During the time being in the payment service provider business I came through a lot of cases where Merchants pretended to sell legal Pharmacy products, also called non controlled drugs. In the early beginning of 2003 the card association’s regulations changed due to many Online Merchants in the Pharmacy business sold controlled drugs behind their main websites, which defiantly isn’t allowed. MasterCard was the first of the big 3 credit card companies that stopped processing for Online Pharmacies due to the fact they wasn’t able to control the many online pharmacy websites nor the payment services providers which handled the payment transactions.
Visa decided to still deal with this type of business and asked the merchant to provide legal opinions from a lawyer or notary, this was mend to protect them self from getting merchants processing credit card payments for websites selling controlled drugs and to back up their bag if something goes wrong.
First it looks like the business was in the process to be “cleaned” from Online Pharmacy websites which won’t play by the rules. At this time it was still possible in some cases to obtain a Mastercard credit card acceptance, and some Acquiring Banks around the World seemed not to follow the global regulations by the card associations because there was good money to earn while processing for Online Pharmacies selling non controlled and controlled drugs. However a few years later it wasn’t possible any longer since the Card Association including Visa and Mastercard started to issue huge penalties to those Merchant’s and Merchant Service providers which breached the regulations, fines in the range of USD 25.000 to USD 150.000 per incident.
Today it is only possible to obtain a Merchant Account with Visa credit card acceptance, some Merchant Account- and Payment Service Providers do still pretend to be able to open Merchant Accounts for Online Pharmacy’s which include Mastercard credit card acceptance, those are fake, or they hide those transactions and code them as something else than what it is, Online Pharmacy.
Sometimes it is strange, since on one side the Card Association has to deal with their preferred Payment Service Providers to tell them what is allowed and which isn’t, and on the other hand the payment service provider’s have to tell the merchants what they can sell and not, this looks as a good way to regulate the entire business. But since there is so much money involved in processing Online Transactions for business which are strictly forbidden or require license to sell, then some Payment Service Providers and Acquiring banks look to involve them self in this business as long as no one ask questions and the merchants processing their credit cards don’t get caught by the Visa Monitoring program or they face massive chargebacks.
Also I have seen cases where the bank allowed to process for a certain merchant business in the first round and later on changed their mind, but they didn’t notify the merchant nor the payment service provider, no, what they did, was to issue huge fines, which was pretended to be passed on from the Card Association for violating their regulations, fact was, sometimes it was true, but the payment processor marked up the penalties amount so they got great money out of it, where in other cases it was just the payment processor which had to bite in the grass because they got caught.
In anyway, than above are some of the reasons for why it has become that hard to place Online Pharmacy merchants with real Merchant Accounts through real and honest Acquiring Banks.
The “old fellows” on both sides know that and continue to fight the battle for the money, which leaf in some cases good and honest Online Pharmacy merchants without a solution to process credit cards or they get burned.
I wrote this post because I think it is time to bring some light on the real World, various forums are full of stories that people on both sites got burned because they got fooled into a business which wasn’t what it say it is. Fact is, the people that scream loudest often don’t are honest people they self. This is of course not the no.1 rule, but reading between the lines it is often the case.
Somehow it is strange since the Acquiring Banks and the Payment Service providers often also get burned and often make huge losses but they don’t say a word about it. In my opinion it looks like they calculate the risk and often the losses make it up with the profit they earn, that’s also the same for the Merchants selling Online Pharmacy’s they know what they are doing, but the risk and the money they potential can lose isn’t that much compared to the profit, but if they get caught they scream.
I guess this will bring some comments and raise some questions which you are more than welcome to post and hopefully we can get the opinions and answers from both parts around the table.
Visa decided to still deal with this type of business and asked the merchant to provide legal opinions from a lawyer or notary, this was mend to protect them self from getting merchants processing credit card payments for websites selling controlled drugs and to back up their bag if something goes wrong.
First it looks like the business was in the process to be “cleaned” from Online Pharmacy websites which won’t play by the rules. At this time it was still possible in some cases to obtain a Mastercard credit card acceptance, and some Acquiring Banks around the World seemed not to follow the global regulations by the card associations because there was good money to earn while processing for Online Pharmacies selling non controlled and controlled drugs. However a few years later it wasn’t possible any longer since the Card Association including Visa and Mastercard started to issue huge penalties to those Merchant’s and Merchant Service providers which breached the regulations, fines in the range of USD 25.000 to USD 150.000 per incident.
Today it is only possible to obtain a Merchant Account with Visa credit card acceptance, some Merchant Account- and Payment Service Providers do still pretend to be able to open Merchant Accounts for Online Pharmacy’s which include Mastercard credit card acceptance, those are fake, or they hide those transactions and code them as something else than what it is, Online Pharmacy.
Sometimes it is strange, since on one side the Card Association has to deal with their preferred Payment Service Providers to tell them what is allowed and which isn’t, and on the other hand the payment service provider’s have to tell the merchants what they can sell and not, this looks as a good way to regulate the entire business. But since there is so much money involved in processing Online Transactions for business which are strictly forbidden or require license to sell, then some Payment Service Providers and Acquiring banks look to involve them self in this business as long as no one ask questions and the merchants processing their credit cards don’t get caught by the Visa Monitoring program or they face massive chargebacks.
Also I have seen cases where the bank allowed to process for a certain merchant business in the first round and later on changed their mind, but they didn’t notify the merchant nor the payment service provider, no, what they did, was to issue huge fines, which was pretended to be passed on from the Card Association for violating their regulations, fact was, sometimes it was true, but the payment processor marked up the penalties amount so they got great money out of it, where in other cases it was just the payment processor which had to bite in the grass because they got caught.
In anyway, than above are some of the reasons for why it has become that hard to place Online Pharmacy merchants with real Merchant Accounts through real and honest Acquiring Banks.
The “old fellows” on both sides know that and continue to fight the battle for the money, which leaf in some cases good and honest Online Pharmacy merchants without a solution to process credit cards or they get burned.
I wrote this post because I think it is time to bring some light on the real World, various forums are full of stories that people on both sites got burned because they got fooled into a business which wasn’t what it say it is. Fact is, the people that scream loudest often don’t are honest people they self. This is of course not the no.1 rule, but reading between the lines it is often the case.
Somehow it is strange since the Acquiring Banks and the Payment Service providers often also get burned and often make huge losses but they don’t say a word about it. In my opinion it looks like they calculate the risk and often the losses make it up with the profit they earn, that’s also the same for the Merchants selling Online Pharmacy’s they know what they are doing, but the risk and the money they potential can lose isn’t that much compared to the profit, but if they get caught they scream.
I guess this will bring some comments and raise some questions which you are more than welcome to post and hopefully we can get the opinions and answers from both parts around the table.
