Credit card spending has more than tripled in the last decade. For merchants accepting credit cards, that means billions of dollars in processing fees. While processing may be big money, very few businesses understand the ins and outs of the industry or the issues they should be aware of when selecting their service.
Software Integration Issues
Many practices use a point-of-sale solution with integrated software. Typically, these software companies work exclusively with one processor, which can make it challenging for a business to secure optimal rates on their own.
Another major issue can be the software itself. If you aren’t running the most recent upgrade (which may not be automatic and require an opt-in for install), all the information required by the processor at the time of the transaction may not be shared, resulting in additional charges that can really add up.
Chargebacks
A chargeback happens when the credited amount from the initial charge to your business checking account is reversed. The issuing bank reverses all or a portion of the transaction amount to your acquirer/processor, citing a violation of Payment Card Networks rules or regulations as the reason for the chargeback. This often occurs frequently for businesses who have a monthly membership program. Other reasons for chargebacks include suspected fraudulent activity with the card, non-receipt of the product or service, or cardholder disagreement regarding the quality/receipt of merchandise.
Managing chargebacks and engaging in representment can significantly reduce your expenses and improve your ratios, but these processes demand a considerable amount of time and resources. If you’d like to do so, check if your processor has a chargeback dispute manager tool.
Respond or Be Fined
In the past, merchants could disregard a response request, essentially defaulting to accepting the chargeback. No longer! To expedite the process, Visa has introduced time constraints. Failure to respond promptly will result in fines.
Unclear Guidelines Around Surcharges
Some business owners have turned to cash discounts and surcharges to cover increases in processing costs, passing the cost to their customers. The guidelines and laws surrounding these programs are unclear, ever-changing, and vary by state and area. Many states cap the percentage of a transaction merchants can charge and the surcharge itself is often set up incorrectly, leading to math errors and overcharging. There are serious tax implications and the possibility of fines in these cases, not to mention insurance constraints.
Be sure to sign up for a registered surcharge program that only passes the fee on credit cards and enlist the help of a vigilant auditing service or work with an expert who can help decipher these confusing statements and negotiate lower fees.
PCI and HIPAA Compliance
Though HIPAA compliance covers medical and personal data, it does not cover credit card payment information. While the specific data they pertain to varies, there is some overlap between HIPAA and PCI in implementation.
Every merchant that stores, processes, or transmits cardholder data is responsible for its protection. The Payment Card Industry (PCI) Data Security Standard (DSS) was created to help protect consumer data. The good news is that it’s easy to become compliant by using a PCI-compliant hosting provider. Europay, MasterCard, and Visa (EMV) chip cards are an additional way to protect card-present transactions.
Medical practices must remain wary, and PCI compliance should never be ignored. Not only will the fines negatively affect your bottom line, but not becoming compliant could bankrupt your practice and ruin your reputation should there be a breach.
How To Remain PCI Compliant
To ensure PCI compliance, you must implement the proper security policies, procedures, and staff training. You can start by auditing your merchant statements, which will show noncompliance via a penalty fine.
Other simple steps include changing your user account passwords on a regular basis, using a third party to monitor your network security, and reviewing your physical security measures such as employee training and information technology (IT) infrastructure.
Protecting the Interests of Your Business & Your Customers
The ever-evolving landscape of credit card security and compliance underscores the need for constant vigilance to safeguard your financial interests. Increasing awareness leads to savings and less stress down the line and empowers business owners to navigate the credit card payment ecosystem with greater confidence
Third-party auditors are often the best resources for understanding the credit card processing ecosystem, as processors often hide fees and make calculation errors, needlessly confusing monthly statements. It’s also normal for them to raise rates three to four times per year. Without due diligence and knowing how to read these statements, fees add up quickly.
Find out if Merchant Advocate can help your business with a free analysis.
Merchant Advocate is an independent expert that saves businesses money on credit card processing WITHOUT switching processors. They understand the healthcare industry and can help you get the best rates and fees. There are no upfront costs for our services, as we are paid out of the savings achieved for you—at a special CAP member rates.
Merchant Advocate is a new participant in the CAPAdvantage program, CAP’s suite of no-cost or discounted practice management products and services for members. For more information, call 888-645-7237 or email CAPAdvantage@CAPphysicians.com.
Learn more about additional CAPAdvantage products and services at https://www.capphysicians.com/practice-management-services#capadvantage.