A quick guide on how your law firm can accept compliant credit card payments.

Credit card payments are continuously growing in popularity, and that increase in card payments includes the legal services industry. From individuals to large enterprises, clients are now asking their lawyers for more convenient ways to pay including accepting credit and debit cards.

Fortunately, accepting card payments compliantly is easy with the right processor. This quick guide shows you how to navigate that compliance.

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Trust vs. Operating Bank Accounts

The main compliance concern that lawyers and paralegals must address when accepting credit and debit card payments is the proper separation of funds. Unearned income, such as retainers, must be deposited to a trust account, while earned income must be deposited to the firm’s operating bank account. When accepting credit card payments, you must select a processor that allows you to deposit funds to the appropriate account based on the payment type.

Fund Deposits and Processing Fees

The same applies when it comes to processing fees. Some processors, such as PayPal, will take their fee before depositing the funds to you, so your $1,000 retainer appears as a $971 when it is deposited to your trust account (based on their 2.9% rate). This practice is outside of payment compliance for the legal industry.

Other processors are unable to manage multiple bank accounts. They will deposit the transaction amount in full, but later deduct the processing fee from the same trust account, which is also not compliant.

You need to setup your processing arrangement so that deposits for unearned income are deposited to your trust account in full, and processing fees are removed from your operating bank account.

Credit Card Encryption and Tokenization

Best practices often transcend any singular industry or business type. When it comes to credit card encryption and tokenization, the legal industry is no exception. Having a processor that can encrypt and tokenize your customer/client payment information not only reduces your exposure to both industry and PCI payment compliance standards, it also shifts your liability for the storage of the data to the processor while giving you the ability to access the payment information anytime, without having to collect the information over and over.

Conclusion

Accepting credit and debit card payments helps you get paid faster by making it more convenient for your clients to do business with you. In order to take advantage of these benefits, all you need to do is make sure that you accept those card payments in a secure and compliant fashion.

Fortunately, there are no limitations on the type of processing solution your law firm can use. From physical credit and debit machines to virtual terminals and online processing, you can employ the solution that best meets both your needs, as well as those of your clientele.


Resources

Below are links on rules and regulations for credit and debit card payments for lawyers and paralegals:
What is IOLTA?
American Bar Association - Model Rules of Professional Conduct
The Law Society of Upper Canada - Payment by Debit or Credit Card