risk Merchant Accounts: We specialize in securing merchant accounts for high-risk businesses, including those in the medical field.
- Expert Guidance: Our team will walk you through the application process, assist with compliance, and ensure your payment system fits your needs.
- Ongoing Support: We offer continuous support to help you manage chargebacks, maintain compliance, and protect your business from fraud.
Applying for a Merchant Account with Durango Merchant Services
1. Contact Us
The first step is simple—reach out to our team. During this initial contact, we’ll gather some basic information about your business, such as:
- Business Name and Structure: Whether you operate as a sole proprietorship, LLC, or corporation.
- Industry Details: Specific products or services your company offers, particularly if you’re dealing with high-risk medical devices or supplies.
- Payment Processing Needs: Whether you’re seeking a gateway for online sales, a POS system for in-person transactions, or a hybrid solution.
Our team will walk you through the initial questions to determine how we can best assist your company.
2. Submit Documentation
Once we understand your business needs, we’ll request detailed documentation to initiate the underwriting process. The following documents will likely be required:
- Business License: Proof that your business is legally authorized to operate, especially in the medical device and supply sector.
Financial Statements:
- Balance Sheets: Showing the company’s assets, liabilities, and equity.
- Profit and Loss Statements: At least two years’ worth of data, if available, to demonstrate profitability.
- Bank Statements: Typically three to six months’ worth of statements, to verify financial stability and transaction volumes.
Tax Returns: Most recent two years, both personal (if applicable) and business, to provide insight into the financial health of the company.
Product and Service Descriptions: Detailed descriptions of the medical devices or supplies you sell, particularly if you deal with regulated or high-risk products. This can include:
- Manufacturer information
- Product classifications (if regulated)
- Descriptions of usage and target customers (hospitals, clinics, consumers)
Sales Volume Projections: Monthly and annual sales projections, particularly if you expect high volumes or high-value transactions.
Compliance Documents:
- FDA Certifications: If your products require FDA approval or are subject to any other regulatory agency oversight, you will need to provide these certifications.
- HIPAA Compliance (if applicable): Proof that your payment processing system protects patient data if you’re handling sensitive medical information.
- PCI Compliance: Verification that your company meets the Payment Card Industry Data Security Standard (PCI DSS) to protect cardholder information during transactions.
- Return and Refund Policies: Banks will want to see your refund and return policies to assess how you handle customer disputes.
Business Continuity Plan: If your company deals with life-saving or time-sensitive products, providing a continuity plan demonstrates your preparedness for operational disruptions (e.g., supply chain issues, recalls).
3. Underwriting Review
Once your documentation is submitted, Durango Merchant Services will work with our network of processors to review your application. This involves a detailed underwriting process, where banks evaluate your business’s risk profile. Here’s what the underwriters look for:
- Business Viability: How sustainable and well-managed your business is, based on financial performance and the market demand for your products.
- Regulatory Compliance: Ensuring that your products are legally compliant and that your business adheres to industry regulations (e.g., FDA, HIPAA, PCI).
- Chargeback Risk: Underwriters assess the likelihood of chargebacks, which is higher in industries with high-ticket items like medical devices. They might look at your company’s policies and history of chargebacks.
- Reputation and Business Practices: A background check may be conducted to ensure that your business has no history of fraud, litigation, or regulatory violations.
The underwriting process typically takes a few days, depending on the complexity of your business and the documentation submitted. Rest assured, Durango Merchant Services will keep you informed every step of the way and work to find the best payment solution for your business.
4. Approval and Setup
Once your application has been approved, Durango will assist you in integrating the payment processing system that best fits your business model:
Payment Gateway Integration: For businesses focusing on online sales, we’ll set you up with a gateway like Durango Pay Gateway, NMI, Fluidpay, or Authorize.net. These gateways offer robust features for handling medical transactions, including secure storage, fraud prevention, and recurring billing options.
POS System Setup: If your business operates a physical location, we can either integrate with your existing point-of-sale system or upgrade it to a modern solution tailored to your needs. This might include mobile POS systems for sales reps in the field or advanced software capable of handling medical inventory and payment management.
Ongoing Support: After setup, our team remains available for ongoing support to help with payment disputes, technical issues, or any adjustments needed as your business grows.
At Durango Merchant Services, we are committed to helping medical device and supply companies thrive by offering the best credit card processing and payment solutions available. Whether you need a new payment gateway, an upgraded POS system, or expert advice on compliance, we’re here to support your business every step of the way.
