If you’re in e-commerce, nothing can take the wind out of your sails like dealing with persistent chargebacks from credit card companies. Chargebacks are a form of consumer protection that means credit card companies have the power to go over your head to ensure customers get their money back if they determine that unfair or fraudulent transactions have happened. However, this necessary online protection can make accepting credit cards for small businesses a pain. In the worst case, customers can use this consumer protection structure to their advantage, a process called “Friendly Fraud.” You send the customer the product that they requested, its delivered fine, and yet they still request a chargeback, meaning you, the merchant, are left to pay for the “mistake”.
However, all chargebacks shouldn’t be viewed in this sinister light. Oftentimes simple misunderstandings are to blame; still, the last thing you want as a merchant is to create an environment where preventable mistakes continue to result in chargebacks. Here are some preventative measures to make sure you’re not putting your business in harm’s way.
The best general protection against chargebacks is great customer service. You want to avoid a situation where your customer feels like it’s too hard to reach out to you, and therefore that their only option is going over your head. Creating clear communication channels through email and phone will empower your customer to come to you with their complaint or issue, so that you can resolve it without credit card company involvement.
A great place to start if you want to protect yourself from chargebacks is to ensure that your catalog of products and services is accurate. This means that product descriptions on your website should be as detailed as possible. Additionally, extensive product photography of the highest quality will ensure that people know what they’re getting. This can minimize the desire for returns, which will in turn minimize your chances of chargebacks.
Customers are programmed to be wary of fraud. That’s why it’s important to use clear payment descriptors that are easy to recognize on your customer’s statement. You can even include a customer service number to the descriptor, so customers can reach out to you instead of going straight to the credit card company.
Duplicate transactions, such as those that happen when a customer hits the back button on their browser and resubmits the form, can put you at danger of chargebacks. Fortunately, Moolah provides the Authorize.Net payment gateway which can be set up to automatically block duplicate transactions, solving headaches for both you and your customer!
Lastly, put thought into your refund policy to make it clear, easy to understand, and fair. Nobody wants to make it easy to get a refund, but given the choice between solving the dispute yourself and suffering from a chargeback, it’s always preferable to keep the ball in your court, and make your customer happy yourself.
It’s unfortunate that chargebacks will probably remain a part of accepting credit cards for small businesses online. Still, by taking steps to clarify the transaction process as much as possible, you can ensure that you’re less exposed to friendly fraud, and that your customers feel comfortable coming to you first.
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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.