A merchant account is a business account established on a Visa/MasterCard/Discover processing network which gives your business the ability to accept credit or debit cards from clients.
Unlike a standard merchant account, LawPay offers account options structured to handle the unique requirements of an attorney-client transaction. When your client pays by credit card, funds are immediately separated into trust and operating accounts as required by the ABA Code of Professional Conduct, and most state bar guidelines on trust accounting. All processing fees are deducted from your operating account, thus keeping the balance of your trust account intact. This processing method eliminates the risk of commingling client funds.
Depending on how you want to accept client payments (in-person, over the phone, or through your website), there is a processing fee from Visa and MasterCard. In addition, you may have the expense of either a credit card machine or use of a web-based terminal to run your transactions. LawPay recommends budgeting 2.5% to cover all fees associated with processing payments on a monthly basis. (See program plans for details).
From the date of a transaction, deposits generally take 24 – 48 hours to credit to your bank account. Weekends and banking holidays are not counted toward deposit time frames.
The processing fee or “Discount Rate” is the percentage deducted or “discounted” from the amount of the transaction. The Discount Rate covers the cost to move money electronically through “Interchange.” Interchange is a global processing network used as an exchange rate between the card-issuing bank and the card-acquiring bank.
With LawPay, all processing fees are deducted from the law firm operating account. For example: if your firm accepts a retainer by credit card, the full dollar amount of the retainer is deposited into the appropriate trust account. Processing fees for that particular transaction is then deducted at the end of the month from the firm operating account. Total processing fees for the month are deducted as a one-time debit from the operating account.
When a charge is run, the terminal or software “dials into” a global processing network to access cardholder information and receive authorization for the charge. A successful card authorization confirms that funds are available for the amount you need. The transaction fee covers the communication cost to authorize, capture and subsequently settle a transaction to your account.
In 2013, Visa, MasterCard and the card brands changed their policy to allow for credit card surcharging at the merchant level. However, be aware specific rules vary by state. Check with the card brands to determine if your state prohibits surcharging (Visa Surcharge Guide). Many law firms simply build the additional cost into their fees as a standard business expense. This is generally recommended as the proper and more professional way to handle the business expense of processing payments.
A chargeback is the reversal of a sale or transaction. A chargeback is different than a return, and occurs when a transaction is disputed by a cardholder. Cardholders may dispute a transaction through their card-issuing bank if they believe the charge was charged in error, service was not received or the law firm did not have their authorization to charge the transaction. With proper procedures in place, chargebacks can be avoided in your firm. LawPay recommends adding authorization language to your client engagement letters and maintaining separate card authorizations on file. In the event of a chargeback, attorneys can generally have them reversed by showing this documentation, along with verification that the work was performed for the client.
LawPay can generally work with any existing credit card machine you currently have by reprogramming your system. Reprogramming normally takes 10-15 minutes and you can begin accepting charges immediately. There is no charge to reprogram equipment.