Over the past year, California, New Jersey and New York have passed laws to protect consumers from surcharges that merchants charge to cover expenses such as credit card processing fees. With the introduction of these laws and others, veterinary practices are feeling the pressure to comply and strike a balance between maintaining transparency with clients and sustaining their business operations.
In states like California, businesses must create one price for goods and services that includes all mandatory charges, such as non-voluntary gratuities and charges for employee health care benefits. Consumers can seek damages of at least $1,000 from violators. In New Jersey, merchants must limit credit card surcharges to the cost of processing a payment.
Businesses frequently encounter substantial and avoidable annual costs imposed by credit card processors. Processors can also impose penalties for recurring payments and missing data, further increasing the financial burden on businesses. In 2022, U.S. merchants paid $160.7 billion in card-processing fees, a one-year increase of more than 16%.
Some processing fees are unavoidable as they are the base cost of accepting payments, but others might be added to increase a processor’s profits. To combat rising fees without switching providers, merchants can employ several strategies, starting with negotiating a rate reduction. Practice owners also should monitor credit card statements and disclosures to identify potential rate increases.
Not every veterinary practice has the resources to check monthly statements. Therefore, another option is to leverage industry experts to identify unnecessary fees and negotiate on the business’s behalf.
Veterinary practices that assess surcharges should be aware of these two factors:
- Transparency: Disclose surcharges to a client at the point of sale. The fees must comply with state and card issuer regulations.
- Debit cards: While surcharge laws vary by jurisdiction, one thing remains the same nationally: Levying a surcharge for the use of a debit card is illegal. The takeaway for businesses is to treat debit cards like cash and train staff members to recognize the difference.
An alternative to adding a surcharge fee to veterinary invoices is to offer a discount on goods or services paid for in cash. This method removes the processor from the equation but requires clients to carry money.
Practice owners considering the adoption of a surcharge policy must make sure to fully understand the credit card brands and their states’ regulations. In addition, taking the time to identify negotiable processing fees is a frictionless way to reduce costs and enhance revenue.