If you haven’t already started taking credit cards, you’re probably used to hearing your clients asking you when you’re going to start. Credit cards not only satisfy client demand for convenience but also help ensure that fees get paid on time, even when a client forgets to bring a checkbook or cash. But some clinicians are reluctant to take on the extra fees that slowly mount.

According to most business coaches, the convenience of plastic is worth the costs. But some clinicians work at low margins. Others would rather not enable clients who don’t prepare to pay for therapy. What’s more, some credit cards increase fees when a customer uses a “rewards” card — the merchant pays for those perks and airline miles. Understandably, many merchants are unhappy about this.

Is it legal to pass the fees on to clients?

Previous to January 27th, 2013, it was against merchant contracts and some laws to levy fees — also called adding a “surcharge” — on credit card purchases. A merchant advocacy group, fed up with paying for airline miles and other perks, reached a settlement with Visa and Mastercard whereby merchants can now legally place a surcharge on credit card payments.

There are a number of limitations, however. I’ll lay them out bullet-style:

• Credit card surcharges are still illegal in 10 states at the time of writing, despite the 2013 settlement. Please note that other states may consider the same laws (and that credit card companies have a lot of lobbying money.) Check with your legal counsel for updated information. 
• The settlement states that merchants must have prominent signage at the checkout that advertises the fees. For us, that would likely translate to informing the client of surcharges at the intake session.
  • AAMFT’s ethics code is clear that MFTs establish with clients up front how payment for services will work. (section 8.1)
  • APA’s code requires psychologists to lay out ahead of time how payments for services will work going forward. It also states that psychologists’ “…fee practices are consistent with law.” (section 6.04)
  • ACA’s code requires counselors to “…inform clients about fees and billing arrangements.” (section A.2.b)
  • NASW’s code does not directly address the issue of including information about fee payment and billing processes in the informed consent process. One can argue that it is a reasonable part of ethical informed consent, however. Additionally, the code’s language on informed consent does address the need to inform clients about costs of services. (section 1.03.a)
  • NBCC’s code states that “…NCCs also shall provide information about client’s rights and responsibilities including billing arrangements, collection procedures in the event of nonpayment…” (section 69)
• You must inform Mastercard and Visa before you start surcharging. They both have forms you can send in to register yourself as a merchant will be charging surcharges.
• The surcharge must be noted as a separate item on all receipts. In general, this may be difficult to accomplish without a hand-written receipt until credit card processing companies revise their software or hardware to accommodate surcharges. 
• This is only for credit card purchases. If a client uses a debit card or pre-paid card — even if you run it as a credit card transaction — you cannot legally add a surcharge. This could mean HSA and FSA cards cannot be surcharged, either. For the far majority of clinicians, this alone is a deal breaker.
• The settlement only applies to charges made in the US or its territories (international distance therapists, take note.)

I get a feeling the insurance companies wouldn’t be happy about this

Generally, if you are paneled with insurance, you have restrictions on charging varying rates. I am unsure if a surcharge would fall under this category, however, since it is not a change to the original fee. I have been unable to find definitive information on the topic, however. The issue may be too fresh or I may lack the knowledge to find it.

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So it could be legal for me, but is it ethical?

In 2013, I asked for opinions on this subject in a number of LinkedIn discussion groups. I received 68 responses that included personal-professional opinions on the issue.

Several people explicitly stated an opinion that it is “unethical,” but not with a specific reference to professional ethics codes. I was unable to find any professional ethics codes that address this issue in a heads-on manner. These commenters may have also been expressing an opinion on morals or standards of practice in their communities rather than professional ethics.

Ten people explicitly stated that they believe it is fine to pass on fees if it involves upfront communication with the clients. It was also pointed out that sharing the fees can help clients have “skin in the game.” Many experts say that paying more for therapy increases motivation to take therapy seriously, although other experts claim that this argument doesn’t stand up to research. (Zur, 2010)

Six people stated an opinion that surcharges for credit cards may actually make clients feel negatively towards the therapist. Money is one of our most vulnerable points for boundary crossings, and we need to take care that it doesn’t turn into a boundary violation. Upfront informed consent and authorization is often the best way to prevent the transition from boundary crossing to violation.

Are there any alternatives?

If your goal is to recoup lost income, then there are a couple alternative ways to go about it:

1. Offer a discount for payments made by cash and check. This may incentivize clients to bring payment with them, and combines well with option 2. The Visa page about surcharges encourages this approach (of course) and claims it is legal even in the states where credit card surcharges are illegal. 
2. Increase overall therapy fees to accommodate the amount of income you typically lose to credit card fees. 

Both of the above ideas may not always work for you if you are paneled with insurance.

Conclusions

While there are ways to pass on credit card fees legally and ethically, they are rather restricted. Consider these bullet-pointed facts:

• You can’t add a surcharge when clients use a debit card or pre-paid card. Many people use debit rather than credit on purpose.
• Practice-building experts seem rather unified that it’s better for your business to not levy surcharges. 
• The card brands are clearly unhappy about this change. I would look for more states to ban the practice in the future. 

On the other hand, with the reach of credit card brands continuing to increase while the economy worsens, the fight between merchant groups and big banks will continue. There may be further legislation or settlements that ease up the above restrictions.

Finally, not every practice is the same and many therapists who wish to pass the fees on to clients report doing so in a way that includes collaboration with the clients. There is no one way to do anything, especially in this business.

References

Reference for this article can be found here.

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