Best Practices for Credit Card Acceptance

Best Practices for Credit Card Acceptance

     The challenge with accepting credit cards for payment is that attorneys are held to a strict set of ethical and accounting guidelines to safeguard client funds and prevent the commingling of earned and unearned fees.  As a result, attorneys must be careful to structure their credit card payment arrangements to ensure compliance with state guidelines.  To begin credit cards attorneys must open a merchant account.  The risk when opening a traditional merchant account is that processors are unaware of the rules for attorneys and can seldom differentiate the requirements of a law firm from those of a retail establishment or even another professional service.  That is why due diligence is necessary when establishing a merchant account.  The best practices described below can help you to evaluate your merchant account and realize the benefits of credit card acceptance.

     The best practice is to have separate merchant accounts for credit card retainers and earned fees.  A firm may then deposit payments accepted for retainers or unearned fees into a trust account and deposit payments accepted for earned fees, invoices or past due balances, into an operating account.  A Law Firm Merchant Account follows this practice and provides law firms with deposit flexibility. 

     The second best practice to remain compliant with guidelines is to deduct processing fees for both transaction types from the operating account.  This process keeps the balance of the trust account intact.  In addition, processing fees from both earned and unearned transactions are not taken out of the individual deposit, but deducted as a one time withdrawal from the operating account at the end of the processing month.  Traditional merchant services are designed to deduct processing fees from the actual transaction only depositing the difference.  For example a $100 transaction with a 2% fee would result in a $98 deposit to the account.  With a Law Firm Merchant Account, the entire $100 is deposited. 

     Once a merchant account is established, the third best practice is to promote credit card acceptance through the firm’s website and marketing materials. The benefits are immediate. The convenience of credit cards can often be the deciding factor when selecting an attorney.  Offering credit cards as a payment option attracts clients and wins new business. Providing clients with an immediate payment option also eliminates the issue of “slow pay” and “no pay” clients.  Past due balances can be instantly reduced by including credit card payment as an option on billing and collection statements.

     In spite of the regulations, ensuring your merchant account is structured properly is easy.  Use the best practices described above and your firm will soon realize the benefits of credit card acceptance. 

If you are interested in the Arapahoe County Bar Association’s approved Law Firm Merchant Account program, for a consultation on your current program or to open a new account, please call
866.376.0950