Guest Column | April 1, 2009

Score Big With Flexible Spending Account (FSA)-Related Sales

By Matt Taylor, CEO, Mercury Payment Systems


Consumer Flexible Spending Account (FSA) debit card use is expected to grow 85 percent in the next year. Yet, many merchants will not be able to accept FSA cards after July 1, 2009, unless they meet new Internal Revenue Service requirements.

Employer-sponsored FSA benefits programs, also known as HSA (Health Spending Accounts), provide participants with pre-tax debit cards for purchases of qualified medical expenses. The growing popularity of the cards presents sales opportunities – as well as compliance challenges – for pharmacy and grocery retailers, POS developers, and resellers.

What steps do merchants need to complete in order to accept FSA cards after the July 1 deadline? First, pharmacies and grocers must use an FSA-compliant POS system. Next, they must complete a self-assessment questionnaire and become certified by SIGIS (Special Interest Group for IIAS Standards). The merchant’s POS developer and acquirer (Mercury Payment Systems, for example) reviews and submits the questionnaire to SIGIS for approval.

What makes a POS system FSA-compliant? First, the POS system needs to be able to identify FSA cards. The system does this by referencing a BIN file of all FSA/HSA cards (Mercury hosts this file, although most processors require the merchant maintain it). The POS system then identifies FSA-eligible purchases from the Inventory Information Approval System (IIAS). The total eligible purchase amount is sent to the payment card issuer for approval.

Consider the benefits of FSA card acceptance for grocery and pharmacy POS developers, resellers and merchants.

FSA platform integration helps POS developers and resellers:
• Attract new merchants
• Retain existing merchants who require FSA-compliant POS systems
• Enable merchants to satisfy growing consumer demand for FSA/HSA card use
• Increase pharmacy and grocery market share

FSA card acceptance helps merchants:
• Attract more customers by providing flexible payment options
• Retain existing customers who prefer to use their FSA/HSA benefits cards
• Expand into healthcare and pharmacy segments

Consumer benefits include:
• Convenience
• Instant access to pre-paid funds
• No out-of-pocket expenses at time of purchase
• Avoid hassle of filing for reimbursement

It is critical for pharmacy- and grocery-focused POS solution providers to become equipped with FSA/HSA compliant processing technology and SIGIS program expertise. The January 1, 2008, grocery deadline has long passed, and the July 1, 2009, pharmacy deadline is quickly approaching.

Your integrated payments partner can help. Mercury Payment Systems offers dedicated integration support, certification guidance for participating merchants, and unique FSA platform features for POS developers and resellers. Contact Mercury or your integrated payments partner to learn more today.