The Most Common Debit and Credit Card Fraud Risks for Brick-and-Mortar Businesses

Store merchant taking cc for payment

Ecommerce has emerged as a monumental market presence, and along with it, the vast, destructive shadow world of hacking and digital fraud has evolved equally as rapidly. Neither of these trends should be overlooked by brick-and-mortar business owners, whose very livelihoods depend on addressing potential threats to their businesses. Unfortunately, it’s often the proprietors and managers of brick-and-mortar businesses themselves overlooking said vulnerabilities. And in an age of mobile payment processing and dynamic points of sale, it can be an expensive oversight.

But it’s not that these entrepreneurs are necessarily lax or indifferent about security. It’s not uncommon for a location’s management and even risk-management policymakers to invest in robust loss-prevention strategies and institute strict check-vetting and acceptance, while overlooking one of the most common, insidious, and expensive security vulnerabilities: debit and credit card fraud. Fortunately, there are some practical steps businesses can take to greatly reduce their fraud vulnerability.

 ID Checks for Stolen Cards

Stolen credit cards are one of the most common manifestations of credit card fraud. Rather than somehow electronically intercepting card information, or stealing someone’s identity (usually), the thief has come into physical possession of the card. While thieves will often use stolen cards to make card-not-present purchases online or over the phone, many will also attempt to use them for physical purchases. Generally, this is one of the easiest forms of fraud to prevent by requiring that the clerk check the ID of the purchaser.

 Dummy Card Fraud

There are two variations of dummy card fraud featuring similar scams: doctored cards and counterfeit cards. Doctored cards are popular with scammers who have actual credit card numbers but don’t have the equipment to rewrite counterfeit cards. Doctored cards are real credit cards, usually printed rather than embossed, that have had their information changed. The magnetic strip on the card is then either altered or erased so when the merchant scans the card it then fails to read it, resulting in the scammer asking that the information be entered manually.

Counterfeit cards are a variation of doctored cards. Oftentimes, if the scammer has access to the technology necessary for actually printing and encoding the magnetic strip of a credit card, they will produce new credit cards written with the stolen card number.

Brick-and-mortar business owners can curb dummy card fraud by ensuring their POS equipment is EMV (chip) compatible, as chip technology is much harder to counterfeit than its magnetic-stripe-based counterpart.

How to Protect Your Business

Technology may seem like the logical place to start when it comes to protecting your business from fraud, but the reality is, successful fraud-prevention starts with people. Employee training is key. Employees are usually both the first line of defense against fraudsters and those targeted by them. Often, just a basic level of training on spotting and avoiding fraud is sufficient to significantly reduce it. The balance most businesses struggle with for card security is being as vigilant as possible without alienating the customer. No one wants to have to share their birth certificate and utility payment processing documentation to confirm their address to buy a new electronic device. But a little security can go a long way. Simply requiring customers to show an ID that matches the card and calling a manager for any card that has to be entered manually can be enough to both prevent incidences of fraud and deter future scammers.

 About Payscout

Payscout has worked to establish the company as one of the most trusted payment processing providers in the world. Facilitating safe and convenient payment solutions across six continents, Payscout has been linking merchants and consumers with credit, debit, mobile, ATM, and alternative payment solutions. Managing payments, whether on-site or across mobile and online media, is easy with Payscout. Payscout integrates with more than a dozen software applications and also offers healthcare payment processing as well as specialization in non profit payment processing. Whatever your specific payment needs, Payscout can accommodate you with quick, convenient, friendly, and secure service.

Learn more about Payscout’s payment processing solutions at www.payscout.com

The Convenience Fee Conundrum

Working with laptop in office
Convenience Fees are an attractive solution for boosting your bottom line, but if you’re not careful, they can cost you your ability to accept payments altogether.

In the accounts receivable management (ARM) world, convenience-fee payment models are growing in popularity, and for good reason: When applied correctly, they have the ability to reduce a merchant’s payment processing costs significantly by charging the consumer or debtor a flat fee for the convenience of accepting payments online or over the phone (depending on the consumer’s/debtor’s State of residence).

What many collection agencies may not realize is that convenience-fee solutions are the subject of serious scrutiny from compliance experts (and enforcers), and if they’re not properly applied, they can cost the merchant their ability to accept payments altogether. Having their merchant accounts closed, being blacklisted, and being cut off from their banks are just a few of the potential hazards for a merchant who deploys this model without doing their due diligence.

Here is what you should consider if you’re thinking about offering some type of convenience fee solution:

Convenience Fees and Compliance

There are two layers of compliance that a merchant must consider if they are using a convenience-fee model: Operating in accordance with the Fair Debt Collection Practices Act (FDCPA), a federal law that governs the practices of third-party debt collectors, and Compliance with Card-Brand (Visa, MasterCard, American Express, etc.) rules.

FDCPA guidelines prohibit “the collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law,” 15 U.S.C. 1692f(1). However, a third-party vendor, in most cases a payment processor, can charge the fee because that vendor is not subject to FDCPA, which only applies to third party debt collectors.

Most of the payment processors who offer convenience fees are doing so in compliance with FDCPA requirements. From the card-brand perspective, however, there is a set of very specific rules pertaining to added charges such as convenience fees, Visa’s being the most restrictive, and many popular solutions are not in compliance with these rules.

Visa defines three main types of fees: Surcharges, Convenience Fees, and Service Fees, each with their own set of restrictions. In the US, a Merchant that charges a Convenience Fee must ensure that the fee is assessed as follows:

1)  Charged for a bona fide convenience in the form of an alternative payment channel outside the Merchant’s customary payment channels and not charged solely for the acceptance of a Card

2)  Added only to a Transaction completed in a Card-Absent Environment

3)  Not charged if the Merchant operates exclusively in a Card-Absent Environment

4)  Charged only by the Merchant that provides goods or services to the Cardholder

5)  Applicable to all forms of payment accepted in the payment channel

6)  Disclosed clearly to the Cardholder:

– As a charge for the alternative payment channel convenience

– Before the completion of the Transaction the Cardholder must be given the opportunity to cancel.

7)  A flat or fixed amount, regardless of the value of the payment due

8)  Included as part of the total amount of the Transaction and not collected separately

9)  Not charged in addition to a surcharge

10) Not charged on a Recurring Transaction or an Installment Transaction

It’s the fourth and eighth items in this list that can, together, compromise a merchant account quickly: Convenience fees have to appear (and be processed and authorized) as a single transaction by the merchant of record.

As you are reading this, if you’re currently deploying or considering a convenience fee model that involves running the fee as a separate transaction, you may be at risk of losing your merchant processing account.

Fully compliant programs do exist that can minimize your business risk while reducing your payment acceptance costs.

Click here to learn more.

Four Big Challenges Facing Healthcare Companies

Two male doctors in consultation at desk in office

The healthcare industry is growing increasingly complicated. Providers are often operating at the intersection of complex IT and billing solutions, competing state and federal policies, and the ever-evolving data-security landscape.

While this operational complexity can seem daunting, a recent survey has shed light on the various challenges facing the industry today, as well as issues that healthcare servicers will encounter in the future.

A 2018 Healthcare Business Strategy and Technology Survey polled the nation’s leading healthcare providers to reveal insights, challenges, and strategies related to topics such as healthcare payment processing, data security, billing and coding, and others.

Survey respondents included:

  • Healthcare collections facilities (50%)
  • Multi-location hospitals with shared service centers (25%)
  • Single location medical practices (25%)

The survey revealed the following challenges:

Payment Collections

Respondents said that patients’ inability to pay is the biggest challenge they face when it comes to revenue reconciliation. Respondents also noted that a lack of payment channels can also hamstring healthcare operations, including an absence of online payment portals, virtual assistants, or hospital staff to assist patients.

When it comes to payment processing and collections, 90% of respondents said they accept electronic payments from patients, including credit cards and debit cards as well as health savings or flexible spending accounts.

Integrating IT solutions like accounts receivable collections software into your healthcare organization can help alleviate some of the billing pains associated with patient checkout and payment collections. Accounts receivable collections software can also ensure that financial transactions are secure, efficient, and provide real-time data.

Innovative Payment Options

The survey also revealed that web payment options are increasingly important for healthcare providers. More than 60% of respondents said their institution or organization plans to add web payment options within the next 12 months.

Additionally, approximately 25% of respondents said they plan to add automated payment options to their phone system. This was an increase of 12% from last year.

Interactive voice response options, such as virtual assistants and intelligent automation, increased from last year as well. According to the survey, an estimated 50% of healthcare providers reported using or planning to adopt automated response systems, which is an increase of 7% from last year.

HIPAA Compliance

Regulations stipulated under the Health Insurance Portability and Accountability Act (HIPAA) are a big deal for healthcare providers, according to the survey. HIPAA rules are extremely complex but are intended to protect patients’ medical records and personally identifiable information. In fact, a majority of survey respondents ranked HIPAA compliance and reporting requirements as the top two factors when choosing a payment processing service.

Documentation

Although documentation practices such as coding and billing weren’t discussed in the survey, insufficient or inaccurate documentation can lead to huge headaches for both the patient and healthcare provider. An estimated 80% to 85% of denied claims stem from incorrect documentation. Essentially, insurance companies can deny claims if bills and medical records are not coded to complete accuracy.

About Payscout

Payscout is a trusted, global payment processing provider working across six continents and connecting merchants and consumers via credit, debit, ATM, and alternative payment networks. Payscout makes it easy to manage payments on-site and across online and mobile platforms. Payscout even offers customized API connections for international payment processing and integrates with over a dozen software applications. If you work in a healthcare environment, Payscout’s mobile payment processing services can help drive revenue efficiently and securely.

Learn more about the importance of payment processing systems at www.payscout.com