If your law practice accepts online payments, do you fully understand the processing fees for each transaction?
If not, you could be throwing money away.
“Enabling your clients to pay their bills is the lifeblood of your firm’s success, and the cost of collecting these payments can add up over time,” writes Andrew Cardy for the Clio Blog. “Even small differences in the fees that processors charge can have a major impact on your bottom line.”
Even more important: if you don’t pick the right processing platform, you could be putting your law license at risk.
“Choosing the right legal payment processor is critical,” Cardy writes. “For lawyers, this means ensuring that you choose a payment processor that is not only safe and secure, but also handles IOLTA (interest on lawyers’ trust accounts) trust compliance. Maintaining IOLTA trust compliance is imperative since you must keep earned and unearned funds separate in accordance with trust accounting rules. Accordingly, the legal payment processing software you use must accept client trust payments and retainers and keep them separate from your firm’s operating funds. The trust account should also be protected from all third-party debiting, including processing fees and chargebacks.”
Read “How to Avoid the Hidden Costs of Payment Processing: What Attorneys Need to Know” on the Clio Blog.
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4-Step Due Diligence for Payment Processing
Here are fours steps Cardy recommends in his blogpost for choosing the right payment processor:
- Understand the different types of fees. “Multiple fees accompany every transaction process,” Cardy points out. “Per-transaction fees for credit cards are typically 1.5-3.5% of the transaction, though some cards may charge higher fees. Fees for eCheck/ACH transactions are typically lower, and may be up to 1.5%. Transaction fees will vary between providers, so ensure you factor this cost in when making your decision.”
- Compare pricing plans and avoid companies that charge extra fees. “As a baseline, expect any credit card transaction fees to be between 1 and 3.5% of the transaction. Though some cards will have higher rates. eCheck/ACH fees are typically lower (up to 1.5%). Some cards will charge an additional fee on top of per-transaction and monthly fees. These might be charges for processing minimum penalties or for having additional trust accounts. PCI compliance may also incur additional fees from some providers.”
- Seek transparent pricing. The simpler – and flatter – the rate, the better.
- Ask questions if you’re unsure. Per Cardy: “Does the payment processor in question integrate with your legal practice management software? Does it allow for pricing plans and trust accounting? Do you feel assured this solution is safe and secure for your clients?”
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