You should be accepting credit card payments. Clio’s 2015 Legal Trends Report observed a 35% reduction in the time it took to receive payment compared to waiting for a check. You may think that the way you process payments now is just fine so why fix it? Because the way we pay for things have changed. A little over 10 years ago, checks were the biggest form of noncash payments in the US, but in 2007, according to the Federal Reserve, the combination of debit cards, credit cards, and ACH payments overtook checks. Many of your clients are already paying online in other places. Four out of five households with internet access opt to online bank, and this isn’t only millennials– more than 70% of online or mobile bill payers are 35 years of age or older. By not collecting on invoices immediately, you’re effectively extending your client’s credit.
Every credit card processor will provide you with a “payment gateway.” A “payment gateway” is what clients use to submit their credit/debit information. It can be a physical swiper or an electronic form. Which type of account you have then determines where that information from that gateway goes. A merchant account is a one-to-one relationship. It will briefly hold the client’s money and then transfer it to your firm’s bank account. Processors made specifically for attorneys are usually merchant accounts. In fact, some legal-specific credit card processors handle trust accounting, depositing the transaction the correct account right away and only deducting fees from your operating account. Examples of these types of processors include LawPay, LawCharge, and MyCase Payments (only available with the MyCase practice management software).
In 2011, a new type of account came on the market – the aggregator account, making way for all sorts of new processors you may have heard of: PayPal, Stripe, Square, and Authorize.net. Aggregator accounts merge the money from your transaction with the money from transactions of other businesses and then move it to their own merchant account. This process reduces their fees from the credit card companies that they then theoretically pass on to you with lower transaction fees. In my comparison chart, however, you can see that merchant accounts have lower fees per transaction, with LawPay having the lowest published transaction fee (see column M for a test of running a $1K transaction). Double click the image to see all the data in Google Sheets.
If you decide to accept credit card payments, it’s important that you remain PCI compliant by following the PCI guidelines for protecting credit card data: 1. Build and maintain a secure network; 2. Protect cardholder data; 3. Maintain a vulnerability management program; 4. Implement strong access control measures; 5. Regularly monitor and test networks; 6. Maintain an information security policy. Every year you should submit a self-assessment of your compliance to your acquirer bank. To make the process easier on yourself, select a processor that is PCI Compliant on their end as well as yours. LawPay actually includes a free guide and support through the assessment. Other processors are PCI compliant but do not offer the same level of support LawPay does. PayPal Payments Pro actually puts the onus on the merchant in order to take on higher risk merchants. Consider if the benefits of using PayPal Payments Pro outweigh the headache of maintaining PCI Compliance. You can learn more about PCI and take a look at sample self-assessments, check out PCI Security Standards Council’s Document Library: https://www.pcisecuritystandards.org/document_library?document=pci_dss
For more information, see our CLE “Accepting Online Payments Ethically and Securely” at http://bit.ly/2mpiCcB
*Bankruptcy attorneys and debt collectors: be diligent in reading the fine print when selecting a credit card processor. Stripe considers your practice too high risk, but there are plenty that don’t.