Category: PAYMENTS

  • PayPal Gets Sued, Stripe Could Be Next – Is Your Business Safe?

    PayPal Gets Sued, Stripe Could Be Next – Is Your Business Safe?

    You’ve probably heard the news: PayPal gets sued for freezing customer accounts without explanation. It’s no longer speculation, it’s a fact. The class action has been filed and it will be interesting to see how it all shakes out in the end. But it raises some important questions about your own online business and how you’re funded.

    This isn’t the first time they’ve been threatened regarding PayPal freezing accounts suddenly or withheld funds. But in the case of Chris Moneymaker, they immediately returned his as soon as he started drumming up some noise.

    This time, it seems they’ve lost this cruel game of chicken. PayPal account holders are speaking out and loud about these unfair practices.

    What Exactly Are They Being Sued for in This PayPal Lawsuit?

    In this particular PayPal lawsuit, the company is being sued for 3 things.

    Committing Conversion

    In the simplest terms possible, conversion is stealing. Someone else’s property is converted and now owned by someone else. It’s wrongfully taking control over someone’s belongings, land, amount of money, etc.

    In this case, PayPal freezes accounts but refuses to give those funds back. The plaintiffs are claiming this is theft, therefore they are committing conversion.

    This also goes beyond just the frozen funds. PayPal is accused of conversion in relation to RICO, the federal Racketeer Influenced and Corrupt Organizations Act. This means they not only froze PayPal account funds, but they also refused to explain why. The definition of thievery.

    On top of this, PayPal required plaintiffs get a subpoena to learn why their funds were taken.

    Breach of Contract

    The PayPal user agreement is 65 pages long. Usually, they freeze account funds for violating those terms for up to 6 months. However, the tables have turned. PayPal is on the being sued for breaching their own contract with users.

    News articles about the lawsuit haven’t explicitly stated what part of the contract was violated, likely because lawyers don’t want to reveal their arguments before trial.

    Unjust Enrichment

    Going along with the conversion aspect, PayPal is accused of being unjustly enriched at the expense of another by taking advantage of that other’s vulnerability. Basically, they’ve benefited from someone else’s work (or money, in this case).

    How Does This Affect Other Payment Aggregators?

    Stripe is another big online payment aggregator like PayPal, and they are equally accused (though not legally, yet) of freezing account funds suddenly. They could be next if the dominoes continue to fall.

    Terms of Service Updates in Tow

    If you’re a Stripe business account holder or a PayPal business account holder, you should expect a big update to their terms of service. This also goes for any other payment processing service. They want to protect themselves from meeting the same fate, and the best way to do that is put it in writing.

    If you run a high-risk online store and you use one of these companies, now is the time to make the switch over to your own high-risk merchant account. DirectPayNet can help you in this endeavor. The reason is because payment aggregators like PayPal and Stripe cannot operate with high-risk businesses. They are leasing out a sub-merchant account to you under their own, meaning they’re bound by the terms of their merchant account and can’t make exceptions for you.

    If you operate a low-risk e-commerce store, then you can continue to use your preferred processor like you do now. But the acceptable use policy will only get stricter and even if that isn’t affecting you right now, it could in the future.

    Aggregators Are Allowed to Withhold Funds for 6 Months

    Don’t get confused about what PayPal did wrong. They are legally allowed to withhold funds for up to 6 months.

    Funds are withheld for up to 6 months for merchants who experience a high number of chargebacks. This is called a reserve, and payment processors can choose to withhold up to 100% of disputed items if they wish.

    The reason for this is simple. If a merchant has many chargebacks or refunds, the payment processor is concerned that the merchant may be involved in fraud or some other kind of illegal activity. They don’t want to process payments for that merchant, but they also don’t want to get stuck with a bunch of unpaid chargebacks either.

    This makes sense in theory, but it causes big problems for merchants who have legitimate disputes and chargebacks. If your business isn’t doing anything wrong (and you haven’t been accused of fraud), then there’s no reason for you to have an unusually high rate of chargebacks, and these funds should be released immediately.

    In the PayPal lawsuit, the funds are withheld without reason. It isn’t explicitly stated that frozen PayPal accounts are due to chargebacks or fraud risk. The problem is also that they do this in an instant. No notification at all, with nothing hinting at this happening in your business or personal account information. And if it’s under the premise of investigation, then is that really lawful to freeze 100% of a business’ funds because they think someone fishy might be going on without any hard proof?

    Abusive Policies Toward Businesses

    You’d think if a big payment aggregator like PayPal would want to protect the businesses that use their service daily. That’s how PayPal makes money. But that simply isn’t the case.

    PayPal and Stripe have a long history of abusive policies towards small businesses who use their services. The most notable of these practices is the company’s requirement that users pay extra fees in order to protect themselves from fraudulent activity. In order to get their money back from PayPal or any credit card company, you must prove that the charge was fraudulent (a scam or phishing). This means you have to pay for shipping on goods that never arrive or make a purchase and then wait 30 days for your money back — even if the item is fully functional and never arrives at all. Without this extra protection, you’re out of luck.

    Another reason why PayPal is bad news for small businesses is because it allows customers to file chargebacks with no proof at all. Chargebacks occur when a customer says they didn’t receive an item they paid for, and they can be filed months after the transaction occurred. If a customer files a chargeback against you, PayPal will freeze your account until you can prove they are wrong; while this is happening, you can’t access your money at all — even if you shipped out the item right away and it’s still en route.

    Harm to Small Businesses

    How long do they really need to withhold funds? 6 months is a quite a while but can be reasoned. The bigger question is why does it always take 6 months, or 180 business days? It seems they think you’ll forget about the lost funds by the end of that period of time and PayPal will keep it for themselves. Or the PayPal customer resolution center is so inefficient that they can’t organize a complete investigation in a timely manner.

    This is incredibly harmful to the small businesses that rely on these payment services. It can shut a business down completely, put business owners in serious debt, empty bank accounts, and cause permanent financial and physical stress on those parties. And what if at the end of the investigation, there was no cause for the frozen funds? How does PayPal help those businesses recover? To us, it seems they send a simple, “Sorry!” and that’s the end of the story.

    Make the Switch NOW to Your Own Merchant Account and Avoid Frozen Funds for Good

    This investigation has brought to light a lot of the wrongdoings of big payment aggregators. PayPal freezing funds, Stripe making accounts inaccessible, both withholding money for 6 months–it’s unfair and unjust.

    PayPal might be convenient, allowing you to start selling the next day after opening an account. This is one of the most common reasons businesses use them, but it isn’t worth it. There are several account limitations that hinder growth and can instantly snag large sums of money from you. Your best bet is to avoid aggregators in the first place.

    The solution is to get your own merchant account. No matter what you sell, or the risk factor involved, there is a merchant account for you and a payment processor willing to take you on. And with that, you can continue to accept credit cards like Visa and MasterCard, debit cards, and other payment types without worry.

    DirectPayNet will connect you with the right processor and set you up with a shopping cart that works for your business, along with terms you can get behind. Speak with our customer service reps to open a new account today.

  • Legal Online Telemedicine in The United States: Is Your State on the List?

    Legal Online Telemedicine in The United States: Is Your State on the List?

    With the popularity of online telemedicine in the U.S. growing, it’s important for anyone who wants to use telehealth services or start their own telemedicine business to know about the laws that govern this burgeoning industry.  While there are positive signs that the legal framework surrounding online telemedicine will soon catch up with technology, we’re still some way from knowing what these laws actually are, covering which treatments they apply to, and how they’ll be enforced in practice. In fact, the legal frameworks of both healthcare itself and the provision of telehealth vary widely by state.

    So, the big question is: is online telemedicine legal in all 50 states, or is it too up-in-the-air to make a broad statement like this?

    The Lowdown on Online Telehealth

    Telemedicine is the practice of providing public health care services to patients via electronic communication. It can take place in real time or near-real time and may include live video conferencing, email, telephone, text messaging and other forms of electronic communication.

    The use of telemedicine has increased dramatically over the past decade, given its potential to improve access to healthcare services and reduce costs. Telemedicine can be used for diagnosis and treatment of illnesses and injuries. It has also been used for preventative care as well as health education.

    With technology advancing, especially in terms of security and access, telehealth (i.e., e-health; e-medicine; online pharmacy) is only getting better. But in the US, there’s a divide on what should and shouldn’t be possible. Some states have fully embraced it while others are lagging behind, holding on to the skepticism that surrounds it. And for business owners, telemedicine can be an entirely new frontier worth pursuing.

    How Online Telemedicine Differs Per State

    Telehealth, or online medical consultation, has been a growing industry for decades, but it’s only recently that telemedicine is being integrated into the healthcare system at large. The Health Resources and Services Administration (HRSA) supported telehealth with $20 million in funding, and that number is expected to increase.

    When it comes to online medical consultation as a standalone business model though, things get more complicated. The laws governing online medical consultation differ per state; some states allow them while others don’t.

    States That Are Progressive with Online Telehealth Services

    These states have broad-use telehealth policies.

    • Alaska
    • Arizona
    • California
    • Colorado
    • Connecticut
    • Florida
    • Hawaii
    • Idaho
    • Maine
    • Minnesota
    • Missouri
    • Montana
    • Nebraska
    • New Jersey
    • New Mexico
    • Nevada
    • New York
    • Utah
    • Vermont
    • Washington

    States That Are Moderate with Online Telemedicine Services

    In these states, telemedicine laws and state Medicaid programs may come head-to-head. However, these states do promote telehealth services to consumers.

    • Alabama
    • D.C.
    • Delaware
    • Iowa
    • Illinois
    • Indiana
    • Kansas
    • Kentucky
    • Louisiana
    • Michigan
    • Mississippi
    • Oklahoma
    • Oregon
    • South Dakota
    • Tennessee
    • Virginia
    • Wisconsin
    • West Virginia
    • Wyoming

    States That Are Restrictive with Online Telehealth Services

    Here are the states you should probably avoid. Either the state law or the Medicaid service policies or both inhibit adoption of telehealth services.

    • Arkansas
    • Georgia
    • Massachusetts
    • Maryland
    • North Carolina
    • North Dakota
    • New Hampshire
    • Ohio
    • Pennsylvania
    • Rhode Island
    • South Carolina
    • Texas

    You can read all about each state right here or here.

    Summary of State Telehealth Regulations as of Jan 2022

    To sum everything up so you get a slightly more abbreviated vision of what the regulations are regarding telehealth in the US, here’s a quick list.

    • 43 out of 50 states have telehealth insurance for consumers
    • 30 of those 43 states protect consumers against paying more for online consultations or visits
    • 14 of those 43 states require payment parity
    • 3 of those 43 states don’t require health plans for virtual visits

    This quick summary should be able to help you in some ways narrow down your base offering to cover, at the very least, those 43 states and the District of Columbia. After that, you can get into the nitty gritty of changing up prices or availability of service depending on what you offer.

    What This Means for Your Telehealth Business

    Telemedicine is a growing industry, and it’s legal in 50 states, but that doesn’t mean it’s always easy to start a telehealth business or practice. The laws and regulations around telemedicine vary by state, so you need to do your research before getting into the business.

    There are many state and federal laws that come into play, including health insurance laws, private insurance, waivers, medicaid reimbursement policies, telehealth reimbursement policies, HIPAA privacy rules, and more. It may look like a regulator nightmare, but it’s worth it in the end. And once you set up properly, it will be easy to add and remove services as policies change.

    Hurdles When Starting Out

    Expense

    Telehealth can be an expensive business to start up, especially if you don’t have any capital to invest initially. The cost of setting up a company and offering health care provider services is high. You will need to purchase equipment so that you can see and speak with clients, as well as an office space where potential clients can visit.

    Insurance

    You also need plenty of professional indemnity insurance, which will protect you against any claims made against your business. This includes liability protection for clients and employees, as well as protection against lawsuits by other companies and individuals who claim patent infringement.

    Registration

    Another issue is getting registered with agencies such as Medicare and Medicaid. This can be difficult due to restrictions on how you deliver your services. You may need to register under multiple categories if you offer different services.

    Presence

    There are some states that require a healthcare professional to be physically present while doing telehealth consultations. This can be a deal breaker if you want to create a company that operates across state lines. While you can use technology to overcome this obstacle, there may be other potential issues with licensure or certification if you’re operating on a national level.

    Technology

    Before getting into business, verify what kinds of technology will be needed for your telehealth business. You should make sure that your equipment meets all necessary requirements and is in compliance with any applicable federal and state regulations.

    Rewards You’ll Reap

    Flexibility

    Many telemedicine jobs allow you to set your own schedule. This allows you to pursue other interests and focus on family as well.

    Virtuality

    Telemedicine businesses do not require a physical space for the practice of medicine. Most of your work can be done from home or any other place with Internet access.

    Profitability

    Telemedicine is still new, but the industry is growing rapidly, adding to its profit potential. A single telemedicine doctor can earn more than $150,000 annually.

    Future-Ready

    Telehealth is still emerging as a new type of medical visitation and prescription-giving that’s completely intertwined in the tech world. That’s the future we’re all heading for, and eventually the inevitable day will come where the world prefers to make virtual doctor’s visits. Your business will be ready for this day with a large customer base already, i.e., you’re way ahead of the competition.

    Why Starting a Telemedicine Business NOW Is Best

    Telemedicine is an essential part of healthcare. It allows doctors and patients to communicate with each other through modern technology, forming faster and easier doctor-patient relationships. This new service has been improving over time, and now it is very important in the medical world.

    Telemedicine allows the use of modern information technology to provide long-distance consultation between doctors and patients or specialists. This method of providing medical services helps people get the right treatment because they can use telecommunication devices to consult with specialists from all over the world.

    With the recent outbreaks of diseases such as COVID, that can spread through air contact and COVID contamination, it’s important to have a good network of doctors who can help with this situation. You can set up your own telemedicine business so people can get treatment from your doctors if they need it during a pandemic outbreak like COVID.

    Essentially, you provide a service that people all over the country, let alone the entire world, need and you make a killing off it. Win-win.

    A High-Risk Business Like Online Telemedicine Need High-Risk Payment Processing

    Telemedicine fee-for-service businesses are one example of when a high-risk merchant account is required than a standard business credit card processing account.

    Telemedicine companies provide healthcare services over the phone or internet to patients across the country. These transactions are often considered high risk because they are considered unusually complicated and businesses that offer telemedicine aren’t always equipped to handle transactions at their location.

    If you’re considering starting a telemedicine business, you need to apply for a credit card processing account for your business.

    DirectPayNet is a merchant services provider that will connect you with credit card payment processors and banks that will work with your business type. Don’t risk getting denied or shut down by typical 3rd-party providers. Contact us today to get started.

  • Credit Card Payments For Therapists: A Complete Guide

    Credit Card Payments For Therapists: A Complete Guide

    A recent study reports that thousands of people have turned to online counseling, which, in turn, has sparked credit card payments for therapists.

    Licensed health professionals have adapted to the new scenario in which the world finds itself. Today, psychologists and psychotherapists deliver services virtually, making conventional payment methods impractical. Thus, when it comes to credit card payments for therapists, it’s time to switch up your options.

    It’s time to weigh the available payment options. The need is the same whether you’re a private practice using video conferencing technology, or a solo therapist providing telehealth services. Not meeting in-person takes both cash and checkbook out of the equation. Swiping credit card or debit cards is also no longer an option. So, what are the possibilities?

    Fortunately, secure choices exist for professionals providing mental health or coaching services digitally. Furthermore, technological payment solutions may provide improved protection against possible HIPAA breaches. As it turns out, one of the biggest threats to HIPAA compliance is human error or even bribery. The credit card processing options below will help eliminate that threat by taking humans out of the equation.

    As experts in payments, we strongly believe that ACH or e-check and merchant accounts are the best choice. But for educational purposes, we’ll cover multiple options below.

     

    Digital platform for therapists

    Mental health professionals have explored alternative methods for delivering their service due to COVID-19. That goes for accepting credit card payments for therapists too. The starting point for many therapists is all-in-one software platforms such as SimplePractice and TheraPlatform. On the surface, they do offer the convenience of credit card processing, keeping a customer’s card on file, HIPAA-compliant video conferencing, and invoicing software on just one platform. Some solutions, such as Ivy Pay, offer clients the ability to pay using their health savings account (HSA card) or flexible spending account (FSA card).

    However, the issues start to mount when you dig a little deeper. Firstly, you will have to pay a flat-rate, monthly fee for the privilege of using these tools. The reality is you could use cheaper solutions such as Zoom or Microsoft Teams on top of your existing HIPAA-compliant infrastructure instead. Some charge nothing for payment processing but take as much as 20% of all revenue you generate on the platform.

    Another issue is breach of client information. All-in-one platforms offer HIPAA-secure storage. But, if there’s a breach in their system, you could land in hot water concerning patient-doctor confidentiality. By storing information online in this manner, you are still on the hook if you use the platform in a non-HIPAA-compliant manner. As a private practice, you will spend more on additional liability insurance. That’s on top of your existing malpractice insurance arrangements. When using a platform, additional teletherapy or cyber liability is needed to prevent your online counseling outfit from being sued, for example.

    online therapy session

    Third-party payment platforms for therapists

    Many of you may prefer low-cost video conferencing options to deliver your mental health support services. Zoom would be an example of this. In this scenario, it may make sense to accept credit card payments using a third-party service provider like Square. This might be a good option for solo therapists who are just getting their feet wet. It’s good if you deliver online sessions to a small clientele and have smaller fees to charge (e.g. under $120 a session).

    For others, some choose to run payments through the third-party card processors like Stripe or PayPal. These payments are simple and low risk, but it’s a little complicated. While they do have low fees for processing Visa and Mastercard transactions, they can demand high reserves on small businesses (e.g. 20% of revenue). Sometimes third parties will only pay you after 14 days. When you consider that the average therapist charges $100-$200 per therapy session, you could be holding back your growth. Also, you want daily payments, not biweekly.

    Have you explored the potential of ACH processing? Did you know that most corporations prefer making a payment using this network? Find out how ACH processing and e-checks can dramatically increase your revenues with our complete guide.

    Square allows you to take payments online and in-person through card readers attached to iPhones, iPads, and Android devices. This payment service provider also offers PCI and HIPAA compliance via a Business Associates Agreement. Lastly, you can use Square card readers to swipe HSA and FSA cards.

    However, Square suffers from many of the same drawbacks of fellow payment facilitators such as Stripe and PayPal. Firstly, as a merchant using third-party payment aggregator services, you share a merchant account with several other businesses. This presents a danger. If you experience high refunds and chargebacks or a sudden spike in transactions, these platforms may flag and freeze your account. Your cash flow and ability to process payments could be cut off without an explanation, provoking unneeded hassle.

    Again, Square offers HIPAA compliance, but doesn’t give you total protection. It’s the same as an all-in-one platform. You take responsibility for safely storing a client’s credit card information. And note that some functionality offered by all-in-one software solutions won’t be there, such as automatically charging a flat-rate fee for late cancellations.

     

    Explore payment options like ACH or e-check processing

    It’s worthwhile to accept credit card payments, but there’s another payment option for your business that we think all providers of online counseling should explore. E-check payments facilitated through the ACH network are an excellent option for US therapists of all niches.

    Firstly, it’s worth explaining that e-checks are the digital version of a traditional check. Paying by check is popular among traditional therapists. Thus, it makes sense to move this payment method online. Not all clients will have a credit card.

    Therefore, if you implement ACH processing to accept e-checks, it can boost revenues by as much as 5-7% by accommodating clients who don’t use credit cards.

    Using the ACH network to accept e-checks also helps on the backend of your payment infrastructure. Credit card payments are accompanied by the threat of chargebacks. However, ACH chargebacks are harder to initiate (has to be done within seven days). They are nowhere near as damaging to your business. You won’t get MATCH listed (Member Alert to Control High-Risk). And if your ACH processing is ever closed, finding another provider is not as hard.

    ACH processing is also useful if you are subjected to low processing limits by third-party processors. For example, your account may only allow you to accept up to $10,000 in credit card payments. After a few months, statements from your e-check account can serve as processing history. This is useful when applying to get a second ACH channel or a dedicated merchant account.

     

    ACH is a highly affordable online payment method

    Perhaps most importantly, ACH processing costs less than credit card processing fees. This network allows recurring direct debits to accommodate weekly or monthly slots for online therapy sessions. Therefore, ACH is an affordable option for recurring direct debit payments straight from the bank accounts.

    This method is also an excellent solution for organizations or corporate accounts that prefer a direct debit payment over credit cards. For instance, suppose you charge a company a retainer for your ongoing counseling support services for their employees. In that case, by using ACH direct debit payments to collect monthly retainers, firms can save money on wire fees. At the same time, you leverage automatic, recurring payments to guarantee the payment arrives on time, every time.

    Please note that ACH/e-check is a service offered in the US and requires funds to stay within domestic borders. There are similar services in other countries so you will need to do your homework on what the equivalent is outside the US.

    man in online therapy session

    Merchant accounts support credit card payments for therapists very well

    If you want to streamline your credit card processing, you might want to consider a dedicated merchant account. Securing this payment option helps you gain control over essential metrics such as consumer behavior, fraud, and chargebacks. By gaining access to detailed information, you can take immediate corrective action to protect your access to superior credit card and ACH processing. You’ll also benefit from competitive credit card processing fees.

    The best part about a merchant account? They can be paired in every payment scenario. Use them with POS terminals to facilitate in-person payments. Or, use a virtual terminal for card-not-present transactions. Don’t forget merchant accounts help you to accept online payments without having to suffer steep commissions from all-in-one telehealth platforms.

    Another beneficial feature of securing a merchant account is the ability to accept higher transaction amounts. Once again, if you offer your services to several individuals at once (e.g., for a corporation), you can process payments way over your standard hourly rates without any hassle. International payments are a cinch too. Perfect if you’re working with non-profits based abroad, for example.

    However, remember that being in charge of your payments makes you responsible for the associated compliance. Make sure your website adheres to PCI-DSS compliance guidelines if you choose to use an online payment gateway to accept client copays, for example. Failure to do so could result in substantial regulatory fines and reputational damage.

    Provide proof of sales and be on guard for disgruntled clients

    It is good idea to build up a solid processing history before submitting a merchant account application. You also need to make sure you have other things in place before opting for this type of payment.  Ensure chargeback ratios are below 1% and that your documentation is up to scratch.

    For instance, do you have a crystal-clear cancellation policy? Do you offer refunds? If so, how can customers claim one in the event of their dissatisfaction with your therapy services? Doctor-patient privilege compliance will also need to be well-documented and presented.

    While the requirements are slightly more stringent for a dedicated merchant account, the benefits are enormous. Competitive credit card processing fees, permission of higher transaction amounts, international payments (through offshore merchant accounts), and greater control over chargebacks are just a few of the advantages provided to your private practice.

     

    Diversification is key to success post-COVID

    Therapists, mental health coaches, and online counselors have all adapted to the demands of the pandemic. In-person therapy sessions have gone. Video conferencing technology has stepped in. But licensed health professionals have many considerations when it comes to delivering their services virtually. There are HIPAA compliance, credit card processing, and business factors that all need to be considered.

    All-in-one platforms appear to offer a streamlined solution to credit card payments for therapists. However, they have hidden additional costs and a lack of control. Using a third-party payment processor may seem more attractive. But some options don’t offer long-term solutions for therapists looking to scale. Lack of control over your payments data, small transaction amounts, and sizeable credit card processing fees are just a few of the issues here.

    The answer to success in the post-COVID world lies in diversification. With a merchant account, you can secure cheaper credit card processing. You can also gain more control over your data, and more flexibility when accepting payments. But don’t forget ACH processing and e-checks. This payment network offers an excellent solution for large corporations. On the other hand, e-checks are great for your clients who don’t have a credit card. They offer the option of recurring direct debits too.

     

    Move your payment offerings forward

    Here at DirectPayNet, we can help your mental health services business secure a broad range of payment options, including the ones mentioned above. Securing ACH processors and merchant account is our specialty. In fact, we’ve been assisting clients for over a decade now.

    So talk to us today to find out how we can help you scale your online therapy and counseling services!