What is IIAS regulations, SIGIS, Flexible Spending Account Cards and What They Mean to Your Business

In 2007, the IRS mandated that to continue to accept flexible spending cards, an Inventory Information Approval System had to be in place beginning January 1, 2008 for all retail stores that did not fall under the Merchant Category Codes (MCC) that define typical drug stores and pharmacies. This meant that the larger retailers including supermarket and warehouse chains had to have an IIAS system in place by the first of January 2008 or risk losing business to independent drug stores.

The IRS mandated that typical drug stores and pharmacies that fell under MCC 5912 (and a few other similar codes) had to have an IIAS system in place by January 1, 2009 if they want to continue to accept flexible spending cards (continuing to compete with the supermarket and warehouse chains). This one-year grace period gave the POS software providers and the pharmacy community a chance to get a system in place that would meet the IRS requirements.

Today, pharmacy and drug stores that fall under MCC 5912 (and others) are able to process flexible spending cards just like they process a credit card. POS vendors, credit card gateways and processors are continuing their efforts on the necessary certifications. New recommendations and industry standards continue to be released, including a revised EPL (Eligible Product List) where many medicine type items were removed and are now unavailable for purchase with a flexible spending card unless filled as a prescription. Pharmacies that do not have an IIAS system in place and have not been classified as a 90% merchant with their credit card processor will have flexible spending cards declined when swiped through their systems. Currently, there is no way to have an IIAS system in place without a POS system. The third party card swipes that reside beside electronic cash registers are still not IIAS compliant.

The Abacus POS system has passed the IIAS certification and is a member of SIGIS.


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