Why It Pays to Accept Credit Cards
Credit and debit card acceptance is an essential practice management tool that is often overlooked as a means
to increase revenue and cash flow. Many clients, including prospective clients, prefer the convenience of
paying with credit or debit cards as opposed to checks. Opening a merchant account for your firm is a simple
process and immediately gives more control of your receivables. Why turn away a prospective client who
wants to use your law firm’s services and has the means to pay promptly?
CASH FLOW 101
Once considered taboo by attorneys, accepting credit cards for payment is allowing a growing number of law
firms to benefit from immediate cash flow. It also helps eliminate “the check is in the mail” syndrome and other
common delay tactics. With most merchant accounts, credit card payments are available to you within 24-48
hours. Clients depend on your firm for assistance with legal matters, not a credit line. It makes fiscal sense to
let the Visa and MasterCard banks manage credit lines, handle collections and potential late payments.
Accepting credit cards saves time, frustration and energy in order to do what attorneys do best…practice law
and help clients.
LAW FIRMS AND CREDIT
For the most part, law firms do not have an approval or ‘underwriting’ process when accepting new clients.
They generally do not review credit history, check credit scores or report late payments to major credit
agencies. As a result, attorneys do not have a clear view of a client’s ability to pay. Every time an invoice goes
unpaid or a payment is late, the reality is you are extending credit to your clients putting your receivables at
risk. From a consumer and client perspective, a legal bill is one of the easiest expenses not to pay on time.
The simple fact is banks do underwriting, attorneys don’t. Take advantage of the banks underwriting
department. If a Visa or MasterCard bank does not approve an individual credit line, then a law firm certainly
should not extend the same credit on their own.
MERCHANT ACCOUNT BASICS
If you are considering credit card services or already accept credit cards in your firm, make sure the credit card
processing company you choose understands the specific needs of a law firm. Most law firms prefer to accept
payment in a professional manner. Law firms do not have a check-out lane, do not need high speed systems
and find asking a client to enter their pin number into a credit card machine is not conducive to the manner in
which they run their office. As such there are many custom options available to law firms which include web-
based programs and specific terminal programs designed for attorneys. You will find fees for a merchant
account range from 2 to 3% of the transaction depending on the type of card used.
SEPARATING EARNED AND UNEARNED FEES
One key feature to consider when opening your merchant account is the ability to separate earned and
unearned fees when accepting credit cards. In order to stay in compliance with the American Bar Association
and most state guidelines for credit acceptance, a merchant account must correctly separate earned and
unearned fees into operating and trust accounts, thus preventing the commingling of funds. Most importantly, a
compliant merchant account enables an attorney to designate which account should be used for withdrawals of
all processing fees.
PAYMENT AUTHORIZATIONS ON FILE
Once your merchant account is established, implement new procedures to take advantage of the service. One
of the best ways to control receivables is keeping a payment authorization form on file for every client. Avoid
the hassle of chasing down delinquent payments by providing a credit authorization form with all letters of
engagement. A credit authorization form gives your law firm permission to charge a client’s credit or debit card
for a certain amount. You can also arrange to automatically bill any past due balance over 30, 60, or 90 days to
the client’s credit card on file. In addition, adding an option to pay by credit card on your monthly invoices will
greatly reduce late payments.
WEB SITES AS PAYMENT CENTERS
Consider expanding the use of your Web site. By simply adding a “Pay Bill” link, your firm can offer clients a
convenient and immediate way to pay. In our ecommerce world, people are very comfortable with online
payments Clients can go online any time and simply click a button to pay for their legal services. You may
also include a “click to pay” link in monthly e-mails to each client. To view an example of a simple bill payment
link, visit www.teaselaw.com.
PROCEED WITH CAUTION
Finally, ensure you have the proper procedures in place to handle such transactions. This includes compliance
with trust account guidelines, proper documentation for chargeback prevention, and basic security procedures
to protect cardholder information.
One of the most common concerns with credit card acceptance is the risk of a chargeback, which occurs when
the cardholder files a dispute with his or her credit card issuing bank. To successfully defend an unfounded
dispute, your law firm must prove two things: the work was performed and the client gave his or her permission
to charge the credit card to pay for that work.
Proving that your law firm’s services were provided is often the easier part. Clearly documenting and tracking
every minute of work performed is a standard part of your operating procedures.
Surprisingly, where law firms often fall short is in obtaining a client signature for a credit card transaction. If you
currently accept credit card payments, review your process and ensure you would be able to provide key
documentation needed if a charge was ever questioned.
In addition to documentation, you must have a procedure in place to handle and store client credit card
information. All card information should be kept under lock and key, with access provided to authorized staff
members only. Card information should never be stored or shared electronically, including via e-mail.
Common sense should dictate when client information may be at risk. You should give credit card data the
same level of confidentiality afforded to other sensitive client information. (For more detail on card security, visit
the PCI Security Standards Council Web site at www.pcisecuritystandards.org.)
THE BOTTOM LINE
A merchant account can be the secret weapon to resolving payment issues. It provides payment flexibility as
well as convenience. In addition, offering credit cards as a payment option can attract clients and win new
business. Now you can spend less time chasing down collections and more time practicing law. The next time
a prospective client attempts to pay with a credit card, just say yes!
Affiniscape Merchant Solutions, the exclusive provider of the Law Firm Merchant Account, professional
payment solution for attorneys and their clients. For more information, visit www.affiniscape.com/OhioBar.