For the last twelve months, many independent pharmacies have struggled over the decision of whether to register their pharmacy under the 90% Rule, or invest in an IIAS certified point-of-sale.  For one reason or another, many pharmacies opted for the 90% Rule.  It seemed like a logical choice.  No expensive point-of-sale, no major changes, just a little complicated paperwork and it is back to business as usual.  For some, this has worked out.  For others, FSA card declines have left many independent pharmacies scratching their heads.  Why isn't the 90% Rule working? 

The first problem is that card issuers are not required to accept 90% Rule pharmacies.  That means if the pharmacy has done everything right, they still may not be able to process any given FSA card.  Certain areas are going to be more affected by this than others.  If there is a large plan or employer who uses an issuer that does not accept 90% merchants, then 90% pharmacies will see a lot of declines.  Unfortunately, there is not much that a pharmacy can do about this.

A common problem that pharmacies can do something about is the SIGIS paperwork.  When registering for the 90% Rule with SIGIS, the pharmacy is asked for foreign numbers such as MasterCard ICA, Visa BIN, and Card Acceptor IDs.  So, the credit card processor was called and provided the numbers.  Here is the problem: the numbers that SIGIS has on file must exactly match with those that the pharmacy's credit card processor is submitting.  Leading zeros are a common culprit: 0123 and 123 are not the same to a computer.  If a pharmacy cannot accept any FSA card this is the place to start looking.  Many credit card processors have few pharmacies as customers, so their knowledge in this area can be less than helpful. 

A rare problem for pharmacies is that their processor may have them listed as the wrong kind of merchant.  If a processor has the pharmacy's account with a hardware store indicator for example, instead of a drug store the pharmacy will receive declines on FSA cards.  For a pharmacy to process using the 90% Rule, their processor will need to have the correct merchant code on their account (this is true of IIAS stores as well). 

Finally, remember that even when a 90% pharmacy does process an FSA card, the pharmacy's customer will still have to manually submit their receipts for that transaction.  This can be a pretty big inconvenience and can put the 90% pharmacies at a competitive disadvantage.  The only answer to this is an IIAS compliant point-of-sale.

The 90% Rule has not been the painless option that many hoped for.  Although it is not without its hurdles, some independents can make it work - once they have crossed all their t's and added their leading zeros.

Jeremy Manchester, MBA
Business Development Manager
Liberty Computer Service