Payments · Telehealth6 min readUpdated November 3, 2026

Do PayPal and Square Allow Telehealth Services?

PayPal requires pre-approval for telemedicine; Square excludes pharmacy models built on remote consults. The exact terms, fund holds and what fits.

Nick Bonnassies, CMO at Tagada · checked against 7 sources

Article summary

Pre-approval or excluded

TL;DR

PayPal, only with pre-approval: its US policy lists "Telemedicine Services", "Prescription Items" and medical services among activities needing approval first. Square doesn't name telehealth consultations, but excludes pharmacies filling medication after an online or phone consultation, and "direct marketing or subscription offers". A clinic charging for a visit can fit; a subscription brand shipping medication doesn't.

PayPal requires pre-approval for "Telemedicine Services: Providing medical services and consultations in a remote fashion" (policy updated October 29, 2022).
Using PayPal for an activity that needs pre-approval, without it, is itself a prohibited activity.
PayPal can hold funds "for up to 180 days" if it sees a risk of liability or a policy violation (agreement updated September 14, 2026).
Square's US terms exclude pharmacies "where fulfillment of medication is performed with an internet or telephone consultation, absent a physical visit" (updated July 30, 2026).
Square "may require a Reserve for any reason related to your use of the Services".

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On this page

This guide is part of our hub on telehealth payment processing. The general guide, for any business: how to get and keep a high-risk merchant account. Processor by processor: PayPal for high-risk businesses and Square for high-risk businesses.

PayPal and Square side by side

	PayPal (US)	Square (US)
Telemedicine consultations	Pre-approval required1	Not named3
Prescription medication	Pre-approval required ("Prescription Items")1	Excluded when fulfilled after a remote consult3
Subscription offers	Not named	"Direct marketing or subscription offers or services" excluded3
Upsells	Not named	"Up-sell merchants" excluded3
Holding funds	Up to 180 days; reserves such as "10% [...] held for a 90-day rolling period"2	Reserve "for any reason related to your use of the Services"3

PayPal Acceptable Use Policy (October 29, 2022) and User Agreement (September 14, 2026); Square Payment Terms (July 30, 2026).

Fig. 1Each line of the terms, PayPal and Square side by side

Telemedicine consultationsPre-approval requiredNot named
Prescription medicationPre-approval requiredExcluded when fulfilled after a remote consult
Subscription offersNot namedExcluded
UpsellsNot namedExcluded
Holding fundsUp to 180 daysReserve for any reason related to your use of the Services

PayPal asks first. Square excludes the medication model outright.

PayPal Acceptable Use Policy and User Agreement; Square Payment Terms (US).

PayPal: pre-approval first

PayPal "requires pre-approval to accept payments for certain items and services". Three lines of its US chart cover telehealth1:

Section	Category	Wording
8	Prescription Items	"The sale of any product(s) requiring a prescription or prescription dispensing services"
9	Telemedicine Services	"Providing medical services and consultations in a remote fashion"
16	Medical Items or Services	"All services or treatment provided by a person or organization holding itself out as a provider of health-care services, including [...] all health-care services for which government licensure is required"

The chart is "not intended to be an exhaustive list", and PayPal sends applicants to its Sales team1.

Watch out

An account opened without approval is already in breach. PayPal's prohibited activities include transactions "involving any activity that requires pre-approval without having obtained said approval"1. PayPal can then hold money "for up to 180 days"2.

Lines of PayPal's pre-approval chart that cover telehealth

180 days

How long PayPal can hold funds

10%

Example PayPal reserve, held for a 90-day rolling period

PayPal's policy also prohibits transactions involving "certain controlled substances or other products that present a risk to consumer safety"1.

Square: what the terms exclude

Square's US Payment Terms list businesses that "may not use the Payment Services". Four items matter for a telehealth brand3:

Item 6
"direct marketing or subscription offers or services"
Item 8
"internet/mail order/telephone order pharmacies or pharmacy referral services (where fulfillment of medication is performed with an internet or telephone consultation, absent a physical visit [...])"
Item 13
"up-sell merchants"
Item 20
"high-risk products and services"

Item 8 describes a common telehealth model almost word for word: a remote consult followed by medication shipped to the patient. A pharmacy referral service is covered too.

Square also keeps a broad right to hold funds: it "may require a Reserve for any reason related to your use of the Services", and the reserve "may be raised, reduced or removed" over time3.

Which telehealth models fit

Model	PayPal	Square
Clinic charging a one-off virtual visit	Possible after pre-approval1	Not excluded by name3
Membership or treatment plan billed monthly	Possible after pre-approval1	ExposedTo "subscription offers" (item 6)3
Consultation plus medication shipped to the patient	"Prescription Items" approval too1	Excluded (item 8)3
Funnel with stacked upsells	Pre-approval still applies	ExposedTo "up-sell merchants" (item 13)3

Card networks don't add a telehealth program on top: Visa's integrity risk program names pharmacies (MCC 5122, 5912), not telemedicine4. Visa's subscription rules still apply to memberships, including a reminder at least 7 days before a trial ends and online cancellation5. Tagada follows Visa and Mastercard rules and the laws that apply to payments.

If you already take payments with PayPal or Square

Check what you sell against the lines above. A remote consultation on PayPal without approval is the riskiest case1.
Ask for approval in writing (PayPal Sales team) before volume grows1.
Separate the medication. Let a licensed pharmacy charge for it, move it to an underwritten account, or run on a telehealth stack with storefront, doctors, pharmacy and payments: charging the consultation and the medication separately.
Open a second route so renewals don't stop if funds are held: payment routing for telehealth companies.
Move saved cards properly if you switch: switching payment processor without losing cards.

Based on PayPal's and Square's terms and Visa's subscription rules.

For the full list of what underwriters ask: how to get a telehealth merchant account approved.

How Tagada helps

Routing and a vault you keep, next to PayPal and Square

TagadaPay brings routing and a vault you own, with "enhanced review for regulated verticals"7: "Every transaction is scored against your live MID network in real time."

Routing across TagadaPay and processors such as Stripe, NMI and Airwallex, with a cascade to another processor when one is down or times out
Your vault, portable: "Switch processors without re-onboarding customers."
Fraud filters: native 3DS2, device intelligence and a rules engine
Apple Pay and Google Pay at checkout

Building the whole telehealth brand? With Tagada Rx, "Independent clinicians review every case before any charge", payments run "hold · capture on approval · rebill on ship", and a "Licensed US pharmacy, ships direct to the patient"6. US patients only, by selection.

Apply for processing

Routing and a vault you keep, next to PayPal and Square

Updated on November 3, 2026

Nick Bonnassies

CMO at Tagada

CMO at Tagada. Before Tagada, Nick built direct-to-consumer brands that generated over $115M in sales, raised over $25M in crowdfunding and sold two of them. He also works as a fractional CMO on marketing operations and AI systems.

Frequently asked questions

Can I use PayPal for my telehealth business?

Only after pre-approval. PayPal's US policy lists "Telemedicine Services" and "Prescription Items" among activities that need approval, and using PayPal for them without it is a prohibited activity. Contact PayPal's Sales team before you go live.

Does Square allow telehealth?

Square doesn't name telehealth consultations, but its US terms exclude pharmacies or pharmacy referral services where medication follows "an internet or telephone consultation, absent a physical visit", plus subscription offers in direct marketing. A subscription brand that ships medication doesn't fit.

Can PayPal hold my telehealth funds?

Yes. PayPal can hold money "for up to 180 days if reasonably needed to protect against the risk of liability or if you have violated our Acceptable Use Policy". It can also set a reserve, such as 10% held on a 90-day rolling basis.

Can patients still pay with PayPal if my processor is elsewhere?

That depends on your processor and checkout. Some processors offer PayPal as a wallet on your own checkout; the PayPal account rules above still apply to the merchant receiving the funds. See payment methods for telehealth companies.

Sources

Checked November 3, 2026

TagadaPay

Keep PayPal as a button, not your only telehealth processor

Tell us what you sell and how you sell it. Each application is underwritten, and approval is not guaranteed.

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01Tell us what you sell and how
02Underwriting reviews your business
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