A LexisNexis study on the cost of fraud included a terrifying statistic—that every $1.00 of fraud ends up costing merchants in the U.S. $2.40!! It’s no wonder some merchants think twice, or even three times about accepting credit card payments, and which company they’ll trust to process them.
However, accepting credit cards for small business need not be as scary as all that. The benefits to your business far outweigh the risks. What’s more, arming yourself with knowledge will reduce the fear and keep you wise to the potential threats in this dynamic fraud environment.
Let’s take a quick look at a few of the most common types of fraud.
When a customer’s card doesn’t go through, merchants can actually force-authorize the card to complete the transaction. Some scammers know this, and have taken advantage of the fact. They’ll say something like, “Oh, sorry, this happens all the time,” and offer a code to override the denial. If the code is fraudulent, and the payment goes through, the business is on the hook for the fraud amount, and will be subject to costly chargebacks and fines.
To play it safe, force authorizations should always be taken with care. Make it a point to always call the issuing bank to get an authorization code.
Vendors that process large orders may be susceptible to a wire scam. The story goes like this: an order is placed, say for $5,000 of coffee. The fraudster offers to pay $7,000, and requests that the extra $2,000 be wired to a distributor, or some other scheme. When the payment doesn’t go through, the business is on the hook for any fines and fees related to the transaction, not to mention the $2k that was wired to who knows where…
Unless it’s to someone you know personally, it’s best to simply institute a “no wires, ever” policy.
There are a range of ways for scammers to profit off of gift cards. Two of the most common are skimming the numbers to create counterfeit cards, and returning stolen goods in exchange for gift cards. If you’re a smaller retailer, the second, and even the first of these may not be much of an issue. Still, offering gift cards is a convenient service for your customers, and with the proper security measures, you can do it safely. Look into digital gift card providers like gyft that may suit your needs.
As we said, fraud should never deter you from accepting credit cards as a small business. With knowledge, and the right tools at your disposal, such as a dedicated merchant account from Moolah, powered by the safety and security of Authorize.Net, fraud won’t be an obstacle to your business’s success.
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A credit card surcharge is an additional fee added to a transaction when a patient chooses to pay with a credit card. The surcharge is intended to help offset the cost of credit card processing and applies only to eligible credit card transactions.
No. Debit card transactions may not be surcharged under any circumstances, even if the debit card is processed as a credit transaction or entered manually.
Yes. Credit card surcharges may not exceed the merchant’s actual cost of accepting credit cards and are capped at a maximum of 3% of the total transaction amount, in accordance with card-network rules and applicable law.
Yes. Card networks require clear and transparent disclosure of any credit card surcharge. Practices must notify patients through appropriate signage at the practice entrance, point of sale, and anywhere payments are accepted. If payments are accepted online, the surcharge must also be clearly disclosed on the practice’s website.
Yes. Some U.S. states and territories prohibit or restrict credit card surcharging. Practices are responsible for understanding and complying with their state’s specific requirements before implementing a surcharge.
No. While Moolah provides tools and general guidance to support credit card surcharging, compliance with all applicable laws and card-network rules is the responsibility of the merchant. Moolah does not provide legal advice and assumes no liability for a merchant’s compliance.
Most major credit card networks permit surcharging when done in accordance with their rules, but additional requirements or restrictions may apply. Practices should ensure they have completed all required network notifications and disclosures prior to enabling surcharging.
Failure to comply with surcharging rules may result in card-network fines, required refunds, or other enforcement actions. Practices should ensure they fully understand all applicable requirements before applying a surcharge.
Flex does not currently offer built-in support for credit card surcharging. If a practice chooses to enroll in a surcharge plan, payments would need to be processed through Moolah’s payment platform, which is designed to support surcharging and integrates directly with Open Dental.
If you are considering introducing a credit card surcharge for your patients, it is important to understand that there are specific rules and regulations that must be followed when enrolling in and operating under a surcharge plan.
This article provides a general overview of common surcharging requirements. This content is provided for informational purposes only and does not constitute legal advice. It is the responsibility of each merchant to review, understand, and comply with all applicable laws, card-network rules, and regulatory requirements, including notification timeframes, signage requirements, surcharge percentage limits, and jurisdictions where surcharging is prohibited.
If you are unsure about the laws or regulations applicable to your practice, you should consult with qualified legal counsel. Moolah assumes no liability for a merchant’s compliance or non-compliance with credit card surcharging rules or regulations.
Transparent Communication
Card networks, including Visa, Mastercard, Discover, and American Express, require merchants to clearly and transparently disclose when a credit card surcharge is applied.
Practices must clearly notify patients of a credit card surcharge through appropriate signage placed at the practice entrance, at the point of sale or terminal, and anywhere payments are accepted. If payments are accepted online, surcharge disclosures must also be clearly visible on the practice’s website. All disclosures must inform patients that the surcharge applies only to credit card transactions.
Surcharge Limits
Credit card surcharges must comply with both card-network rules and applicable law. The surcharge amount may not exceed the merchant’s actual cost of accepting credit cards and may not exceed 3% of the total transaction amount.
Card-network rules cap credit card surcharges at 3%, meaning that if a merchant’s processing costs exceed this amount, the excess portion cannot be passed on to the patient.
Network and State Restrictions
The major credit card networks, such as Visa and Mastercard, impose specific requirements related to surcharge limits, advance notification, and disclosure.
In addition, several U.S. states and territories regulate or prohibit credit card surcharging. At the time of writing, credit card surcharging is prohibited in Connecticut, Maine, Massachusetts, and Puerto Rico. Other states, including Colorado, Minnesota, Mississippi, New Jersey, and New York, impose restrictions on surcharge amounts or require specific disclosures.
If your practice operates in a state that restricts or prohibits credit card surcharging, you must fully understand and comply with those requirements before implementing a surcharge.
Debit card transactions may never be surcharged, even if the debit card is processed as a credit transaction.
Applicability
Credit card surcharges may be applied only to credit card transactions. Other payment types, including debit cards and alternative payment methods, are not eligible for surcharging.
Regulatory Compliance
Merchants are responsible for maintaining ongoing compliance with all applicable card-network and legal requirements. This includes meeting advance notification obligations, using compliant signage and disclosures, adhering to surcharge percentage limits, and respecting jurisdiction-specific restrictions.
By following these guidelines, dental practices can implement credit card surcharging in a way that aligns with card-network rules and promotes transparency with patients. Clear and upfront communication helps maintain patient trust and supports a positive payment experience.