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It seems that banks are constantly coming up with new ways for us to pay bills and withdraw money. First there were paper checks, then credit cards, then ATM cards, then debit cards linked to bank accounts, and now ACH electronic funds transfers. Of course, with each new payment method comes a new set of fees passed on to ac

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

count holders and merchants. The smart merchant will weigh the pros and cons of each method with regards to safety, accountability, and processing cost, and then design her business practices to maximize profits without compromising customer service.

This article will help merchants do this by comparing two very similar paym

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

nt methods—debit card charges and bank account ACH direct-debits. It will explain how switching customers who pay with debit-cards to direct-debit transactions can significantly reduce merchant processing costs.

What is a Debit Card?

A debit card is a bank issued card that allows its user to access the funds in his a

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

count to pay for merchandise or services. A debit card acts like a credit card, and is often associated with a credit card brand such as VISA or MasterCard, with the difference being that funds are immediately deducted from the cardholders checking or savings accounts when a purchase is made.

What is Direct-Debit?

D

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

rect debit is an easy way to deduct a payment directly from a customer’s bank account. It uses the premise of a paper check but takes it to the next level with electronic funds transfer. With direct debit, the need to write paper checks is completely eliminated. Your customer simply gives you permission to take funds direct

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

y out of his checking or savings account and transfer them to yours. Direct-debit is typically used for auto-recurring billing of regular transactions, such as a monthly rent payment, so that written permission to transfer funds is needed only once and customers no longer need to write checks every month. But, it can also be u

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

ed with an Online Payment Gateway to enable your customers to purchase your products or pay their bills directly from a checking or savings account instead of with a credit card or debit card.

What are the differences between a Debit Card transaction and a Direct-Debit transaction?

Debit card transactions and direct d

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

bit transactions are at their core the same—each authorizes a transfer of money directly from the cardholder’s account to the merchant’s account. And, from the consumer’s standpoint they are exactly the same.

From the merchant’s standpoint however, they are very different. The transactions are processed through different ne

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

works, and the payment processing charges differ significantly.

Debit card transactions require the merchant to obtain a credit card merchant account and often to sign a long-term contract and pay a fee to open the account. Debit card transactions are processed through the same network as credit card transactions, and funds

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

re deposited, less a commission (known as the “discount rate”), into a merchant account. The discount rate for debit-card purchases is typically lower than for credit card purchases (This is because the bank is taking less of a risk with a debit-card that deducts funds immediately from a bank account than with a credit card.)

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

however there are some merchant processors that do not extend this discount to their clients. Typically, 2-3% of the transaction plus a 30 cent inquiry fee will be deducted from a debit-card payment and the balance will be deposited into the merchant’s account.

Direct-debit transactions use the Automated Clearing House (ACH

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

network to move funds from one bank account to another. Thus, you can use your regular business checking account for Direct-Debit transactions. You will need to sign a contract with a company authorized to manage these ACH transactions, but there is typically no long-term commitment. You will pay a fee for each direct-debi

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

transaction you process—but it is typically a flat-fee that is not dependant upon the size of the transaction. (There are some companies that do charge a percentage based fee for direct-debit transactions—you should avoid these processors!). This fee is typically less than $1 per transaction.

How much can merchants save

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

with Direct-Debit transactions?

Accepting direct-debit instead of debit-card transactions can generate significant savings for most transactions; with the rule of thumb being the larger the transaction amount the more the merchant saves. The following is a simple example using the PaySimple pricing structure:

Transac

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ion Amount: $500

Cost to process via Debit Card (MOTO rate): $10.24 ($0.29 inquiry + 1.99% discount rate)

Cost to process via Direct-Debit: $0.55 flat

Total Savings per Transaction: $9.69

Total Monthly Savings (based on 250 transactions/month): $2,422.50

Are there drawbacks to Direct-De

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

it transactions?

The largest drawback for merchants accepting direct-debit payments is that unlike debit-card payments, you will not immediately know if there are sufficient funds in the customer’s account to cover the charge. With a direct-debit, you will get NSF notification in 24 hours (far better than the weeks it ty

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

ically takes for a paper check processed by the bank). This can be a significant concern for merchants who are providing goods or one-time services at the time of payment. But, in the majority of cases, 24 hour notification is sufficient.

Another concern is that customers will not be comfortable with giving a merchant direc

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

access to their bank accounts. However, that is essentially what they are doing with a debit card transaction. The problem truly is one of education not of security or of process. Fortunately, that is an easy problem to solve. ElectronicPayments.org is a fantastic website that provides a wealth of customer education mater

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

als. Your payment processing company may also offer free marketing and educational literature that can be distributed to your customers.

The Bottom Line

Direct-debit transactions are just as safe as or safer than debit card transactions. Direct-debit and debit card funds are deducted immediately from customer accoun

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

s. Direct-debit transactions are just as simple to perform as debit card transactions, and both can be used for auto recurring payments, online payments, phone payments, and point-of-purchase payments. But, processing direct-debit transactions is significantly less costly for merchants than processing debit card transactions

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Buyer beware! Your decision for selecting a Merchant Account provider is much more important than you think! Why? Because you will rely on their service many times a day, as you take in credit card payments for your business. A lousy customer service group, a slow delivery of a replacement machine and many other potential downfalls could hurt your sales. Learn these qualifiers before selecting a merchant account provider!

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