Late Fees

Should Your Invoices Charge Late Fees? What Contractors Need to Know

If you have a client who always pays 30 or 45 days late, no matter how many follow-ups you make or reminders you send, you’ve probably wondered whether a contractor’s late-payment fee is even allowed. If you’re under a client who always pays 30 or 45 days late, no matter how many follow-ups you make or reminders you send, you’ve probably wondered whether a contractor’s late fees is even allowed. A clearly documented late payment policy will encourage your client to pay on time, and especially when a late fee charge is applied, that’s enough to change payment behaviour.

But for contractors, there’s a way to do it. You can’t necessarily add a late fee just because you printed it on the invoice.  For contractors, whether you can charge interest or a late fee depends on what your contract says, when the terms were agreed upon, and the laws that apply to the transaction. State rules may also limit the interest rate or fees you can legally charge.

So should you add a late fee on invoices? What should you charge, a flat fee or a monthly percentage? And what should you do when a good customer pays late? In today’s blog, we’ll break down important aspects that contractors need to know before adding late fees on invoices and how you can do it without denting your relationships with customers.

Can Contractors Legally Charge Late Fees on Overdue Invoices?

Can Contractors Legally Charge Late Fees on Overdue Invoices

Yes, contractors can charge late fees or interest on overdue invoices. But it’s important to note that all the terms are agreed upon and disclosed in writing before the work starts. That usually means spelling it out in your contract, your signed estimate, or the payment terms printed on the invoice itself, not something you decide to add once a payment is already late.  Your contract should ideally establish:

  • When payment is due
  • What happens if payment is late
  • Whether interest or a late fee applies
  • How the fee is calculated
  • When the fee begins accruing
  • Whether there is a maximum charge
  • Which state’s law governs the agreement, where appropriate

Additionally, the customer should know the payment rules before starting the work. For example:-

Imagine your contract says that payment is due within 30 days on invoice receipt. But haven’t included anything about interest, late fees or penalties. But there is no mention of interest, penalties, or late fees. Thirty-five days later, you send an invoice that says:

Late payments are subject to 2% monthly interest

You may have a problem if the customer disputes the charge because that term wasn’t part of the agreement they originally accepted. The fix is the same either way: get it in writing before the next job starts, not after this one goes overdue.

Why Your Contract Matters More Than the Invoice

Your invoice tells the customer how much they owe and when payment is due. Your contract outlines the terms both parties agree to. This difference matters most when you want to add late penalties or fees. In simple terms, the customer must know about the late-payment terms before the project starts.  The contract can outline when payment is due, whether interest or a late fee applies, how it is calculated, and when it begins.

The invoice can, then, serve as a reminder of those agreed terms to the customer. For example, if your contract establishes Net-30 payment terms and a legally permissible late-payment charge, the invoice should clearly display the due date and reference the applicable payment terms.  It’s important that your invoice should cover every detail about the late payment charge. The problem occurs when charges appear suddenly, and your customer has never agreed to that term; here you may face a dispute. That’s why late fee wording in a contract is so important.

What Are the Common Types of Late Fees?

What Are the Common Types of Late Fees

Contractors use two basic approaches when it comes to late-payment charges: a flat fee or a percentage-based charge. The appropriate structure depends on the business, transaction, and applicable law. 

A flat fee is a static dollar amount that becomes due when an invoice passes the payment deadline. For example, a contract might state that a $50 charge applies to an overdue invoice, if legally allowed. The benefit is simplicity. Customers can easily understand the amount, and your accounting team doesn’t need to perform complicated calculations.

However, a flat fee can have a very different impact depending on the invoice amount. A $50 charge on a $10,000 invoice is relatively small, while the same $50 charge on a $500 invoice represents a much larger percentage of the balance. Contractors should consider whether the fee is reasonable and permitted under applicable law.

A percentage-based charge adds the late payment amount to the unpaid balance. For example, a contract may disclose a monthly interest rate on overdue amounts, subject to applicable legal limits. This approach can make sense for larger commercial invoices because the charge increases with the amount outstanding.  Percentage-based charges need more care because usury and interest laws apply. Contractors shouldn’t simply copy a percentage from another company’s contract, since your situation may differ.

What Is a Reasonable Late Fee for Contractors?

There isn’t a standard answer, as the amount or rate depends on factors like the type of customer, invoice size, project type, industry practices, payment terms, and applicable law. For example, a contractor working mostly with homeowners may have a different late-fee policy or face different considerations than a subcontractor working with commercial clients. 

Similarly, a small repair invoice and a big construction contract may require very different approaches to payment terms. The key is to avoid choosing a number simply because it is common online. Your goal should be to practice a payment policy that is clear, legally appropriate, and commercially sensible for your specific contracts.

Understanding Invoice Interest Rates by State

One of the more confusing issues that contractors face is confirming the right invoice interest rate by state. There isn’t a single nationwide rule that provides one late-payment rate for every private invoice. State laws can treat interest differently, and applicable rules may involve various aspects, the parties involved, the transaction, and the terms of the agreement. Some situations may involve statutory interest rates, while others may involve contractual rates subject to legal limits.

This means contractors should be careful when using a standard interest rate across every customer and project. A rate that works for one contract may not necessarily apply to another.

Flat Fee vs Percentage: Which Approach Makes Sense?

Flat Fee vs Percentage

Both structures have advantages and drawbacks. A flat fee is easy to understand and administer, while a percentage-based charge adjusts according to the outstanding balance.

The fee structure suits businesses starting with a small investment, but a percentage-based model can cost more in fees over time. Flat-fee structures are transparent, so customers know what they’ll pay. For example, a contractor with smaller invoices may prefer a straightforward fixed charge because customers can immediately understand what happens when an invoice becomes overdue.

The better approach depends on whether the customer agreed to the terms, whether you clearly explain the charges, and whether the amount complies with applicable law.

The structure should also fit your actual billing process. If your accounting software automatically calculates monthly interest, a percentage-based system may be easier to administer. If you prefer a simple manual process, a fixed charge may be easier to manage.

What Should Your Late-Fee Clause Say?

A good late-payment clause should answer the basic questions a customer mostly has, like:- When exactly is the invoice due? When does the late charge begin? How is it calculated? Does a grace period apply? Is there a maximum amount? What happens if the customer disputes part of the invoice? The language of your clause shouldn’t be unnecessarily complicated; the goal is to convey your terms clearly so that they are easy to understand.

A Simple Example of Late-Fee Wording

Here is an example of the type of language contractors can discuss with their attorney:

“Late Payment: Payment is due according to the terms stated in this agreement. Amounts that remain unpaid after the applicable due date may accrue interest or a late-payment charge at the rate specified in this agreement, subject to applicable law. The customer will remain responsible for undisputed amounts while any disputed portion is being resolved.”

Should You Put the Late Fee on the Invoice Too?

Yes, if the invoice language matches your contract. Contractors can include a short note such as Past-due balances may be subject to the late-payment terms stated in the service agreement,”- referring customers back to the agreement. This approach is best and should be followed by every contractor as it dictates everything clearly without suggesting that the invoice itself created a new contractual obligation.

What If You Didn’t Put a Late Fee in the Contract?

Then it’s best not to add one to an overdue invoice. Instead, review the agreement and confirm what payment terms were actually accepted. You can also send a reminder, ask when payment will be made, and answer any billing-related questions. If the unpaid amount is substantial or the customer disputes your right to charge interest, it may be worth getting legal advice before adding charges or escalating the matter.

When Does It Make Sense to Waive a Late Fee?

You can offer a one-time waiver if a customer was facing an administrative issue and has a strong payment history. For example, the customer may never have received your invoice because it went to an outdated email address, or the customer may have contacted you and explained a short delay. In these situations, you might choose to waive the fee as a business courtesy.

Why Visible Waiving Can Be Better Than Never Charging

Interestingly, a late fee can improve payment behaviour even when you occasionally waive it. Suppose your customer pays an invoice 10 days late. You decide not to charge the late fee because they have been a reliable customer. Instead of saying nothing, you can tell them that you’ve waived the charge as a one-time courtesy.

That communication reminds the customer that your contract contains a late-payment policy without turning a minor delay into a major dispute.

Use Automated Reminders Before the Invoice Becomes Overdue

Your first payment communication shouldn’t necessarily happen after the invoice is late. A simple reminder sequence can keep payment on the customer’s radar without making your team spend hours chasing invoices. Automation reminders make this manual process more consistent and accurate. If slow-paying commercial accounts are already putting pressure on your cash flow, you may also want to review “Net-30 Commercial Accounts Are Wrecking Your Cash Flow.”

Conclusion

Late fees on invoices should be treated as a part of a clear billing system rather than as a punishment for customers for late payment, but this policy is getting both the boxes ticked.

The most important step is establishing your payment terms before the work begins. Your contract should clearly explain when payment is due and, where applicable, what happens when an invoice remains unpaid. Don’t assume that simply printing a late fee on an invoice creates an enforceable obligation.

You also need to consider applicable state laws before choosing an interest rate or fee. Ultimately, the goal isn’t to collect more late fees. It’s to get paid on time. Clear contracts, straightforward invoices, automated reminders, convenient payment methods, and consistent follow-up can all help you get there.

Late fees on invoices: one piece of getting paid on the job. The rest of our contractor payment guides are in Contractor Payment Resources.

Tip Deduction

The Tip Deduction Makes Clean POS Tip Records Worth Real Money to Your Staff

The federal government restructured the economics of a tipped shift. Final rules published by the Treasury Department and the IRS on April 10, 2026, confirm that over 70 occupations are now allowed to deduct qualified tips up to $25,000 from their taxable income for each tax year. At the end of the year, each server, bartender, or stylist will see that number on their pay stub, Form 4137 or W-2, and know it represents their take-home income.

Point of sale (POS) software, for the first time in history, is now intertwined with tax law. Only the tips that get reported are legally qualified for tip deduction. For the tipped employee, unreported cash tips, service charges coded as tips, and tips that are pooled and assigned to the wrong tipped employee are all non-deductible tips. Employees are left to bear the burden of tips that were not properly recorded. It is now a benefit for the employees to have a POS system that captures tips.

What the Tip Deduction Covers, and Who Qualifies

What The Tip Deduction Covers, And Who Qualifies

President Trump signed the One Big Beautiful Bill on the Fourth of July, 2025. RSM US says that is when Section 224 of the tax code was made. It outlines a new tax deduction that will run for 2025 through 2028 to help cover the cost of certain tips that are considered qualifying. The deduction applies to staff in occupations that routinely received tips before the end of 2024.

According to the Journal of Accountancy, over the course of the next year after Trump signed the OBBBA, the IRS published an initial list of occupations in September, proposed regulations later that month and additional guidance in November, then published the final rules on April 10, 2026, adding three additional occupations of qualified tipped workers (floral designers, visual artists, and gas pump attendants) to the list that already included 68 qualified occupations.

The deduction for qualifying tipped workers ends at the end of 2028. The cap, as RSM US notes, is $25,000 on each return. The benefit is less and less for higher earners. The deductible tips will be reduced by $100 for every $1,000 of modified AGI above $150,000 (single filers) or $300,000 (joint filers). Rehmann says that the final rules took effect June 12, 2026, so payroll and point-of-sale staff had a two-month grace period after publication to prepare for the new regulations.

The IRS has introduced a new system called the Treasury Tipped Occupation Code, or TTOC, under which they classified the 71 occupations into 8 broad categories, summarized by TaxAct. Each occupation has a designated 3-digit code, which is the code the employer reports in box 14b of the W-2. According to Frank J. Bisignano, the IRS Chief Executive Officer, the IRS has already started to issue refunds related to the deduction.

The IRS announced this in its April 2026 final rule publication. This becomes relevant for point-of-sale teams because it signifies the IRS is already cross-referencing tip amounts with returns under their continued active review of returns, as opposed to publishing a rule and waiting for the subsequent filing season.

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Service Charge vs Tip: The Distinction That Decides Who Gets Paid

The final rules specify that determining whether a service charge is involuntary is what decides if the amount is deductible. A tip is voluntary; a charge is involuntary. Ogletree Deakins states that the example of the restaurant adding an 18% charge to the bill for parties of 6 or more is charging a service charge and not collecting a tip. The money collected that way would never be deductible, even if the restaurant later distributed that money to the employees as if it was a tip.

The final rules also increased the standard for voluntary tips. If a customer can’t tip zero, the charge is not voluntary. RSM US and Doeren Mayhew agree that a POS system is coercive if it offers only preset amounts, such as 16 percent or 18 percent, and tips cannot be set at zero. This also applies to checkout signature screens and tip-enabled touch screen tablets if customers do not have the option to opt out of the tipping system. In that case, the tipping amount does not meet the requirements of Section 224.

The IRS states that the ability to control the tip decreases the voluntary nature of a tip. Doeren Mayhew and the IRS state that service charges must be allocated to the wages of the employees. Employers that have their workers include banquet tips, large party surcharges, and delivery fees in the tip pool run the risk of employees claiming a deduction that the IRS will not honor. The decision of whether an amount is a tip or a service charge is made at the point of sale, at the item or charge level. Of course, payroll is not in a position to make a workaround.

Why Accurate POS Capture Now Carries a Dollar Value

Why Accurate POS Capture Now Carries A Dollar Value

Before this rule, an unreported tip was more of a compliance hassle for the restaurant than anything. An unreported cash tip from a server or a sloppy batching of tips by a manager impacted math for the tip pool and payroll taxes. Now, each dollar unreported is a dollar the employee cannot deduct.

Let’s take a single day and see what happens. Let’s say a server has cash tips totaling $150. However, the server only reports $100 to the POS. That server has lost the ability to deduct $50 at the end of the year. Think of what this does over the course of an entire year. The difference in the value of lost deductions between a restaurant that maintains good tip report habits and a restaurant that has poor tip report habits can easily amount to several hundred dollars per employee.

This changes the way employees interact with the POS tip reporting systems. Employees now have more incentive to report tips than before. This new structure makes employees report card tips and cash tips and make sure that pooled tips adhere to the terms of the tip pool. A restaurant that trains its employees to report tips accurately and a restaurant that configures its systems to make tip reporting easy provides a real benefit to its employees at no cost to the business.

Tip Pooling, Managers, and the Records That Still Need Care

Even with tip pooling, there are reporting risks. The final rules state directly that tips going to tip pool managers or supervisors for tip-sharing, either mandatory or voluntary, are not considered qualified tips. As stated by Ogletree Deakins, this is true no matter the tip pool arrangement structure. Thus, a shift lead who receives a share of a tip pool by a title that is effectively supervisory cannot consider that share of the tip pool a deductible tip, even if the source of the tip money is the customer.

Tip pools that are distributed automatically by a point-of-sale system rely on classification of employees. If the tip pool system automatically distributes the tips to a working manager who is classified as a manager for tip distribution, but who is a non-supervisory employee for most of the shift, the classification would be wrong. The final rules treat ownership interests and abusive situations on a case-by-case basis, in place of the previous broad prohibition, as described by RSM US. This means that classification decisions carry more gray area, and more incorrect decisions will go unnoticed.

Restaurants with shared tip pools for servers, bussers, and bartenders should treat the attribution report for a tip pool the same as reviewing payroll. An incorrectly attributed dollar in a tip pool report is not just an internal equity issue. It is a dollar that would show up or fail to show up on the W-2 of the wrong employee.

W-2 Reporting Changes for Tax Year 2026

Because of the tip deduction, the design of W-2s for 2026 will be the first to focus on the tip reporting change. As the instructions state, cash tips must be reported separately and should be reported in box 12 with code TP indicating the total tips in cash. Box 14 has now been subdivided into box 14a (Other info) and box 14b (the employee’s TTOC). Here, employers can report up to two codes. Employers can enter code 000 for the portion of the tips that came from a non-qualifying position.

W-2 fieldWhat it now showsSource
Code TP, Box 12Total tips in cash that were reported to employerIRS 2026 W-2/W-3 instructions
Box 14aOther information (unchanged category)IRS 2026 W-2/W-3 instructions
Box 14bTTOC code(s), up to twoIRS 2026 W-2/W-3 instructions
Boxes 3 and 7Social Security wages and tips; FICA still appliesIRS; MP HR (Jun. 30, 2026)

Analysis of the 2026 W-2 Design regarding separating qualified cash tips as a discrete wage type.

There are no changes to the withholding for Social Security or Medicare. As MP HR states, FICA taxes apply to tips reported to the IRS, even if those tips are not eligible to be claimed back as a federal tax deduction. Employers who think the new W-2 boxes mean a change in payroll tax withholding are gambling on under-withholding each payroll and will be in for a shock at the end of the year when they have to reconcile all the payroll.

In 2025, the IRS had not finalized the new W-2 format, so the earlier reporting method had to be used. The method used in 2026 will really matter to the configuration of the point-of-sale equipment, as the total tips in cash reported must be the same as the information stored in the equipment at the end of the year.

What to Check in POS Tip Settings

What To Check In POS Tip Settings

Three criteria will determine if a restaurant’s tip records will satisfy the IRS’s deduction rules. None of the three are uncommon POS settings. The first criterion is the flag for ‘tip vs. service charge’ that is associated with each menu item or party-size rule. An automated system that favors automatic large-party tips falling under the ‘tip vs. service charge’ category is misclassifying money prior to seating the party, and will lose the deduction for every dollar of tip the employee purports to claim.

The second criterion is whether a ‘zero-tip’ amount can be keyed in on the payment screen. If the tip screen only provides a series of tip amounts, and if a ‘zero-tip’ amount cannot be keyed in on the screen, then under the final rules the amount collected is not a voluntary tip and the deduction will be denied, no matter if the screen is a handheld, a countertop terminal, or an ordering kiosk. Cash tips are the last criterion and, during a busy shift, will likely be the one criterion that is overlooked. A cash tip entry at closing is what puts the server’s cash tips on the record.

Another audit-worthy section is attribution logic related to tips in the context of determining whether the system separates supervisory tips from other tips, as the final rules state that, irrespective of the structure of the tips pool, income earned from manager/supervisor tips is not deductible. Restaurants should perform this as a due diligence audit rather than a voluntary cleanup, because the regulations went into effect on June 12, 2026, and apply to the full 2026 tax year.

Clean Tip Records as a Retention Advantage

Restaurants face the tightest labor markets in the service sector when it comes to staffing. In 2018, the National Restaurant Association reported an average employee turnover rate of 75%. Additionally, Cornell University’s Center for Hospitality Research states that replacing one hourly employee costs an average of $5,864 due to the costs associated with recruiting, hiring, and training. Given these factors, a tax deduction of up to $25,000 is a substantial part of a restaurant employee’s total compensation, at least at restaurants where staff can validate their tip record.

A restaurant that accurately records cash tips, occupational codes, and pool assignments provides full benefit value to employees. An employer who has messy entries loses some benefit to employees, and the employer potentially never sees this money. Tipped employees talk to one another about which restaurants keep clean records. A manager who can say that employees’ tip entries are correct and employees receive their recorded wages is a strong retention tool with very little cost.

Restroworks industry turnover data indicates front-of-house turnover is 41 percent per year. This may not be as bad as the average of all positions within an organization, but most restaurants spend a significant amount of time and resources training a large portion of their staff every year. When a new employee is added to the staff mid-year, that employee must be trained to do tip entries the correct way so that the POS is configured for turnover, not the work of one trained server. A setting that works for one server is not a long-term solution.

Conclusion

A POS configuration decision results in an additional line item for tip deduction in the tax return. For cash to qualify as a tip, the amount must be separated from service charges at the point of sale, making tip reporting the responsibility of the employer before the preparation of a W-2. The Treasury’s tip-eligible occupation list and the $25,000 cap, in addition to the $150,000 and $300,000 phase-out limits, will only reach an employee whose employer records tips correctly.

In restaurants where tip entry, pool allocations, and job coding are done right, the tip deduction will appear on 2026 W-2 forms. Not addressing the tip entry system results in a loss of the benefit to employees at no cost to the employer, which is not what Congress intended.

Frequently Asked Questions

  1. What is Section 224’s federal tip deduction?

    RSM US states that for the years 2025 through 2028, eligible workers can deduct qualified cash tips of up to $25,000 from their federal taxable income.

  2. Do mandatory service charges fall under qualified tips?

    No, automatic service and gratuities charges are not considered tips by the IRS and therefore do not qualify for a deduction.

  3. How many occupations are there that qualify for this deduction?

    The final rules state that the 71 occupations defined by the IRS include the addition of floral designers, visual artists, and gas pump attendants, made in April 2026.

  4. Do tips that are paid to a manager through a tip pool qualify?

    No, tips that reach a supervisor or manager through any tip-sharing are not included, regardless of how the pool is structured.

  5. Does this deduction affect payroll tax withholding?

    No, this deduction is only for a reduction of federal tax liability. Medicare taxes and Social Security will still apply to all reported tips.

  6. What is different for tipped employees for the 2026 W-2?

    For 2026, cash tips must be reported separately in box 12 with Code TP and the employee’s TTOC must be reported in box 14b.

POS tip records and the tip deduction: one piece of running payments in a restaurant. The rest of our restaurant payment guides are in Restaurant Payment Resources.

Online Holiday Sales

Early Holiday Forecasts Point to 8% Online Growth and a $22 Billion BNPL Season

What if waiting until November to prepare for Black Friday is already too late? The holiday shopping season may still be weeks away, but retailers don’t have to wait to see what could shape the 2026 season. Early forecasts are already highlighting various important trends. According to Salesforce’s holiday shopping data, last season set records. Shoppers worldwide spent $336.6 billion during Cyber Week, and online spending for the full season reached $1.3 trillion globally.

Deloitte’s September 2026 forecast puts online holiday sales growth at 7.5% to 8.4%, call it 8%. And if BNPL keeps growing at last year’s pace, American shoppers will put over $22 billion of their November and December online orders on installment plans.

These numbers may sound like a reason to go all-in on holiday inventory and promotions. But that’s not necessarily the message. For ecommerce retailers, that means the goal isn’t to make dramatic changes based on predictions. It’s to use those predictions to make a few practical decisions while there’s still time to test, fix, and adjust. So, what do the online holiday sales and early 2026 holiday ecommerce forecasts actually mean for your business? Let’s break down each prediction and turn it into a September action.

Online Holiday Sales Could Grow by About 8%

Online Holiday Sales Could Grow by About 8%

Let’s first start with the number most retailers care about: online sales. Deloitte’s early forecast points to roughly 8% growth in ecommerce sales this holiday season. Eight percent may not sound huge, but for an ecommerce retailer, even modest growth can bring real operational challenges.

Imagine your online business generated $1 million in sales during the 2025 holiday season. An 8% increase would put your sales around $1.08 million.

That’s an additional $80,000 in sales. This also means that:

  • More orders to fulfill
  • More inventory to store
  • More customer service requests
  • More returns
  • More payment transactions
  • More pressure on shipping operations

This is why retailers shouldn’t read forecasts only as a sales number. They should know what that growth means for the rest of the business.

What Should Retailers Do in September?

Start with last year’s holiday numbers. Look at your:

  • Total holiday revenue
  • Number of orders
  • Best-selling products
  • Slow-moving products
  • Average order value
  • Return rates
  • Stockouts
  • Fulfillment times

Then use those numbers as your baseline for 2026 planning. For example, if your business sold 10,000 units of a particular product last holiday season, that doesn’t mean you should order 15,000 units this year. Instead, look at the product’s actual sales trend, current demand, margins and inventory position. The same principle applies to your overall sales forecast.

BNPL Is Heading for a $22 Billion Holiday

BNPL Is Heading for a $22 Billion Holiday

Holiday shopping can be expensive and can push people over budget. Customers buy gifts for their loved ones, upgrade electronics, or spend on products they wouldn’t buy during the rest of the year.

Paying in installments has obvious appeal in December. Shoppers like being generous, but they don’t want a whole season of gifts landing on one month’s budget, and they don’t want to carry that balance on a high-interest card either. That’s one reason buy now, pay later (BNPL) can become especially relevant during the holiday season. BNPL allows customers to split a purchase into multiple payments rather than paying the entire amount. Adobe put last season’s BNPL total at a record $20 billion, a 9.8% rise. One more year like that clears the $22 billion mark.

For retailers, that makes BNPL worth evaluating before the holiday rush.

If your business doesn’t offer a BNPL option, determine whether it makes sense for your products and customers. If you’re already offering it, it’s time to test the experience. Don’t wait until Black Friday to discover that the BNPL option isn’t showing correctly on mobile or that customers aren’t clear on the payment terms. Review the complete customer journey:

Product page → Cart → Checkout → Payment option → Confirmation

AI Shopping Traffic Could Become More Important

AI Shopping Traffic Could Become More Important

AI has entered the market, and now customers have more ways to discover products. Instead of looking for a particular product on search engines, a buyer might prefer an AI-powered shopping tool for recommendations. Adobe’s data from last holiday season showed shoppers arriving from AI tools converting 31% more often than visitors from other channels. The gap was 54% on Thanksgiving itself and 38% on Black Friday.

There’s no reason to expect that gap to close this year, and Salesforce predicts one in five holiday ecommerce visits in 2026 will come from AI agents.

Retailers should start reviewing their product catalog. Product pages should clearly communicate:

  • What the product is
  • Who it’s designed for
  • Product size
  • Color
  • Material
  • Price
  • Availability
  • Key features
  • Shipping information
  • Return information

For example, compare these two product titles:

Basic: Premium Winter Jacket

More useful: Men’s Waterproof Insulated Winter Jacket, Black, Sizes S–XXL

The second title gives shoppers and shopping systems much more information. The same principle applies to product descriptions.

Don’t rely on vague phrases such as “high quality,” “premium product,” or “great for winter” without explaining what actually makes the product useful. September is also a good time to review your structured data and product feeds. Make sure important information such as price and availability isn’t outdated.

Cross-Border Shopping Could Approach 20% of BFCM Spending

Cyber Monday and Black Friday aren’t just domestic shopping events anymore. Buyers can make purchases from retailers based overseas and ecommerce makes those purchases easier than ever. Practical Ecommerce’s 2026 predictions have cross-border orders making up about a fifth of global Black Friday and Cyber Monday spending. In DHL’s 2026 report on e-commerce trends, 70% of online shoppers worldwide said they purchase from merchants based abroad, compared with 60% the year before, and 45% said they do so at least monthly. Chinese sellers take the biggest share of that business. Nearly six in ten international buyers (59%) have purchased from a Chinese merchant, compared with 32% who have bought from an American one.

The biggest motivation for people to shop overseas is lower prices. The Chinese discount apps are a big part of it: 41% say they shop on Temu, Shein gets 32%, and AliExpress or Alibaba 22%.

This is a real opportunity for retailers who are already selling across borders. But it can also create problems, because preparing international orders can be complicated.

For example: a customer in Canada is buying a $150 product from a US retailer. The customer may want to know:

  • How much will shipping cost?
  • When will the package arrive?
  • Will they have to pay customs duties?
  • Are taxes included?
  • What happens if they need to return the item?

If those answers aren’t clear, the customer may abandon the purchase—or be surprised after placing the order. Before you open up to international customers, set your international shipping policy. If you are already shipping to international customers, review the countries you serve and make sure your shipping details are accurate and up to date.

If this is your first year selling internationally, determine which markets you can realistically support. Be clear about where you ship, how much international shipping costs, who is responsible for duties and taxes, and how long customers can expect their orders to take.

Don’t Plan for a Holiday Boom That May Not Come

The 2026 holiday season could bring more online spending, increased use of BNPL, more AI-driven product discovery and cross-border shopping. But that doesn’t mean you’re heading for a massive sales surge. An expected 8% increase in online sales is meaningful, but it’s still moderate growth. It’s better to prepare carefully. Use last year’s sales as your foundation. Add reasonable growth assumptions. Review your payment options. Clean up your product data. And settle international shipping and duties policies before the holiday rush. If you’re also looking at cash flow, “Ways to Tighten Your Cash Flow Before the Holiday Crunch” can help you prepare for the financial side of the season.

Black Friday may be the headline event, but September is when many of the decisions behind it can still be made calmly.

If you need the broader holiday preparation checklist, read “The Holiday Season Plan: 10 Moves Retailers Should Make Before October.” And for payment-specific preparation, “E-Commerce Payment Optimization” can help you review the checkout experience before the holiday rush begins.

tap to pay

Taking Cards at Markets and Pop-Ups with Just Your Phone

Card Acceptance without a Card Reader

Not long ago, small sellers had to purchase a separate card reader to handle anything other than cash transactions. Now, with tap-to-pay technology, many smart devices can take a payment with the phone’s hardware. This technology is being adopted by larger retailers with tap-to-pay checkout counters. Since a phone has tap-to-pay technology, no card reader is needed; there are no cables to connect to a dock, and you do not need to charge a card reader since a phone already has many use cases and gets charged often.

This technology is most beneficial for sellers who operate booths at markets, fairs, and pop-ups because these types of sellers have a small amount of time to set up and a small amount of space for their selling booth. A seller who uses a phone to accept payments can set up quicker and carry less equipment. It also helps limit the number of pieces of equipment the seller has to manage during a selling transaction.

This article explains how a tap to pay phone works, what the steps are before a seller can accept payments at a market, and the money questions vendors ask most, including how long it takes for money to be available to the seller, what a digital receipt looks like, and how to issue a refund from a phone.

Why Vendors Are Moving to Tap to Pay

Why Vendors Are Moving to Tap to Pay

A week may not seem significant, but it can justify a major change in the payment systems at market stalls. According to Visa’s March 3, 2025 release, its Tap to Phone option had an increase of 200% in comparison to 2024, and around 30% of the users were private small vendors, which is the main clientele of vendors working at pop-up shops for the first time.

Visa’s own data on domestic face-to-face transactions shows how far tap payments have come in the U.S., especially: in 2017, less than 1% of Visa’s domestic transactions in the U.S. were tap transactions. By the end of 2022, that percentage was 28%. According to Visa Inc. data reported by S&P Global’s 451 Research, by the second quarter of fiscal 2025, this percentage had reached 60%.

The chart below shows the expansion based on Visa’s reported figures concerning the domestic face-to-face transaction share.

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Accepted card methods have infiltrated cash-only markets. The USDA’s Economic Research Service reported that by 2018, at least one farmers market in 51% of U.S. counties accepted credit cards (having been at 48% in 2016). Independent research conducted by Cornell University’s market strategy extension program with ten meat farms at farmers’ markets in 2021 stated that buyers using cash paid on average $2.28 less per transaction than those using a card to pay for their goods.

How Tap to Pay on a Phone Actually Works

Behind tap to pay is NFC technology, which is built into many new iPhones and Android devices. To take a payment using this technology, the vendor opens the payment app and enters the amount, and the customer brings their contactless payment card or digital wallet close to the phone. The phone and the card or wallet then communicate wirelessly to complete the payment. The payment app sends the payment credentials on to the processor, and the payment is processed.

For iPhones, Apple says Tap to Pay on iPhone has been reviewed by a security laboratory and is accepted by payment networks in the locations where it is available. Tap to Pay on iPhone uses the Mobile Payments on COTS standard in iOS 18.4 and later. Setting a passcode on the iPhone is also required. Android tap-to-pay implementation will vary depending on the payment app and the phone’s NFC hardware, and support will also vary by payment app.

A tap-to-pay phone can accept the same types of contactless payments as a POS system. With tap-to-pay, a vendor does not need to determine which payment network issued the card the customer presents. The phone reads the contactless payment the customer brings.

Payment networks assign processing limits to how much a single tap can process. Vendors do not set these limits. Published limits for Tap to Pay on iPhone are $50,000 for a digital wallet tap and $10,000 for a contactless card tap. On larger card taps, the issuing bank may ask the customer to enter their PIN on the phone’s display. A handicraft seller who participates in a flea market will rarely, if ever, come close to the tapping limit.

Vendor Apps Built around Tap to Pay

Some mobile point-of-sale (POS) systems include several payment methods.

CloudPay Mobile

Host Merchant Services (HMS) has created CloudPay Mobile as an addition to their point-of-sale (POS) app offerings. CloudPay Mobile has the Tap to Pay feature that works on both Android and iOS devices. CloudPay Mobile also provides the PAX card terminals, the ability to manually enter card numbers, and accept cash, all on the same POS. This ensures that vendors will not be locked into a single payment acceptance method for the duration of an event.

CloudPay Mobile has protections in place for duplicate charges. Should a payment be retried due to a dropped connection, the customer will not be charged twice. This includes taps, saved cards, kiosk sales, and invoices. CloudPay Mobile can also process payments for multiple branches and merchant accounts from a single device. This includes payment separation for each account as well as separation of staff and payment session accounts. All of this is offered for free for the vendor. Payment processing is how HMS makes its revenue.

Other processors create their iterations of Apple and Android’s tap-to-pay framework, and bundle it into a point-of-sale or invoicing app. The steps to set up each of these apps are largely the same, although there are slight variances in menu names.

The One-Afternoon Setup before Market Day

The One-Afternoon Setup Before Market Day

Getting tap to pay working on a market booth is a straightforward process that can be done in a day and once for the season before the first market.

Install and Test the App at Home

Begin at home on a stable internet connection and download the payment app from the Apple App Store or Google Play Store. If you haven’t already, sign in to your account or create an account. Verify that NFC is set to on, under your phone’s settings.

Some Android phones have it set to off by default. Make or confirm a passcode on your device, as both Apple and Google’s tap-to-pay require a passcode before the feature is enabled. Develop a simple product catalog in the app; a short one is fine, so you can select items in the catalog as opposed to having to type everything at the table.

Run a Real Transaction before Market Day

A test charge for a small amount, refunded almost instantly, verifies the merchant account is connected, the phone’s NFC reads a physical card, and a receipt is sent as expected. This should be an actual transaction, not a sandbox transaction, and should be done a week before the market, not at 7 am on market day. It’s a significant customer service mistake to do a test transaction in front of a customer ten minutes before market.

Check Connectivity at the Venue

To process tap-to-pay transactions, a connection is necessary, either through Wi-Fi or cellular. Market connections and fairground connections, especially those that are indoors, underground, or have metal roofs that interrupt cell signals, are not very reliable. A vendor who has never worked that particular market/fair before should arrive as early as possible to test the signal strength at the booth location and not just in the parking lot.

Some payment applications offer a setting for offline transactions that will hold an approved transaction and process it when the device connects to the internet. Even though offline transactions are processed, payment is not guaranteed, and there is a chance the transaction will get declined later.

The Backup Plan for a Card That Won’t Tap

Some cards don’t always successfully tap the first time. Also, some customers don’t have contactless enabled. For a machine that only takes a tap, there is no solution if the card doesn’t tap. One of the best solutions is tap to pay with another way to accept payments in the app — for example, manual payment for cards that will not read, or a PAX terminal for chip and PIN where contactless does not clear the sale. Keeping a small amount of cash on hand for the unlikely situation of total system failure remains standard for all vendors.

Tap to Pay Compared with a Dedicated Card Reader

Tap to Pay Compared With a Dedicated Card Reader

A number of vendors continue to like physical card readers that can be plugged in or paired to a phone to process transactions. Both the tap-to-pay and the card reader options process payment transactions via software that runs on the phone. The main difference is on the hardware side with regard to the different types of customer cards that each reads.

FeatureTap to pay on phoneDedicated card reader
Extra hardware neededNoneReader device, plus charging or batteries
Card types acceptedDigital wallets and contactless cards onlyContactless, chip insert, and magstripe
Setup at a new venueApp and phone onlyPair reader via Bluetooth each session
Best fitFast-moving stalls, small tables, pop-upsHigh-volume booths, older customer cards

Table 1. General comparison of tap-to-pay and dedicated card-reader setups for market and pop-up vendors.

There are no clear winners. A low-cost stand selling to an audience of young customers typically sees payment via card or digital wallet. With tap-to-pay available to buy a majority of items offered, most transactions are completed via card or digital wallet taps. A booth that offers different age ranges of customers benefits from having a chip-reading card machine.

When the Money Lands

When a sale is made with a credit card, the vendor does not receive the funds directly. The sale authorization is processed in real-time, but the sale is not considered complete until the batch of sales for the day is closed (or “batched”). Host Merchant Services says that sales closed or batched before a certain time, which ranges from 4 p.m. to 11 p.m. Eastern, will be processed for payment the next business day.

A batch closed after that time is not processed until the next business day, effectively delaying the payment by one more business day. Batches closed on a Sunday will be processed on Tuesday, since banks do not process transactions on Sundays. Many payment applications, such as CloudPay Mobile, are able to auto-batch at a certain time of the day, meaning a vendor does not need to close the batch themselves.

What Receipts Look Like

Receipts that are sent through tap-to-pay systems are digital by default. After a payment is processed, the app gives the customer the option to send the receipt through a text, email, or (if the store has a portable printer) by giving them a printed receipt. The receipt has the transaction amount, the time and date, the last four digits of the card, the approval code, and the name of the business.

Inside these systems, CloudPay Mobile, for example, keeps a record of the same transaction within a batch settlement log that can be searched by day and has information for each sale authorization code and the associated processor reference. This information can be used to aid in a customer refund dispute.

How Refunds Work from a Phone

A refund for a tap-to-pay purchase is not made by tapping your phone against the card a second time. Instead, a refund is initiated from the payment application used to process the original payment. Once the merchant has located the original transaction in the application, they are able to issue a refund for the full or partial amount. The refunded amount is sent back to the same payment method used for the purchase and, along with the rules standard for card networks, is not permitted to be sent to a different payment method.

The time it takes for the refund to be processed and posted to the cardholder’s statement is mostly beyond the control of the merchant and will be dictated by the card issuer, which is usually a few business days rather than being instant. A refund made after a batch has been settled still processes normally; it simply appears as a separate transaction on a later statement rather than netting against the original sale.

Conclusion

Thanks to NFC technology, making phone-only tap-to-pay contactless payments an option is much more convenient for market and pop-up vendors. Since the technology is the same for customers as it is for vendors, it’s much easier to get started.

Unfortunately, some vendors are wary about getting started because they end up trying to set it up at the booth, instead of the week before. That’s when most vendors learn that it’s as simple as installing the app, running one test transaction, checking the signal at the venue, and making sure they have an alternative payment method.

The risk of losing potential sales is almost completely eliminated when setting it up before the first customer taps their payment card.

Frequently Asked Questions

  1. Do I need a separate card reader to accept card payments with phone?

    No, you don’t. ‘Tap to Pay’ works with digital wallets and contactless cards on supported Android and iPhone devices, and does not require any peripheral hardware.

  2. Is Tap to Pay safe for a vendor to use at a market?

    Yes, Apple claims that Tap to Pay on iPhone has been assessed by an accredited security lab and approved for use by accepted payment networks.

  3. Which phones support tap to pay for vendors?

    If you’re using an iPhone, it needs to be an XS or later. For Android, it depends on both the payment app and the hardware NFC on the specific device.

  4. How fast does market money get to my bank?

    If the payment batch is closed before the processor’s daily cutoff time, you can expect to see funds the next business day. A batch closed after the cutoff takes one more business day.

payment abandonment

Why Residents Abandon Online Bill Payments Halfway

For most American households, online payment is the new default. However, users still leave payments unfinished. When users click the payment link but do not finish the payment, billers, utilities, and government agencies lose potential income and incur the cost of increased call center usage. An unfinished payment will not magically disappear; it will generate late fees for the resident and possibly even cause a service disruption.

The word abandonment indicates that payment quitting happens at a specific, discrete moment. However, new research shows that abandonment happens over multiple steps. Consumers begin the payment online, but an unexpected fee, a login they cannot remember, or an awkwardly located field on a payment form that requires a piece of information the user does not have leads to payment abandonment. All of these things can cause payment abandonment individually. Collectively, they explain why adoption of online payment systems runs ahead of actual payment completion.

The Scale of Online Bill Payment Adoption Today

The scale of online bill payment adoption today

Eighty percent of online bill payments in the United States bypass bank bill-pay systems and go directly to utilities, government agencies, or service providers. This was only 62% in 2010. It has also become easier to automate bill payments. Nearly half (44%) of consumers had automated bill payments in 2026; only 40% had it in 2023. People prefer automation because it reduces the need for the repeated “decision” to log in and pay a bill, which is often the point at which payment is skipped.

These automated payment systems reduce the burden of “decision fatigue” to bill payment and also automate the payment so that consumers do not face the moment of deciding whether to pay the bill and therefore skip it. The automation of payments also eliminates the mailing delay. Financial stress is widespread, as reflected in the 36% of consumers who regularly report anxiety over bill payments and the 29% who do not have $400 saved for emergency expenses.

Datos Insights

In the second quarter of 2026, Datos Insights’ Retail Banking and Payments practice surveyed 4,057 U.S. consumers for its 2026 bill payment methods report, covering a market of 17.1 billion bills totaling $5.2 trillion. The size of this dataset makes their biller-direct and recurring payment figures the most useful findings.

It is their dataset size that allows these figures to be considered reliable benchmarks as opposed to being a single organization’s case study. The report also breaks bill payment method adoption by generation, and notes a significant divide between Gen Z and baby boomers on both method and channel. This divide matters to any resident portal that has to serve every generation.

Where the Payment Abandonment Actually Happens

Where the payment abandonment actually happens

The user experience problems with government payment systems and online payment systems for utility bills are the same as with retail checkout, even though payment with government systems or utility bills should be much simpler. A resident who pays for water is not checking the competition or looking for a deal. They just want to pay the bill and leave. When the system takes too many steps, the result is the same as with retail checkout – residents abandon their task.

Baymard Institute

In its September 2025 report, Baymard Institute elaborates in detail on the reasons behind customer payment checkouts that do not complete successfully. Based on their report, 40% of all U.S. online shoppers attributed abandoning an order to payment checkout processes that charged them last-minute fees. 19% of online shoppers abandoned an order because they didn’t trust the site.

18% of shoppers felt forced to create an account prior to being able to complete a payment. 17% of shoppers blamed abandoning an order on a complicated and lengthy checkout process. Another 17% attributed abandoning an order to site errors or crashes. 12% of all shoppers complained about having to complete the payment checkout process only to find out the total amount due later in the process.

Baymard Institute’s benchmark data gives a number to this final complaint. The ideal checkout process consists of 12 to 14 form fields. The average checkout process in the U.S. is longer and requires 23.48 form fields. Every additional field is an opportunity for an online resident to stop the checkout process or be distracted and come back to complete the payment at a later time.

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Government Payment UX and the Trust Gap

While a retail shopper can leave for a competitor, public sector portals have no alternative provider. If a portal for a county tax payment or a utility bill is difficult to navigate, the resident has no other choice but to call or go to the office in person. As a last resort, the resident will miss the payment altogether.

Deloitte

A survey conducted by Deloitte shows that 55% of respondents in the US said they would prefer to interact with the state government online and 50% said that preference applies to the local level. However, actual use of online government services is only at 23%. Among the respondents of the survey satisfaction was reported to be 78% for online voter registration, the highest satisfaction rate.

Close behind, online services for motor vehicle documentation, public health, and transportation services scored 60% satisfaction. The other services, such as public housing, child and family services, and business licensing, scored low satisfaction around 50%, and these services tend to have the most complicated payment and application processes.

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SimpliGov

SimpliGov has identified a gap caused by a particular structural issue. Many agencies use a separate vendor for a forms platform and a payments platform. For payments that are processed on a separate, disconnected site, residents do not have visual continuity and do not know if they are still in a legitimate government process. Separating systems interrupts more than one transaction.

The broken connection with two systems creates a lack of trust in the agency, and that lack of trust has consequences with the following bill cycle. SimpliGov has identified an additional issue on top of the trust issue. Residents who live in rural and suburban areas, where connectivity is limited, already experience more friction than urban residents. If those residents are required to navigate two separate systems, that puts the payment at risk.

Resident Payment Portal Friction Points

Resident payment portal friction points

The issues in a resident payment portal tend to build gradually. They are more like a series of small incremental steps rather than one large issue.

InvoiceCloud

The Third Annual 2026 State of Online Payments Report by InvoiceCloud is based on a commissioned survey of bill payers in the United States. The report found that a third of respondents avoid digital payment methods altogether due to a lack of options that are convenient and easy to use. Of digital payment method users, one in four need to look up their login credentials to pay a bill every time. Another 22% said that payment reminders are the main reason they fall behind.

All of these issues can have a negative impact on a biller’s ability to collect. One of the most common reasons residents let payment reminders lapse is that they begin to enter payment information, get pulled away, and close the browser to pay at a more convenient time.

Eliminating the requirement to create an account as a prerequisite to making a payment solves the same problem that Baymard studied in retail: the percentage of residents who abandon the payment process increases if the residents feel as though they are being forced to create an account.

InvoiceCloud’s other survey, published in 2025, found that for the first time in the survey’s history, payments initiated by mobile wallets surpassed payments initiated by the Automated Clearing House (ACH). The survey reported that if the payment system is designed for mobile use/payment, the completion rate also improves.

The Mobile and Connectivity Divide behind Incomplete Payments

Building a resident payment portal that works solely on desktop loses segments of the intended audience before a single design flaw is even detected by analytics.

Pew Research Center

The most recent Pew Research Center broadband tracking, January 8, 2026, shows that 16% of US adults use a smartphone as their only means of Internet access. This means that they have a smartphone but do not have home broadband. Three-quarters of US adults do subscribe to home broadband. This 16% is not evenly distributed. According to Pew Research Center, the dependency on smart devices increases among adults younger than 30 years of age, Hispanic and Black adults, adults from low-income backgrounds, and adults with less formal education.

These groups overlap heavily with utility assistance program recipients and public housing residents. A payment interface that takes a long time to load on mobile, or a payment form that was designed for desktop, will result in losing the residents who are either unable to place the call during business hours or unable to make a payment in person.

According to the payments company InvoiceCloud, approximately two-thirds of the US adult population used their mobile devices at one point to pay a bill in the last year and mobile is now the leading payment channel for this population, growing to be the choice of 29% of billpayers in 2024 from 26% in 2023. Treating mobile as an afterthought is treating the leading payment choice as an edge case.

Utility Bill Payment Online and the Paperless Billing Gap

Having residents enroll in the system as ‘paperless’ is one of the clearest predictors of which residents will consistently pay their bills online. Barriers to this are limited enough to be resolved.

According to InvoiceCloud’s 2026 report, 65% of customers receive at least half of their bills digitally. However, 7% of customers have not taken any initiative to go paperless. Of that group, 35% want a paper bill. 23% are unsure of how to go paperless. 19% of customers have concerns about online bill payment safety. Finally, 12% of customers are unsure of how to enroll. This is an interface concern and is the easiest of the issues to resolve.

If enrollment options are made more apparent, for example, at the time of payment, it is a fairly easy issue to resolve. One incentive for paperless billing is the environmental angle. Frame environmental concerns about paper as a nudge. In 2018, 20% of responses to why customers choose to pay digitally cited paper concerns, compared to 2017, when only 10% of customers cited them.

What Reduces Resident Payment Portal Abandonment

Building a new resident portal is not the solution to payment abandonment. The solution is to eliminate the steps that have been previously identified in the data. The data shows that having a guest checkout option removes the barrier of forced registration that Baymard found affects 18% of abandoners. Making the total amount due visible, including any convenience fee, eliminates the barrier of extra costs that affects 40% of abandoners.

Reducing the number of form fields to the range of 12 to 14 identified by Baymard reduces the length of the flow enough to have an impact even on a slow mobile Internet connection. The trust gap that SimpliGov found when analyzing public sector portals is addressed by integrating the payment form and the payment processing system as a single system.

Conclusion

There is no compelling evidence to suggest that users avoid online bill payment systems because they reject the concept of paying bills online. The available data indicate the opposite; users prefer digital payment systems, and biller-direct payment volumes have been increasing since 2010. The issues that cause people to abandon payment systems are relatively minor design choices such as making users create accounts, hidden costs, long forms, and designs untested on the connections residents use.

Each of these issues has known solutions that do not require waiting for users to change their behavior. According to Baymard Institute, the expected value of better checkout design is a 35.26% increase in conversion rate for large sites. Conversion rates of utility payment and government payment portals have not been reviewed against this benchmark.

Frequently Asked Questions

  1. What is the main reason residents stop paying bills online?

    Baymard Institute’s research says 40% of online shoppers abandon carts because “unexpected costs” pop up.

  2. Does mandatory account creation affect successful payment rate?

    It almost certainly does. Baymard Institute’s research shows that 18% of online shoppers abandon the checkout because of mandatory account creation.

  3. Why do government payment portals have lower usage than anticipated?

    A 2023 Deloitte study shows that residents like the idea of online access to government services at 55%, but only use digital services at 23%, which is attributed to cumbersome government websites and services.

  4. How much do mobile-only internet access and payment portals intersect?

    In its 2026 report, the Pew Research Center found that 16% of adults only use the internet on mobile devices, so not having a mobile device-friendly payment portal could effectively shut that group out.

llinois Cash Acceptance Law

Illinois’ New Cash-Acceptance Law Covers Nearly Every Staffed Retailer — Is Yours Ready?

A cash-only driver at a Rockford gas station has a $20 bill, but no card. The attendant has the legal right to turn the cash away, but by 2028 in Illinois that will be illegal.

On July 31, 2026, Governor JB Pritzker signed the Retail Cash Payment Act. It was described by the media as a law for “most retailers.” And rightly so. The Illinois New Cash Acceptance law covers any business that takes in-person payments of any kind. Gas stations, grocery stores, and pharmacies are listed, but so is any store with a staffed cash register.

A boutique store is treated the same as a hardware store or an electronics store, so any merchant that sells face-to-face in Illinois must be able to accept cash. The rest of the law describes what needs to be ready by the deadline to meet the requirements of the new law.

What the Illinois Cash Acceptance Law Actually Requires

What the Illinois Cash Acceptance Law Actually Requires

On July 31, 2026, Governor Pritzker signed HB4592, the Retail Cash Payment Act. The Act passed the House in April 2026 with a unanimous vote of 102-0 and was unanimously passed by the Senate. This Act will take effect on January 1, 2028.

The intention of HB4592 is straightforward. Retail businesses covered by the Act may not refuse cash payments for sales less than $500. The Act prohibits a sign that indicates retail cash is not accepted. No such sign can be legally posted, even if cash is accepted at the cash register.

The Act is not require merchants to accept any bill a customer has. A merchant may refuse any cash bill that is greater than $20. The Act also does not prohibit offering discounts for other payment methods, but a covered business cannot charge a cash-paying customer a higher price than other customers. In Section 10(e) of the Act, payment method incentives and other discounts cannot nullify the intent of the Act.

Competing cash rules will not be allowed for home-rule counties and cities. Section 25 of the Act states that local ordinances are preempted by the Act. This Act states that the only standard that will apply is the state standard when the Act becomes effective, regardless of a city council’s preference.

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Who Is Actually Covered — Staffed, In-Person Retail

This is where sloppy reading leads astray. The Retail Cash Payment Act impacts retail mercantile establishments that employ at least one person to accept in-person payments at a physical location to transact the sale of goods or services to the general public. This covers nearly every staffed storefront in the state. A boutique qualifies. A hardware store qualifies. So do an electronics retailer and a furniture showroom as well as the gas stations, grocery stores, pharmacies, and restaurants that the news coverage kept naming.

These named categories are important for a different reason. They are the categories that cash refusals have been happening in and were the examples that lawmakers referenced when discussing the law. A gas station has an obligation on a sale of fuel and any other sale of in-person payment for goods or services under $500 on the same premises, whether it is food sold at the counter or a car wash.

A pharmacy has an obligation on the sale of goods and services transacted at the dispensing counter. A restaurant has an obligation on the sale of goods and services transacted at the cash register. None of these has an obligation on anything greater than what any other staffed retailer has.

How a business sells its goods and services dictates whether it falls under the Act, not the category. A business that has no employees to accept payment in person is outside the Act. The same is true of businesses that have no physical presence and transact sales purely over the phone, internet, or via an application. The exemptions further down carve out the rest.

Is Your Business Covered? Two Questions

The test is not as complicated as early summaries suggested. Does the business sell goods or services to the public at retail? If the answer is yes, and employees get in-person payments, then cash must be accepted for sales under $500 as of January 1, 2028, unless one of the following statutory exemptions applies. The law does not apply to the business if the answers are no, e.g. an unstaffed context, or a business that has no in-person sales.

The Complete List of Statutory Exemptions

Illinois Cash Acceptance Law The Complete List of Statutory Exemptions

Covered businesses are allowed to refuse cash in certain situations under this law. Section 10(b) describes six exceptions. Section 10(c) provides guidance for the self-checkout option: every self-checkout must accept cash if it is the only option to pay. However, if there is at least one cash checkout lane, the self-checkouts do not have to accept cash.

There are other examples. Cash does not have to be accepted between the hours of 10 p.m. and 6 a.m. This section would pertain to convenience stores, gas stations, and pharmacies that stay open overnight.

It is also an exception if the cash system fails or the business cannot make change. The exception lasts only as long as the failure does.

If a business requires a membership to purchase, that is another exception to the law.

The fifth exemption was the one that early news summaries ignored, and it is important to merchants that are considering a cashless-adjacent offering. A business that provides conversion of cash to a prepaid card onsite does not need to accept cash at checkout. Cash can still be converted to spending value within the merchant, but the conversion will be done by the prepaid card system, not at checkout.

The sixth exemption includes orders placed by phone, internet, or app and picked up in person at a merchant’s premises. A transaction that is not completed in person is not a cash transaction under this statute; therefore a merchant offering ordering by app for a time period of the day is not breaking the law during that time.

The $20 Bill Rule and the “No Cash Accepted” Sign Ban

Two small provisions are the most confusing for merchants because they deal with less common issues than most of the provisions. First, a business is not obligated to accept bills larger than $20. A customer who cannot pay a $40 tab with smaller bills can be refused service. This is not a violation of the act.

The second confusing provision is the signage rule, which businesses also get wrong. The sign “cards only” or “cash not accepted” is in violation of the act and will still be a violation even if cash is accepted at the register. Therefore, a store that accepts cash at the register and displays the “cards only” sign at the point of sale is also in violation of the act. These signs should be removed voluntarily by the businesses well before January 2028 to avoid an inspection prompted by a complaint.

What Covered Merchants Should Do Before January 1, 2028

Preparation begins with classification, and for most operators this is a quick step now: if a location has an employee taking in-person payments, then treat it as covered. A multi-location operator should still confirm this for each location separately, as formats can vary under one brand and one point-of-sale system, and should revisit the answer whenever a location changes format, rather than treat a 2026 review as a one-time classification.

The next step is hardware and staffing. Every covered location must have a point of sale that can process cash, and be staffed. This is the practical requirement for the self-service exemption in Section 10(c) and a fully unstaffed store format will not satisfy the law, even if a person is on the premises and is responsible for stocking or ensuring the security of the store.

Operations that are open on an overnight basis must also have a documented overnight policy. A 24-hour pharmacy or gas station must have a documented policy that provides the 10 p.m. to 6 a.m. carve-out so overnight cash refusals are not in violation of the law.

Signage on all locations must be reviewed. All “no cash” prompts, including signage and/or decals, must be removed prior to the effective date. New signage vendors and/or franchise packages must be verified for compliance.

Any businesses considering utilizing the prepaid card exemption must maintain an on-site conversion mechanism as the exemption’s on-premises language would more than likely not be satisfied by an off-site vendor who processes card loads through an application or call center.

Penalties, the 30-Day Cure Window, and Local Preemption

Violations of the Act are petty offenses. The fine schedule is designed to be low initially. There is a $50 fine for the first violation of the Act in a 12-month period. If a violation is committed for a second time during the rolling 12-month period, the fine increases to $100. If the violation is committed three or more times, the fine increases to $500. There is a $5,000 fine cap for each establishment for fines issued within a calendar year. Because there is a repeated violations cap, each establishment has a financial limit for how much they will spend for repeated violations.

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Section 20 of the law gives businesses a 30-day advance written notice for a cure period. Merchants who allegedly break the law are not penalized on the spot. They are required to fix the violation and are subject to penalties after the 30-day cure period. Businesses have the 30-day period to plan for becoming compliant. Since businesses can staff their cash registers, train employees, and audit their signs during the cure period, compliance is not difficult for many businesses.

Local governments do not have the power to pass local laws that go beyond the cash acceptance laws and restrictions that are set at the state level. Section 25 of the Retail Cash Payment Act preempts home-rule municipalities from making local laws. Once that Act is operational, the laws will be the same for the cities of Chicago, Springfield, and Rockford and all other municipalities of Illinois.

How Illinois Fits into a National Pattern

How Illinois Fits Into a National Pattern

Illinois is not the first nor will it be the last state to implement a cash acceptance policy. Massachusetts was the first in 1978. In the past couple of years, merchants in several other states and cities have been required to accept cash as society began to favor digital payment methods over cash transactions.

States and cities pass consistent laws requiring cash acceptance due to the large number of cash-based households. There are many reasons cash-based transactions still exist, including preference of cash, privacy concerns, and lack of bank accounts. The FDIC survey reports that 4.2% of households in the U.S. do not have banking services of any kind (unbanked), while another 14.2% of households are “underbanked.”

What Illinois retailers need to know is that cash acceptance laws generally stay valid. Just because the Illinois law does not take effect until January 2028, retailers should not assume it will go unenforced or be amended or repealed. Similar laws in other states and cities have demonstrated that cash acceptance stays on the books.

Conclusion

The Retail Cash Payment Act will impact a wide range of businesses, just as the media has reported. The act covers businesses where employees take in-person payments at physical locations. Gas stations, grocery stores, pharmacies, and restaurants are some of the more visible businesses covered by the act, but so are staffed boutiques and hardware stores.

The businesses covered by the act will still maintain a lot of flexibility. The act allows businesses to have a combination of staffed and self-service checkouts, to operate during overnight hours, to have problems with their cash system that last only a short period of time, to perform on-site the conversion of cash to prepaid cards, to operate in membership-only formats, or to encourage customers to order goods for pick up or delivery. The two clear and absolute rules are to have cash payment systems for payments under $500 and to have no signs indicating cash is not accepted.

Covered businesses will have until 2028 to put cash payment systems, staffing, and compliant signage in place. The first infraction penalty is very low, but businesses will face the greater cost of the scramble to change signs and staffing after the implementation deadline, instead of before.

Frequently Asked Questions

  1. Does the Illinois cash acceptance law affect all retail businesses?

    There are exceptions, but the law affects the vast majority of retail businesses. A retail business that employs staff to receive in-person payment transactions must accept cash for any sale that is less than $500.

  2. When does HB 4592 become law?

    On July 31, 2026, the Illinois state governor signed the Retail Cash Payment Act. The law will go into effect on January 1, 2028.

  3. Does the new law legally allow a business to refuse to take large tender?

    Yes, the law states businesses may refuse any single bill larger than twenty dollars.

  4. Do online-only sellers have to take cash?

    No, any transaction where the payment is processed remotely does not fall under the law.

  5. If a business places a sign that reads, “Cash not accepted,” what would happen to the business?

    It would be considered a violation of the law to place such a sign.

  6. If a business has only self-service cashless checkout lanes does the business have to install at least one lane that takes cash?

    Yes. If every lane is self-service, those lanes must take cash. If at least one staffed checkout lane takes cash, then self-service checkout lanes are not required to take cash.

  7. If a business violates the Retail Cash Payment Act, what would be the penalty for the business?

    The first violation would require the business to pay a penalty of $50. The second violation would require a payment of $100; the third violation would require a payment of $500, with fines capped at $5,000 per calendar year, and fines apply only after a 30-day grace period to allow the business to correct the violations.

  8. Can individual municipalities pass their own laws about cash acceptance?

    No. Section 25 preempts home-rule units, meaning that Illinois has the statewide rule.

BOPIS Chargeback

How to Prevent BOPIS Chargebacks

Buy online, pick up in store shopping has become one of the fastest-growing checkout options in retail. It gives customers speed and convenience, and it gives merchants a way to compete with same-day delivery without the shipping cost.

That convenience comes with a hidden trade-off. A BOPIS order skips most of the verification steps built into home delivery, from a shipping address to a carrier’s proof of delivery. Once the sale moves to the pickup counter, the merchant is often left with the weakest evidence in the entire order lifecycle.

That gap is exactly what BOPIS chargeback exploits. Disputes on pickup orders are climbing as fast as the channel itself, and most retailers are still defending them with fraud tools designed for shipped goods, not for a face-to-face handoff.

What Is a BOPIS Chargeback?

What Is a BOPIS Chargeback

A buy online pickup in store (BOPIS) chargeback is a situation where the consumer disputes a BOPIS purchase with their card issuer after the purchase has been made. In these situations, the consumer purchases the item online, but doesn’t receive the item until they pick it up at the store.

The majority of these types of disputes are filed as “item not received.” In a BOPIS situation, this terminology is incorrect, as the item was received. It was simply exchanged at the counter, as opposed to being received through the mail.

The majority of standard e-commerce fraud screening models were created prior to the BOPIS model. These models rely heavily on the comparison of a shipping address and billing address. A BOPIS order does not have a shipping address because, by nature, nothing is shipping.

The lack of one simple piece of data is the reason why pickup orders (BOPIS) are drastically increasing order fulfillment fraud undetected. It also explains why so many merchants only learn of a discrepancy after the dispute notification is sent to the merchants.

Why Pickup Orders Attract More Fraud Than Home Delivery

Fraud thrives off of convenience, and BOPIS is very convenient. Card-not-present fraud is extremely easy. From the perspective of the fraudster, there is no need to drive to a location and sign for a package. There is no need to even approach a building. All the fraudster needs to do is walk up to a counter, say the name on the order, and take merchandise.

What many loss prevention personnel have long suspected based on their experience has also been proven by many studies. According to fraud prevention analysts, the checkout and fulfillment data for a large number of transactions show that there is a “significantly” more serious attempt at fraud for BOPIS orders.

image 26

Source: Fingerprint (fingerprint.com) and Founders Guide, sourcing reported fraud rate attempts for buy-online-pickup-in-store compared to other online order types.

Three examples keep popping up in the reports relating to this issue. In criminal fraud, orders are placed with stolen card details and there is no shipping address, which eliminates a flag. Friendly fraud happens when a customer legitimately buys an item and then disputes the charge. It occurs accidentally or intentionally, after the customer has changed their mind about the item and has decided they do not want to go through with the return. Guest checkout fraud happens when a retailer has no online verification, and at the counter the employee does no verification either, so no verification is done throughout the entire transaction.

There is a fourth pattern, and it also deserves to be included. Internal mistakes, such as when a staff member has given an order to the wrong customer, are charged back. Retailers that use pickup as a fulfillment option are taking on four risks at the same time and do not even realize which of the four have resulted in the loss of revenue.

The Rapid Growth of BOPIS Makes This More Urgent

Pickup shopping is not a convenience any longer. It is now how people shop and this trend will only continue.

image 27

Compiled using several industry research estimates, here is an illustrative trend (Capital One Shopping Research; ElectroIQ; Accio Business Research). Figures are estimates and vary by source.

According to analysts, purchases made through Buy Online Pickup In Store (BOPIS) shopping will likely continue to increase through 2026 and possibly beyond. As more purchases move through the same channel, more transactions will be processed with fulfillment models designed around speed and convenience.

Because pickup models are designed around speed and convenience, they are easy to exploit. The growth of a channel that is this easily exploitable, coupled with a lack of adequate controls, will lead to more exposed merchants. Larger pickup volumes mean the cost of ignoring BOPIS fraud will be more painful to merchants who previously ignored it.

The Chargeback Codes behind Most Pickup Disputes

The Chargeback Codes Behind Most Pickup Disputes

Card networks provide a reason code for every dispute a cardholder files. Knowing the reason code allows the merchant to determine the correct course of action to remedy the situation, as providing the wrong evidence can result in the loss of a case that could be won.

Visa Reason Code 13.1

Most Visa disputes on pickup orders occur under reason code 13.1: “Merchandise/Services Not Received.” The cardholder says they paid for something and did not receive it.

The acquirer will have a set amount of time, often 30 days, to respond after the issuer files the dispute. The best evidence a merchant can submit is a signed pickup log with a matching photo ID and a time-stamped receipt of the pickup.

Mastercard Reason Code 4853/4855

Mastercard consolidates dispute chargeback claims under its cardholder dispute chargeback framework, which previously included code 4855 for goods or services not provided, but these are now consolidated under a single code. Mastercard’s chargeback code standard requires that the order was fulfilled as promised.

Lacking a carrier, a tracking number also has no benefit for a BOPIS transaction. Whatever evidence exists is the responsibility of the store, and was captured at the moment the order was transferred.

DetailVisa 13.1Mastercard 4853/4855
Common claimMerchandise or service not receivedGoods or services not provided
CategoryConsumer disputeCardholder dispute
Merchant’s best evidencePickup log, ID match, timestampPickup log, ID match, timestamp
Weak evidenceShipping tracking number aloneShipping tracking number alone

ID Verification at Pickup: Closing the Biggest Gap

While fraud prevention measures have improved, most still focus on the checkout phase. Many stores still leave the pickup counters unprotected, which is the last line of defense for the entire transaction.

Photo ID checks for government-issued IDs against the order name can reduce the gap significantly. Staff should check the order number or confirmation email on file. Faking someone’s name is easy, and with a copy of their confirmation email it is even easier.

Some stores conduct additional measures by asking to see the credit card that was used in the original purchase or by sending the customer a temporary code that must be shown at the checkout counter to finalize the order. These measures only take a matter of seconds.

The trade-off is real and should be addressed. Measures that increase checks also increase wait times for legitimate customers who want to get their bag and go. Balanced check measures apply increased checks to high-risk orders (i.e., brand new accounts, large order amounts) while decreasing checks for low-risk orders (i.e., prior order history, repeated orders).

Building a Paper Trail That Wins Disputes

A chargeback really is a paperwork battle first and foremost. The party with the better paper trail will most often win, even if they told a worse version of the story, when the paperwork is the final argument.

Every pickup should yield a log entry with a timestamp. This log entry should include the staff member, the type of ID checked, and a digital signature or a physical signature of the customer confirming that they received their order in a good state. Evidence tied to the transaction, even a webcam photo, is evidence that is very difficult for a cardholder to refute when providing a dispute review.

This record should be maintained as long as the chargeback window is active. Both Visa and Mastercard give the issuers a few months, not a few days, to dispute a purchase after it was made. A “pickup” log that is set to auto-delete after 30 days, is typically long gone when it is needed to defend a claim.

Curbside and Third-Party Pickup Add Another Layer of Risk

Curbside and Third-Party Pickup Add Another Layer of Risk

Curbside pickup and third-party pickup apps both introduce the same issue for retailers. An unverified customer never even goes inside the store, meaning the handoff is the only point of verification.

Curbside pickup orders should require the customer to verify their order over the phone or through the app before an employee brings the order to a vehicle. Third-party pickup orders require the delivery platform to verify the order, which should be separate from the check the store does for an in-person pickup. A lot of retailers treat curbside pickup orders the same as in-store pickup orders and this is a costly mistake. The controls designed for verification for in-store pickup orders rarely work for curbside or app-based pickup orders.

Curbside pickup orders also give fraud opportunities that are compounded when placed during the holiday shopping season. A misread license plate or a passenger picking up an order for another customer increases opportunities for fraud. This leads many retailers to release unverified pickup orders. Retailers typically lose controls that ensure a customer has verified an order when an employee brings it to the customer during peak shopping periods.

Chargeback Prevention Alerts and Real-Time Order Screening

Not all disputes lead to a chargeback. Some alerts from card networks and third-party services flag a transaction as disputed before it becomes a chargeback. These alerts give merchants a short time to process a refund or provide evidence.

In the case of BOPIS, or buy online, pick up in store, these alert services are most effective when combined with screening of orders initiated at the time of checkout. One of the more effective signals is order velocity, or rapid placing of pickup orders by an account or a device. A new account placing several high-value pickup orders in a short time frame is very different from an account which is a member of the loyalty program and is making a normal grocery store pick up order. Screening tools can apply very different levels of friction to these orders.

None of what was described displaces the counter-level ID check. It only focuses the major efforts of the merchant on the orders which require the highest level of scrutiny before the customer gets to the pick up location.

Steps Retailers Can Take Right Now

Closing these gaps is more effective for reducing BOPIS chargebacks than an expensive, complex technology solution. Building a guest checkout option for pickup orders exposes the merchant to the risk of a chargeback because the customer does not need to supply a verifiable phone number or email address. Merchants have nothing to verify the legitimacy of the dispute should one arise.

Requiring a photo ID at the counter that matches the name on the order prior to release of the merchandise protects the merchandise from being stolen. A documented receipt of each transaction that includes the staff initials and the customer’s signature turns a “he said, she said” dispute into a valuable piece of evidence that can be reviewed by the bank. Merchandise should be held until pick-up verification is complete, and orders should be screened for high risk prior to releasing the merchandise.

While none of these methods will eliminate the BOPIS chargeback, the combination of these will eliminate most of the attractive features of pickup orders to the fraudster.

Conclusion

BOPIS (buy online pick up in store) chargebacks occur for a single reason. Home delivery contains controls and checks that build trust automatically without having to think about it. BOPIS lacks several of these control mechanisms.

There is no delivery address to enter and check for a possible mismatch. There is no proof of delivery with a carrier’s tracking number. The only evidence that merchants typically have is the physical evidence captured at the moment of delivery to the customer.

Consequently, two things need to happen simultaneously—controls need to be added to both checkout and to pickup. The control mechanisms at checkout need to incorporate more ID verification and controls, and at pickup, verification needs to be more than just a name with a smile (even a friendly one), from a store staff. Incorporating both controls consistently has led to greater success in reducing disputes and increasing the percentage of chargeback disputes won by merchants.

The merchants who act as if each pickup is an in-person, card-present sale have measurably protected their revenues. Those who continue to act as if pickup is an afterthought will continue to fund that choice one chargeback at a time.

Frequently Asked Questions

  1. How are BOPIS chargebacks and item-not-received disputes similar?

    First of all, they both use the same reason code. A BOPIS chargeback does not have a shipping carrier to prove delivery, which means the merchant has to use the records of the in-store pickup.

  2. Which chargeback codes do BOPIS pickups fall under?

    Visa tends to use reason code 13.1. Meanwhile, Mastercard consolidated its former code 4855 into cardholder dispute code 4853.

  3. Does checking ID at pickup help with chargebacks?

    Yes. Checking a government-issued ID against the name on the order prevents the ordered item from being released to an individual using a stolen credit card (a common method of BOPIS fraud).

  4. What evidence should a merchant keep for each pickup order?

    A log with the time of the order, initials of the staff member, the ID checked, and a signature or digital agreement to the terms and conditions of the order. This is usually the strongest evidence in a dispute.

Vendor Impersonation Fraud

Vendor Impersonation Fraud Is Surging. That’s Why Basware Just Bought Trustpair.

A finance team can have a clean invoice of approved purchases through the appropriate channels, and it is still possible for the payment to end up in the bank account of a fraudster instead of the supplier’s bank account. This risk is known as vendor impersonation fraud and has grown large enough to affect the market.

On August 26, 2026, Basware agreed in a binding deal to buy Trustpair, a company that stops fraudulent payments. Basware develops software to help a company process an invoice from receipt to approval. Trustpair examines bank accounts of suppliers to confirm that the accounts are legitimate. Putting the two together provides something that is novel in the market: an assurance that covers the complete process of an invoice and payment.

There are many good reasons for the timing of this acquisition. Criminal groups are using artificial intelligence to make vendor fraud at scale possible. Regulatory bodies are beginning to address the problem. Finance teams have realized that an immaculate invoice has no value if payment is made to a fraudulent account.

What Is Vendor Impersonation Fraud?

what is Vendor Impersonation Fraud

Vendor impersonation fraud occurs when a fraudster poses as a regular supplier. The objective is for a business to send payment to an account controlled by that fraudster. Most often, this type of fraud is accomplished through an email request for payment.

One technique is for a fraudster to register a domain name that looks like a regular vendor’s domain, except for one or two substitutions. Another technique is for a fraudster to hack into a vendor’s email account and then wait for the opportunity to send a request to the vendor’s finance department to update payment information.

This type of payment request fraud falls under business email compromise (BEC) scams. BEC is the broad term used to describe a scheme in which a fraudster uses email requests to persuade an employee to transfer funds or company data to the fraudster. Vendor impersonation is the most damaging version of BEC because it affects the accounts payable process.

The Changed Bank Account Scam, Step by Step

There are clear patterns to bank account switching scams. Emails to team members in finance purport to be from a reliable source. The sender states that they have switched banks. The email instructs the team to update the supplier account information in the file with a new account number and routing number. An invoice, which may or may not be a new one, is often attached to the email. The fraudster, posing as a supplier employee, may even place a follow-up call.

After the new bank account information is entered, payments to the supplier are transferred to the fraudster. The payment amount is often the amount owed to the supplier, and the invoice may even be genuine. The fraud is often detected several weeks later during the reconciliation process when the real supplier calls to inquire why the invoice was not paid.

The most important control to prevent this type of fraud is bank account validation. A validated bank account is one that has been confirmed to be a supplier’s account by a source outside of the email or the invoice. This confirmation can be a verification phone call, a callback to a verified contact, or even an automated account ownership confirmation. The most important thing is to not use the same communication channel to confirm the bank account change request.

Business Email Compromise Payments Are Climbing

The extent of this issue is now well known. Each year, the FBI’s Internet Crime Complaint Center, IC3, logs Business Email Compromise (BEC) reports. Its 2025 Internet Crime Report shows a considerable increase in the number of BEC reports and losses reported.

image 24

Source: FBI Internet Crime Complaint Center (IC3), 2025 Internet Crime Report.

In 2025, BEC complaints reached 24,768, a 15% increase from 2024. Reported losses increased from $2.77 billion to $3.05 billion. Yet, these numbers only reflect the victim reports. It’s likely much higher.

Other studies also reflect the same findings, but from different perspectives. One study estimates that 8% of revenue is lost to fraud on average. Another study by the Association of Certified Fraud Examiners shows that over the past two years, 75% of anti-fraud professionals witnessed more cases of BEC fraud using generative AI. In contrast, only 7% of anti-fraud professionals felt more than moderately prepared to catch or stop generative AI fraud. This clear shift of increasing BEC fraud with insufficient countermeasures has driven software consolidation.

Basware Moves to Close the Invoice-to-Payment Gap

Basware Moves to Close the Invoice-to-Payment Gap

Basware uses the acquisition of Trustpair to fill that gap. This deal joins two capabilities that up until now have resided in different systems: confirming that the invoice itself is genuine, and confirming that the money lands with the right supplier.

Basware

Basware is a leader in software that manages the invoice lifecycle. The company works with over 6,500 clients including DHL, Heineken, and NBC Universal Media, and has developed invoice control systems over the past forty years. For Jason Kurtz, the CEO of Basware, the acquisition of Trustpair has a lot to do with how finance teams run into issues with sending money to an account that isn’t the supplier’s. Invoices are correct, but money can still go to wrong accounts. Trustpair adds to Basware’s fraud detection and duplicate detection tools and allows Basware to have greater control over the payment process.

Trustpair

Trustpair got its start in 2017 and has offices across New York, London, and Paris. Its only focus is stopping payment fraud. Its software verifies the authenticity of a supplier’s bank account at three stages. These stages include adding a new supplier, changes to supplier account information, and right before any payment goes out. The software protects over 600 organizations, which includes many companies in the Fortune 500. Trustpair’s software also carries ISO 27001 and Type II SOC 2 certifications.

Baptiste Collot, Trustpair’s CEO, states that Trustpair’s software was created to combat fraud and that approving a valid invoice is futile if the funds still land in a fraudster’s account. As part of the acquisition, Trustpair is set to keep running under its current brand and structure, so customers on SAP, Oracle, or Coupa can keep their current setup and stay protected.

Trustpair’s acquisition by Basware allows both companies to implement machine learning and artificial intelligence technologies to combat payment fraud. Trustpair is the latest acquisition made by Basware in the last three years, after buying Redmap, Glantus, and AP Matching in the same period. The deal should close before 2026 ends.

Bank Account Validation Is Becoming a Compliance Expectation

Bank Account Validation Is Becoming a Compliance Expectation

Regulators no longer treat fraud in supplier payments as a private business risk. In the U.S., 2026 Nacha rule revisions mandate specific protections for ACH payments. Businesses must implement controls to identify payment authorization fraud, including business email compromise payment fraud. Similar changes are evident in the UK and the EU, where instant payment schemes offer little time to recover fraudulently transferred funds.

This change will impact any business, including small and medium enterprises, which pay their suppliers electronically. Payment-network rules and local laws dictating that businesses must implement control systems vary from state to state. Therefore, businesses must verify the control systems implementation requirements with a payment compliance professional or attorney to avoid legal implications of non-compliance.

Vendor Payment Fraud, by the Numbers

The numbers confirm what regulatory changes indicate: now the risk is the new standard, not the exception.

image 25

Source: 2026 Payments Fraud and Control Survey Report, underwritten by Truist, AFP.

According to the Association for Financial Professionals’ 2026 survey, 76% of U.S. organizations experienced attempted or actual payments fraud in 2025, and 74% of those organizations were affected by business email compromise. Paper checks were involved in 58% of fraud attacks, and show the use of payment rails, whether digital or not, will keep being exploited as digital fraud increases. Most concerning, only 17% of organizations use AI against payment fraud, while fraudsters increasingly use AI against them.

The survey also reported that classic executive email scams are declining while vendor and third-party impersonation scams are increasing. Finance teams are increasingly able to identify a fake CEO email. Because of this, fraudsters are moving away from executive scams and are now increasingly using supplier scams.

What Finance Teams Can Do Now

The Basware-Trustpair merger is not something finance teams can wait for. There are controls finance teams can implement now. Never put a request to update the bank details of a supplier through on the strength of the email alone. Call the supplier back using the phone number you have on file, never the number in the request. Before the first payment, new suppliers should undergo an independent account-ownership check. Require two approvers for a payment that is significantly larger than usual or unusual in nature.

Payments staff should be trained to identify scam vendor payment requests such as changes to bank details, last-minute requests to process payments, and urgently sending payments outside the normal protocols. None of these protocols need new technology. They need an organization-wide practice of consistency and willingness to delay, as scams aim to rush you.

Conclusion

Vendor impersonation scams went from being a minor issue in accounts payable to a full-blown boardroom concern. The FBI’s data shows year-on-year climbing losses in BEC. Regulators and payment networks are writing new rules with the assumption that fraud will occur, and that businesses will be required to detect the fraud. The Basware-Trustpair deal also shows that large enterprise software vendors are now integrating payment confirmation services with invoice management software. The bottom line is that any business which pays suppliers, regardless of size, must confirm the payee account for each invoice.

Frequently Asked Questions

  1. What is vendor impersonation fraud?

    Vendor impersonation fraud happens when a criminal emails a business pretending to be a real vendor and tricks the business into sending the criminal money.

  2. How does the changed bank account scam begin?

    It begins with what looks like a normal email to a business account from a normal supplier, asking accounts payable to enter new bank details so the next payment can be made.

  3. Why did Basware decide to buy Trustpair?

    Basware decided to buy Trustpair because they wanted to extend the controls on invoices beyond invoice approval and into the payment.

  4. What does bank account validation check?

    Bank account validation checks, independent from an e-mail or invoice, if a bank account actually belongs to the supplier being paid.

BNPL Competition

Klarna Pushes Deeper into the US: Should Your Store Add Buy Now, Pay Later?

Klarna charges US merchants 5.99% plus 30 cents for each purchase. Card transaction processing charges, on average, are around 2.9%. Klarna’s processing charges amount to approximately double the cost of card purchases. “Should I offer Klarna to consumers?” is essentially a question about the size of the purchase and the gross margin.

Merchants with a volume of $5 million or more of annual revenue can negotiate it down to 3.29%, lowering the penalty over card rates to about 40 basis points. Thus, two different merchants selling the same product will have to pay different fees.

With the BNPL competition, Klarna is confident that enough merchants on both sides of that line say yes. In July 2026, it filed with Utah regulators and the FDIC to charter Klarna Bank USA as an industrial bank. This would let Klarna hold deposits and fund its own loans instead of routing through partner banks. It already has a $26 billion forward-flow deal with Nelnet backing US Pay in 4.

Average order value, gross margin, and the customer are three important things on which the merchant depends to decide whether to offer BNPL. Here’s where it works and where it doesn’t.

The Context: BNPL Competition Heats Up in the US

BNPL Competition Heats Up in the US

The growth of Klarna is not quiet. In July of 2026, Klarna filed for a bank charter with the FDIC and the Utah regulators. This would allow Klarna to loan to consumers more efficiently without a partner bank. Klarna has two other deals that show the same sentiment. The first is a forward-flow agreement with Nelnet. This agreement sells newly originated Pay-in-4 loans up to the amount of $26 billion on a rolling basis and keeps them off Klarna’s balance sheet. Klarna also has a partnership with Worldline that extends its reach to Point of Sale merchants.

Klarna’s not the only one targeting the checkout button. Affirm, Afterpay, Sezzle, Zip, and PayPal’s Pay in 4 are all competing for the same thing. Klarna leads; however, this is solely based on the metrics that are provided. By one metric, Klarna is far ahead of Afterpay, with Sezzle and Affirm showing single-digit numbers. By another metric, the Federal Reserve puts both Klarna and PayPal at 32% of the market. The following chart breaks down the site presence.

Klarna

There are two main pillars of Klarna’s US expansion. The first is Pay-in-4, an interest-free, six-week, short-term payment plan. The second is its own banking license to manage direct US deposits and lending. Klarna’s first quarter of 2026 provided revenues of over $1 billion, showing substantial growth from the previous year. With this growth, there is a strong reason for fierce competition.

image 21

Figure 1: Share of BNPL-enabled merchant websites by provider, early 2026. Source: Capital One Shopping data, cited in Digital Applied BNPL Decision Matrix (2026).

What BNPL Does to Conversion and Order Size

What BNPL Does to Conversion and Order Size

The BNPL system is a beneficial pitch for both merchants and consumers. Merchants enjoy an average selling price increase of 30-50 percent as well as an increase of 20-35 percent in volume of goods sold.

This claim states that BNPL systems have been proven to increase selling price and selling volume, but the claim requires confirmation, as some studies contradict this claim. One study by Stripe tested more than 150,000 payment sessions and inserted a BNPL option for half of those sessions, while the other half had no option. During these sessions, Stripe reported an increase of up to 14 percent. Stripe attributed the increase in revenues to an increase in conversion and size of the shopping cart. Most studies do not include the control group that the BNPL option was hidden from.

The finding that is more significant in this report is cannibalization. Stripe reported that over two-thirds of the purchases made through BNPL were completely new sales; the other third were purchases that would have been made through a credit card, meaning that BNPL systems potentially do not erode sales volume. However, the presence of BNPL systems increases selling cost by 300 basis points.

What It Costs the Merchant

BNPL isn’t cheap. There’s typically a range of 2.5%-3.5% for every transaction that goes through using a card. BNPL charges well above what is standard. The range of what Klarna charges for commercial businesses is 3.29% to 5.99% per transaction with a $0.30 charge for each order. Affirm’s standard rate for similar marketplace offerings is around 6% with a $0.30 charge.

Afterpay charges between 4% to 6% with a $0.30 charge. Shop Pay Installments, powered by Affirm, has the same rates as Afterpay. Below, you can see where each of these charges sits compared to the range for typical card processing.

image 21

Do your calculations first. With a gross margin around 50% and BNPL adding approximately 3.5 percentage points to your processing cost per order, to break even you would need a 7% increase in order volume. If the lift is less than that, BNPL is eroding margin even as it appears to stimulate sales. Additionally, numerous BNPL providers do not refund their cost if the customer returns the item. Be sure to confirm this cost in writing.

Where BNPL Fits by Business Type

Where BNPL Fits by Business Type

Fashion and Beauty

This is BNPL’s strongest home turf. Klarna dominates Shopify Plus apparel and beauty brands. Cart sizes are average, their customers are younger, and Pay-in-4 mirrors this shopper’s budgeting of a purchase.

Furniture and Electronics

Higher-price items are better suited to Affirm. For example, on average, Affirm transactions are $276, while Klarna transactions are $101. You can also pay off Affirm purchases in 30 days or as long as 5 years on purchases as high as $30,000. Klarna’s Pay-in-4 plan caps repayment at 6 weeks. So Affirm is best suited to buy larger items.

Home Services and High-Ticket B2C

Via its new partnership with Worldline, Klarna is starting to introduce point-of-sale BNPL solutions. A homeowner faced with a $6,000 repair bill is clearly within the boundaries that justify BNPL solutions, though a $40 tune-up would not.

Where It Does Not Make Sense

The clearest no is the low-margin categories. If your margin is already low, a 4-6% fee on an order alone can wipe the margin clean. Raising order quantity also increases the chances of that fee eating into margin. Very low order values are also an issue. A $25 cart that is split into 4 payments would rarely benefit the merchant because a $0.30 fee (fixed cost) will eat into a much larger percentage of the total order value. Subscriptions and recurring billing businesses are a third fit that is considered weak.

BNPL is intended for a one-time buying scenario, not a recurring buying scenario (like subscriptions). Also, forcing BNPL into a subscription flow would create more support tickets than sales. If you’re not able to measure a lift in conversion from a proper test, it’s better to wait. It is not a good practice to introduce a new fee with no way to prove it pays.

Adding Pay-Over-Time without Rebuilding Your Stack

Most major platforms provide BNPL as a plug-in, not a total rebuild. Shop Pay Installments by Shopify is one of the plug-ins that Shopify stores can utilize. Klarna or Afterpay can be used as extensions. Both WooCommerce and Magento support Klarna and Affirm through official plugins. Stripe and Adyen can send BNPL options under their respective payment checkouts. The rest of the integrations mentioned here take only a few days, and most providers charge no monthly fee or fee for onboarding.

Iterate gradually. According to one analysis of Shopify Plus stores, most brands use only one BNPL provider, and one BNPL provider covers more than 90% of interested BNPL shoppers. Having two logos in your checkout seldom results in two times the conversion and is almost always counterproductive to having a clean checkout.

The Customer-Experience and Disclosure Side

The regulatory framework surrounding BNPL has changed. In 2024, the CFPB published an interpretive rule that would consider BNPL providers as credit card issuers under the Truth in Lending Act. This rule would have granted customers the right to dispute and would have required certain disclosures. This rule was withdrawn in May 2025, and the CFPB does not plan to issue a similar rule.

A CFPB study was released that researched the largest BNPL providers and raised concerns about harm to the consumer. However, the study has not resolved the argument surrounding it. Meanwhile, New York’s Department of Financial Services created a framework at the state level for BNPL licensing and supervision.

For merchants, the new frameworks create additional complexity. At the federal level, the frameworks are constantly changing. At the state level, the frameworks can change independently of the federal level. Some BNPL providers install a framework that allows customers to reschedule a payment and avoid late fees.

There is great variability in the terms and conditions of returns and refunds. Merchants should confirm the handling of returns and refunds with the individual BNPL providers instead of assuming that they are the same as a typical card refund. This is a rapidly changing space, so the terms of individual providers should be assumed to change at any point.

A Yes/No/Not-Yet Decision Framework

Do this if average order value is above $75, gross margin can cover a 3-6 percentage point rise, and the customer base is younger than 40. Wait if you have never done A/B testing on BNPL with a no-BNPL control group, and run the test for 2-4 weeks before adding more budget or marketing. Say no if margins are too slim, average cart is under $30, or your business is a subscription business.

This is not about whether BNPL works, since it clearly works for many stores. This is whether BNPL works for your margin structure and that is only something you can determine for yourself with your numbers.

Conclusion

Klarna’s US expansion will make its way into the minds of many consumers. Prepare for more checkout page clutter. Even though Klarna’s expansions are pressuring stores, this doesn’t always mean stores need to follow. With Buy Now, Pay Later (BNPL), the fee is higher than the cost of processing a credit card, but in some cases, BNPL can increase conversions and increase the average cart value per order. If you are considering using BNPL, run the test and check your own numbers.

Frequently Asked Questions

  1. Should my small business allow customers to use buy now, pay later?

    It depends mainly on your margins and order size. If your average order size is over $75 and your margins can cover a higher fee, it may be worth trying.

  2. Does buy now, pay later (BNPL) increase sales?

    They can, but only when properly A/B tested against a control. Real-world data shows customer orders increase by about 8-15% and conversion rate increases by 2-5%.

  3. What do merchants pay for the use of BNPL?

    Typically 3.29%-6% per transaction, plus a $0.30 charge, compared with standard card processing at about 2.5%-3.5%.

  4. Which kinds of businesses tend to benefit more from BNPL?

    Fashion, beauty, furniture, electronics, home services, and similar types of businesses tend to see the most benefit when they offer BNPL payments for orders of medium to high value.

  5. How can I get BNPL to appear at checkout?

    Most ecommerce platforms like Shopify, WooCommerce, and Magento have plugins that add Klarna, Affirm, or Afterpay to checkout in a matter of days.

Cash App Settlement

The Cash App Settlement: Why Business Collections Don’t Belong on a Consumer P2P App

When one of the apps most widely used by small business owners was in the news this past summer, it was as part of a $45 million settlement. The app, Cash App, is owned by Block, Inc. Cash App settled with 46 states after regulators claimed Cash App misled consumers about fraud protection and failed to protect activities that consumers believed were covered. The underlying issue is that Cash App built tools and technologies that are meant for person-to-person payments and should never be used for business-to-customer payments as those tools are designed for low volumes and do not provide adequate protection from liability.

Hundreds of thousands of transactions happen through Cash App and other payment apps as consumers pay small businesses every day. Cash App makes it very easy to use, so business owners often set it up and never think about doing something better. Business owners who collect their revenue through a P2P app do themselves a disservice by not using a real piece of business software to manage their finances. Using a payment app means you have no recourse if something goes wrong. With the Cash App settlement, it is clear that there is a huge difference between ease of use and reliability.

What the Settlement Was about, Briefly and Factually

What was Cash App Settlement

Block and Cash App

On July 8, 2026, Block agreed to pay $45 million to settle a multistate probe into Cash App. Oregon and Texas led the investigation, and the 46 participating states filed the settlement in their respective state courts. Regulators said Block misled customers about Cash App’s safety measures and failed to provide fraud protection.

Block will create customer support systems for fraud complaints and account lockouts. Block has agreed to have a phone support line active for at least 13.5 hours a day and a chat support system for at least 18 hours a day. States are also reviewing Cash App’s “Cash App Fridays” promotion that rewarded payment posts with a prize and exposed users to scamming.

This is not Block’s first scrape with regulators. In January 2025, Block agreed to pay $255 million to 48 states and the Consumer Financial Protection Bureau over failures to comply with fraud protection and consumer protection laws, with a promise to provide at least $75 million in reimbursement to consumers. Additionally, Cash App was ordered to pay Washington state $20 million for funneling fraudulent unemployment benefits in the wake of the pandemic. Block argues this settlement resolves a legacy Cash App case and says its current practices have improved protection for consumers.

The three actions combined span approximately eighteen months and over $300 million in total penalties and redress. No single amount is the most important here. Length and timing matter. Regulators only return to the same entity within a year or two when there is a persistent pattern of related complaints. To a business owner judging whether it is worth using a given platform for revenue, the clear enforcement pattern is many times more persuasive than any individual media article.

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Sourced: Payments Dive coverage of the $45M Cash App settlement, July 2026.

Why Consumer P2P Apps and Business Collections Are Different

Peer-to-peer money transfer apps are intended for situations where people transfer funds between one another. Examples include splitting a bill, sending a gift, or repaying a small personal debt. In these situations, the risk is very low. Business collections are very different in that one party purchases goods from the other party and funds the transaction. There are risks for both sides of the transaction, and it’s possible that funds will not be received. The transfer of funds must be verified and provide a means for recourse in case there is a dispute.

The payment industry was built to address problems associated with the collection of funds. This involves the underwriting of a merchant, determination of merchant identity, and the signing of an agreement to resolve disputes. P2P consumer apps avoid most of these issues because they were not intended to manage a commercial relationship. When a business owner transfers funds from a customer to a personal P2P money transfer app, the app processes that transaction as a P2P transfer even though the relationship is commercial.

The Cash App settlement emphasizes this conflict. Regulators found that consumers didn’t receive protections that they believed they had. Higher volume, more frequent transactions, and larger dollar amounts increase the risks for a business owner collecting customer payments through consumer payment rails.

Along with everything else, there is also a volume issue. A personal user might make a couple of P2P transfers each month. A business that collects customer payments could be processing dozens or hundreds of transactions through that account per week. Consumer apps were never load tested from the risk and support perspective to handle that sort of commercial volume. An account that used to be OK with casual transfers can start triggering reviews and get flagged for holds or even freezes, all because it is starting to behave like a business, which is the exact behavior the app was never designed to support.

Dispute Recourse You Do Not Get on a Consumer App

Dispute Recourse You Do Not Get on a Consumer App

The Federal Trade Commission

The Federal Trade Commission has said that compared to credit card transactions, P2P payment schemes provide significantly less protection to consumers. In fact, P2P payment schemes mimic cash transactions. Consumers have little right to recourse; once sent, the money is effectively gone unless the payee chooses to return it. There is no contractual dispute process.

For a business receiving payments, the effects are the same, but in the opposite direction. There is no standard process for the business to demonstrate the service was rendered, no documentation trail for commercial disputes, and no agreed-upon approach for resolving a dispute at a given network. If the customer claims they never received the service, or reverses the payment after the fact, the business has little more than a chat log available. In comparison, a merchant account provides a network-based dispute resolution for both parties.

This asymmetry isn’t good for anyone. Let’s say a customer gets scammed on a P2P app. In that case, there’s (currently) little chance for that customer to recover their losses. This is the same instance that the regulators pointed to in their case to justify the settlement. An honest business owner is in the same spot. There’s no formal representation process, so that business owner is also at the mercy of the system with no appeal process like the one card network rules provide.

Fraud Exposure and Thin Support

Fraud handling was a primary concern in the states’ Cash App investigation. As the investigation detailed, Cash App understood that P2P services were target-rich environments for scammers. Despite that, Cash App continued to promote a service that revealed usernames to scammers and did not provide assistance to users whose accounts were compromised. Under the new settlement, Block will be obligated to establish a minimum threshold for support hours, something regulators clearly believed was lacking earlier.

In the case of a business, that particular support deficiency matters even more than it does for an individual user. One personal account fraud incident is painful. For a business, if the primary collection tool has a pattern of fraud incidents, cash flow can be totally restricted, especially if the tool locks the account during its investigation. Consumer apps lack the support and structure to address the business-level fraud that has the potential to lock accounts and stop business.

The Federal Trade Commission explains how P2P scams usually work. Scammers pose as a bank or business, or impersonate one of the victim’s contacts, and convince victims to send them money. A business account is a very attractive target for the same scheme because there is a much greater motivation to scam an account with a lot of activity compared to one used personally for a few transfers. Business owners have a greater fraud risk exposure, with no added protection.

Tax-Reporting and Recordkeeping Gaps

Using a personal payment app to run a business leaves a significant paperwork problem. Peer-to-peer (P2P) accounts do not differentiate between personal and business transactions, which requires additional labor and increases the risk of underreporting revenue. Payment volume greater than what is expected can push the account past reporting thresholds and complicate tax filings, since personal and business activity are mixed in one account.

The uncertainty surrounding the use of personal payment accounts is resolved from the outset with a merchant account. Each transaction is logged to a business account and is presented to the business as a net sales report. The reports give an accountant a clean view of the records and are ideal for an audit or a loan application, as revenue is clearly documented for each transaction.

What a Real Merchant Account Provides Instead

HMS Pay

HMS Pay targets the void left by consumer P2P apps. Having a merchant account gives a business its own identity in the card networks, which gives each business the ability to process transactions with the appropriate merchant category code, and gives businesses the right to dispute transactions as well as the ability to view the data as soon as a sale happens. Instead of sharing a support chat with millions of casual P2P users, a merchant account provides risk surveillance and chargeback tools.

The nature of the problem really shows itself when something goes wrong. A merchant account transaction processor would be able to analyze the flow of transactions and stop what could become a fraudulent event before it is too late. Unlike a consumer application, a merchant account processor is also able to guide the business through the formal disputing process and provide the requested documentation for filing taxes.

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Illustrative: Relative feature coverage varies by provider and account type. The numbers presented do not represent a specific vendor’s scoring.

When P2P Is Genuinely Fine, and When It Is Not

P2P apps are useful for quickly and easily sending money to people you trust, and the use case for that will almost certainly remain. Someone asking a friend to reimburse them, a roommate paying their half of the electric bill, or a parent sending their child an allowance are all transactions that P2P apps can be used for, and there is virtually no risk to the transactions.

Things get problematic when money begins to move to or from people who are not known, or when the transactions are really business transactions. Recurring customer transactions, services for which an invoice has been sent, sales via an e-commerce platform, and transactions for which the buyer may claim that what they received was not right are all transfers that should be done on the payment rails designed for commerce.

The Cash App settlement is a good example to show that even for the app’s typical consumer, the app’s services were lacking what the regulatory agencies required. It is a considerable risk for a business owner to use the app’s payment rails when the app was not designed for payments in commercial contexts.

Moving Business Payments onto the Right Rails

Moving off a personal payment app should not disrupt a business’s cash flow. The process typically begins by opening a proper merchant account and undergoing some basic underwriting. After underwriting is complete and the business is established, a payment link, invoicing tool, or card reader can be used in place of informal collection methods, usually within days rather than weeks.

The people side of the change usually takes longer. Customers need to be directed to the new payment method, and the business must no longer use the P2P app as a backup. Using both at the same time creates the same issues this article addressed with respect to reconciliation and fraud exposure. A clean cutoff, followed by business communication to customers, is the only way to address the problem the settlement exposed.

Conclusion

The Cash App Settlement is a consumer protection action on the state level. It is not, on its face, about business payments. However, it shows exactly why consumer P2P apps and business collections should not overlap. The consumer P2P apps suffer from weak dispute resolution, thin fraud support, and poor recordkeeping. Those may be slight annoyances when it is a consumer transfer.

A merchant account is designed to fill those gaps and offers underwriting, dispute rights, and reporting, among other things. Merchants that collect payment through consumer-focused apps take on little to no risk when they move to a dedicated merchant account. The settlement does a good job of focusing their attention on moving collections away from consumer-focused apps.

Frequently Asked Questions

  1. Can I start a business through a P2P app?

    Commercial transactions should make P2P app users pause. Most P2P apps are put together to facilitate consumer transactions and as such, do not have the necessary built-in tools, automation, systems, and reporting for dispute resolution or management to address the needs of a growing business.

  2. What was the outcome of the Cash App lawsuit?

    In its settlement, Block agreed to pay $45 million to 46 states to resolve claims of misrepresenting its fraud protections and support.

  3. What differentiates a P2P app from a merchant account?

    A merchant account is designed as a business account with dispute and reporting rights. A P2P account is a personal account for peer-to-peer transactions.

  4. Do consumer payment apps offer chargeback protection?

    Usually not. Rights and recourse rest in the discretion of the payment app.

  5. Should I move my business from a personal payment app?

    Yes, especially if you accept customer payments on a regular basis. A merchant account aids in the protection of your revenue and clean reporting for taxes.