Medical Discount Buying Merchant Account:
Voted the #1 High Risk Merchant Account Provider, Soar Payments is focused on providing comprehensive and affordable merchant accounts for discount buying services, including medical savings cards and similar negotiated discount medical, dental, prescription drug and veterinary plans for individuals.
Our goal is to be the undisputed best discount buying service merchant account provider for your company, whether that’s for medical, dental, vision, veterinary or other healthcare discount membership related business.
To achieve that, we have to cater to the unique needs of different medical discount businesses and understand their issues. To that end, we’ve created the below “medical discount membership credit card processing cheat sheet”. It’s designed to give medical discount membership companies a single resource to obtain all the information they’ll need to obtain a medical discount membership merchant account for phone and eCommerce sales, and succeed long term when accepting debit and credit card payments.
Table of Contents
About the Medical Discount Membership Industry
Getting and Setting Up A Merchant Account
A Note From Our CEO
Adam CarlsonSoar Payments, CEO
It’s a great time to be in the medical discount membership industry.
With US healthcare expenses exploding, customer demand for more affordable dental, medical and vision care is stronger than ever.
At least that’s what I hear from some of the medical discount membership card businesses we provide merchant services for. Despite consumer demand for the services, however, there are still a number of issues that successful medical discount membership companies must navigate, particularly when it comes to their credit card processing. Such as:
The good news is, these problems are all solve-able. It took me about 8 hours of research, but I’ve put together the following “Medical Discount Membership Merchant Account Cheat Sheet”. On this page you’ll find everything a business owner offering medical, dental, vision or other healthcare discount program needs to know to navigate these issues.
It’s my sincere hope that this article is useful to you (because I’ve put a lot of time into it). And if you need help with credit card processing for your medical discount membership company, we’d love to help with that too.
P.S.If you own an medical discount membership company, and want reliable and affordable credit card processing we can help you (in fact, medical discount membership businesses are one of our specialties). Click here to apply online.
MEDICAL DISCOUNT MEMBERSHIP INDUSTRY CATEGORIES:
A medical discount membership business that is applying for credit card processing, will need to select an appropriate SIC and NAICS classifying code for their business. Here’s a brief summary of common choices for medical discount membership businesses:
SIC Code: Businesses in the medical discount membership industry generally fall into one of the following SIC codes:
- 8011: Offices and Clinics of Doctors of Medicine.
- 6399: Other Insurance Carriers (Not Elsewhere Classified Often used by medical discount membership merchants across all industries.
- 7299: Miscellaneous Personal Services, not elsewhere classified A catch-all for personal services that do not neatly fit into another SIC category
- 7389: Business Services, Not Elsewhere Classified A catch-all for business services that do not neatly fit into another SIC category
The medical discount membership industry’s use of SIC codes is fairly inconsistent, as there is no neat fit for discount membership cards or other services, in the same way as exists for NAICS classifications.
See the entire list of SIC codes here.
NAICS Code: Businesses in the medical discount membership industry would generally use one of the following NAICS codes:
- 621111: Offices of Physicians (except Mental Health Specialists):
- 812990: All Other Personal Services A catch-all category for a wide range of other car related businesses, including discount buying services.
- 524128: Other Direct Insurance (except Life, Health, and Medical) Carriers For other medical discount membership providers.
NAICS codes for the medical discount membership industry are fairly consistent in using 812990, with the exception of some medical discount membership businesses with a narrow industry focus, or which are directly affiliated with a particular medical provider, and thus choose to select an NAICS code that more closely matches the specific healthcare provider they are directly affiliated with.
See the entire list of NAICS codes here.
Getting a Discount Buying Service Merchant Account
How do I get a merchant account for a discount medical buying service?
Getting a merchant account for a business in the medical discount membership industry, whether it be discount medical savings cards, discount prescription drugs (Rx), dental, orthodontic, veterinary, or any other medical discount membership related business isn’t as easy as talking to your local bank or their credit card processor. That’s because medical discount membership companies are considered high risk, and as a result only a limited set of credit card processors accept this industry type.
Therefore, if you’d like credit card processing for a discount buying service, you’ll need to apply with a high risk merchant account provider (like Soar Payments).
Once you’ve found an medical discount membership merchant account provider, the application process is straightforward. Simply apply online, and include with your application a few additional documents (for example, a copy of the owner’s drivers license, recent business bank statements, a voided business check) and that is it. The credit card processor’s underwriters will then review the application, and upon approval, you’ll be able to accept credit, debit and ACH payments. Depending on how you want to take payments (in person, over the phone, or eCommerce) will determine what equipment or logins your merchant account provider will send you.
Why can’t I just go to PayPal for my medical discount buying company’s credit card processing?
The short answer is that because medical discount buying services are considered a high risk industry, neither payment aggregators (like PayPal, Square, or Stripe), nor low risk credit card processors (like Wells Fargo or TransFirst) will accept your business. They specialize in low risk businesses, and do not accept businesses in high risk industries. In part, that’s because they don’t have the underwriting or risk management procedures in place that high risk credit card processors do.
Unfortunately, however, many of these low risk companies won’t tell you that right away. That’s either because the salesperson you’re speaking with doesn’t know their processor’s underwriting guidelines, or if its a payment aggregator like Stripe or PayPal, because they don’t do underwriting on the front end, but only once you start actually accepting payments. So typically, you’ll find out between a week and a couple months into accepting credit card payments that you’re terminated as a merchant, and in some cases can have your funds frozen.
In any case, if you want to save yourself the time and hassle of applying and promptly getting dropped from a low risk processor (and sometimes having your funds frozen in the interim) apply directly with a high risk merchant services company that accepts companies that offer medical discount buying services (such as Soar Payments).
Why are medical discount membership merchant accounts considered high risk?
First things first, nobody is saying that your business isn’t legitimate, or legal, or well run. Rather, your business is considered high risk purely because you operate in a high risk industry. And it’s considered a high risk industry for a few reasons that have nothing to do with your individual business. Specifically…
- Historically High Chargeback Rates: As a whole, membership services generally, and discount buying services specifically have a higher than average chargeback ratio. That’s because anytime a customer is billed monthly on their credit card, there will be some small percentage of people who don’t use the service that month and decide that they don’t want to pay for the service despite a refund policy that clearly states that they cannot have a refund.
- Recurring Billing: Most discount buying service memberships rely on monthly recurring billing. Again, some percentage of customers will decide in any given month that they don’t want the service anymore and will initiate a chargeback rather than call the business to stop the charges. That is an unavoidable characteristic of the industry and billing type.
- Small Business Dominated: Healthcare discount membership businesses, whether their focus is on dental, vision, veterinary or medical tend to be dominated by small businesses. Small businesses typically don’t have the name recognition, or procedural protections in place to protect themselves against chargebacks, and as a result generally accrue a higher chargeback ratio.
- Regulated Industry: A number of discount membership businesses have run afoul of regulators by attempting to pass themselves off as health insurance. As a consequence of these few bad actors, there is a perceived heightened risk of reputational harm to a sponsor bank, as well as regulatory responsibility to a credit card processor to process payments on behalf of discount membership businesses, particularly in healthcare.
How do I know who accepts my specific type of medical discount buying service business?
Virtually no low risk merchant service providers, and even a number of high risk merchant account providers do not accept medical discount buying membership businesses. But, generally speaking, if you operate a legal, responsibly run, well organized medical discount membership business, there will be a number of credit card processors and sponsor banks that are interested in your business. The easiest way to begin your search is to ask others in your industry who they use for credit card processing, or do a web search specific to your industry, such as “medical discount buying service merchant account” to find a short list of providers. Then apply with each.
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Question? Ask Away. We’re Ready to Help.
If you’ve got a question about a payment gateway, chargeback management tool, medical discount membership merchant account or anything related to accepting payments, and want some advice, shoot me your question directly: AdamCarlson@soarpay.com.
Ready to Get Started?
Ready to start accepting payments at your medical discount buying service, Click to begin a free online application.
Medical Discount Membership Platform Integrations
Many medical discount buying services use a CRM to manage their customers, have a particular website shopping cart they’d like to use, or other piece of software or platform they’d like to make sure integrates with their new merchant account.
Typically, if you have a specific piece of software, CRM or shopping cart you’d like to use, the key question is what payment gateways that software is pre-integrated with (e.g. Authorize.net, NMI, etc). You can usually find that information on the software provider’s website or by calling their customer service. Then you simply need to make sure that your high risk merchant account provider also integrates with that payment gateway. At Soar Payments, we keep a list of all of our shopping cart integrations, and integrated plugins on our FAQ Page. But given how many different software platforms and CRMs exist, it is a good idea to just speak with a salesperson directly.
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Everything Your Medical Discount Buying Business Needs to Know About Chargebacks
The primary difference between a medical discount buying service that successfully accepts credit cards for years, and one that ends up having their merchant account terminated after a few months is how seriously they deal with chargebacks. Chargebacks are the #1 reason that merchant accounts are terminated in the medical discount card industry. Unfortunately, trying to address chargebacks once they’re already upon you is often too late, so it’s important to have a plan from the get-go.
Why do medical discount membership businesses get a lot of chargebacks?
Medical Discount Buying Services get a higher than average number of chargebacks because of their unique exposure to so-called friendly chargebacks.
Friendly Chargebacks: “Friendly Chargebacks” is an industry term that refers to situations in which an actual cardholder orders your service, but the initiates the chargebacks (as opposed to someone who has had their card stolen). Typically, in the context of medical discount buying services it is because the customer feels that they were misled as to the quality or nature of the service, or because the customer simply doesn’t want the service any longer and finds it easier to cancel via a chargeback than with the company directly.
What is a Chargeback?
A chargeback is a situation in which the cardholder contacts their credit card issuer and disputes a charge. Typically, the cardholder has 6 months to dispute a charge, and can do so for a large number of reasons. For example, that they didn’t actually authorize the charge, that their card was stolen, that the service wasn’t as described, that they never received the service, etc.
Once a charge has been disputed, the credit card issuer will notify your discount buying service credit card processor, who will freeze the funds in question. As the business owner, you’ll then need to prove that the charge was legitimate, otherwise you lose the dispute and the funds are returned to the customer. If you win the dispute, by contrast, you keep the funds.
My business is legitimate, so I don’t need to worry about chargebacks, right?
Unfortunately, this is the approach many medical discount membership businesses take, and it’s almost always the wrong approach.
Your business doesn’t just get chargebacks because it’s illegitimate. Rather, raw vast majority of chargebacks are initiated against legitimate quality businesses by fraudsters and customers attempting to circumvent the business’ refund policy. Thus, the question isn’t whether you will get chargebacks, but how many and how effectively will you manage them.
A failure to address chargebacks will of course lead to lost revenue, but additionally your business will incur fines from the credit card processor, and you can potentially have your discount buying service company’s merchant account terminated due to excessive chargebacks.
How do I keep my chargeback ratio low?
Taking some basic steps on the front end to address the potential for chargebacks can have dramatic effects in terms of reducing the rates of chargebacks that your business faces, and better ensuring that you win any chargeback disputes that do arise. Here are a few best practices that every discount buying practice should follow:
- Disclose Terms of Service:
One of the most common points of dispute between customers and discount buying services is that the scope of the service promised was not as delivered. In order to eliminate chargebacks, and win those that do occur under this reason code, make sure that the terms, conditions, and limitations of the services or card offered are transparent to the customer before and after their purchase.
- Send Clear Order Receipts:
Many recurring billing businesses send an email receipt once, when the first order is made, and never send another bill again. If the customer happens to lose that original receipt, they may find it easier to simply initiate a chargeback rather than call you to cancel the service. Therefore, it’s always a good idea to send a receipt when a credit card charge is made.
- Use Clear Payment Descriptors:
For small businesses without great name recognition, it’s quite common for customers to not recognize a charge on their credit card statement, and immediately think that it’s fraud and initiate a chargeback. Make sure that your payment descriptor (what shows up on customers billing statements) is clear, straightforward, and includes your customer service phone number so that if the customer has any questions your phone number is the first one they reach for.
- Integrate Chargeback Alerts:
A chargeback alert is a service your business can enroll in that will notify you when a customer has initiated a chargeback. Effective in 30-40% of cases (due to issuing bank participation rates) if you provide the customer with a refund in these instances the chargeback will disappear and you won’t incur any additional fines, fees, have the chargeback affect your chargeback ratio, nor have to deal with the chargeback process. .
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Need a Medical Discount Buying Service Merchant Account?
We’ve Got You Covered.
Soar Payments provides ACH, debit and credit card processing services to discount buying services including medical discount cards, dental, vision, veterinary or other healthcare discount membership related business. So when you’re ready, we’re ready.