Running a business is hard work. There are so many things to think about – from marketing and sales to product development and accounting. But one of the most important aspects of any business is making sure you are following the law when it comes to payments.
Payment procedures can be confusing, but with this information, you’ll be able to avoid any common mistakes and make sure your business complies with the law!
Accepting Payments
When it comes to accepting payments, there are three main methods businesses can use: cash, check, or credit card. Each method has its own set of pros and cons that you need to be aware of. For example, cash is easy and convenient for customers, but it’s also riskier for businesses because there is no way to track or recover lost funds.
Checks are less risky than cash because they can be canceled if they’re lost or stolen, but they can also take longer to process than credit cards.
Credit cards, on the other hand, are the most common and popular method of payment for businesses. They’re fast, convenient, and secure. However, there are some fees associated with credit card payments that you need to be aware of, for example being on a match list mastercard or visa, as well as a few other legal requirements. Payments by card are also increasing in popularity as more and more people are using mobile wallets like Apple Pay or Google Pay.
1. Your Rights When It Comes To Payment Methods
Businesses have the right to choose which payment methods they accept. However, there are a few exceptions to this rule. For example, if you’re a business that sells goods or services online, you’re required to accept credit card payments.
Additionally, if you’re a business that sells goods or services to consumers, you must accept cash as a form of payment (unless the transaction is under $10) as well.
Additionally, businesses are not allowed to discriminate against customers based on the method of payment they use. So, if you only accept cash or checks, you can’t refuse to serve a customer who wants to pay with a credit card just because you need to pay fees for this payment method.
2. You Need to Disclose Your Payment Policy
This means letting them know upfront what methods of payment you accept and any associated fees. For example, if you only accept cash or checks, you need to let customers know this before they make a purchase.
You also need to disclose any fees associated with credit card payments. These fees can range from 2-4% of the total purchase price and are typically passed on to the customer.
It’s important to note that businesses are not required to accept all methods of payment, but they do need to disclose their payment policy upfront so that customers are aware of it before making a purchase.
3. You Need to Give Customers a Receipt
This receipt needs to include the total amount paid, the method of payment used, and any relevant payment processor fees. For example, if a customer pays with a credit card, the receipt should state the total amount paid, the method of payment used (credit card), and the associated fee (2-4%).
It’s important to note that businesses are not required to give customers a receipt if they pay with cash, but it’s always a good practice to do so. However, if a customer pays with a check, you are required to give them a receipt that also includes the total amount paid, the method of payment used (check), and any associated fees.
4. Customers Have the Right to dispute a Charge
If a customer believes that they were wrongly charged, they have the right to dispute the charge with their credit card company. The credit card company will then investigate the charge and if they find that the customer is correct, they will reverse the charge.
It’s important to note that businesses are not required to accept credit card payments, but if they do, they must be aware of this chargeback process and how to handle it if it happens to them.
For instance, a customer may dispute a charge if they were charged the wrong amount, if they never received the product or service they paid for, or if the product or service was not as described. To handle these disputes, businesses need to have a solid refund and return policy in place.
There are a few other legal requirements when it comes to payment procedures, but these are the four most important ones that all businesses should be aware of.
By understanding these legal requirements, you can avoid any common mistakes and make sure your business complies with the law.