As a small business owner, you know the importance of accepting credit cards. But accepting credit cards for small businesses can cause headaches, and one of the biggest sources of headaches can be chargebacks.
A chargeback is when a customer disputes a credit card charge, and the bank or entity that issued the card reverses the charge. Typically, the customer asks for their bank to return the funds for that charge to their account. This is different than a return, which occurs when a customer returns an item, and you credit their card or account for the purchase yourself. Credit card chargebacks can take place for a variety of reasons. They can take place if a person’s credit card has been stolen and charges on their card don’t match their actual expenses. A chargeback can take place because of friendly fraud, as well. In these situations, a customer may not remember making a purchase, may not know how to return what they bought, or may not recognize your business name on their bank statement. Sometimes this happens because the merchant made a mistake on their end, while other times it occurs because of a customer’s mistake. Whatever the reason for them, chargeback fees can be a difficult issue for businesses. However, there are some ways to combat them.
One of the first and most important ways to reduce the chances of a chargeback is to verify your customers’ identity. Ask for an ID for in-person transactions, as well as verification codes, if applicable. For swipe transactions, require a customer’s signature. You can even take the added step of sending email receipts to your customers if it makes sense for your business.
Another way to prevent chargeback fees is by using your business or store name on transactions. This is important, because if you are using a name your customers don’t recognize on your customer’s billing statement, they may suspect fraud and dispute a transaction. Make your information clear and recognizable. Doing so will go a long way to prevent chargeback fees.
A final way to prevent chargeback fees is by making your shipping and return policies clear. Let your customers know how long items may take to ship, or how long they have to return items so that they don’t end up disputing transactions out of frustration because they didn’t receive something or weren’t able to return something they no longer want.
To a degree, chargebacks come with the territory of accepting credit cards for small businesses. But that doesn’t mean you can’t be protected. Take steps to protect yourself. Consider our suggestions for reducing the risk of chargeback fees. They can save you time, money, and headaches. And remember, if you want to simplify payment processing, consider Moolah for your needs.
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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.