‘Squaring’ Away New Credit Card Payment Solutions for Legal Fees
Tips on how to accept credit card payments from clients.
Several years ago I considered accepting credit card payments from clients, but the process seemed so daunting. It required setting up a merchant account at a bank, contracting with a credit card company, fussing with complex accounting systems, and confronting questions about retainers, invoices, and client authorization for payment. In my area of practice there are very few bounced checks, and so long as I was vigilant with regard to collecting retainer payments in advance, I didn’t need to bother with credit cards.
Then, about two years ago, the question came to a head in an unavoidable way. I met with a new client and she said, without any sense of apology, that she no longer had any checks and couldn’t pay me except by credit card. I called one of my local colleagues who runs a practice similar to mine, and she gave me the name of the magic elixir that would promptly remedy my ailment: Square. Within a few days I was all set up to go with the credit card processing service. I had my Square reader, a working account linked to my bank account, and I received my first payment, from that same client who had inspired my conversion.
And quite a conversion it has been. Last year more than 50% of my income came through the Square credit card system, and my hunch is that the percentage will be even higher this year. I’ve processed well more than $200,000 in fees through this system, with only one small dispute—more on that later—and not a single technical or accounting glitch. Yes, it has cost me around $5,000 in fees, but that’s a small price to pay for the ease of getting paid and the reduction in anxiety over worries that a client won’t pay promptly, or at all. My clients are thrilled about a credit card payment option: they can put off the reality of paying for a lawyer for a few weeks, or defer the bill even longer by incurring oppressive interest payments. Most important, it seems, is that they get to earn mileage or other perks by using their card.
This arrangement won’t work for every sort of client. It most likely doesn’t work for the corporate or government client, who needs a formal invoice and an institutional bill-paying process. It won’t work for clients who don’t have credit cards. And, it won’t work for clients who may be uncomfortable giving their credit card authorization—carte blanche, so to speak—to a lawyer they have just met. My clients tend to be upper-middle-class folks with good credit, and most of them have been referred to me by other lawyers or friends of theirs, so there’s a high level of trust. It most likely won’t work for older clients, who are more comfortable with conventional methods of payment.
While I’m partial to Square, there are numerous other business options to choose from. Apple, Intuit, and Google offer payment systems, and many people use PayPal. Then there are the other app-based systems, such as Stripe. Rumor has it that there are platforms in development that will insure payment under certain conditions (and with additional fees, I’m sure). They all charge 2-3% per transaction, and few if any of them impose any set up or minimum charge.
My criteria for picking a system are as follows:
- Ease of set-up. I’m moderately competent when it comes to new computer programs, but I’m no techie whiz, so I need a system that is easy to set up and operate. Square is surprisingly simple and intuitive to set up. They even deposit $1 into your bank account and then withdraw it the next day, to be sure you haven’t accidentally typed in the wrong bank account number. They send you a nifty card reader device, including a second one so you can handle tap or “dip” charges using the new chip device cards.
- Mobility. I often meet with clients in their homes or offices, or mediate disputes in other lawyers’ offices, so I need a system that works on my smartphone, not just in my office.
- Efficiency of operation. I don’t want to be bothered tracking down payments or dealing with botched transactions, and neither do you. Check out the reviews of the various systems, and be sure you are using one that has a good reputation for performance.
- Integrity. It’s a bit scary to have so much of your income in the hands of an unknown corporate entity, and you certainly don’t want to risk embezzlement or mishandling of the funds.
Even if this payment method seems foreign or unnecessary to your practice, I encourage you to give it a try. Pick a company, sign up for the service, and use it when needed. There’s generally no fee unless you actually accept a payment, so what’s the harm in trying?
Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.
"The Art of Getting Paid" is a one-year series of blog posts that provides a comprehensive training to lawyers on how to get paid.
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