MCC 0472

Veterinary Services
Applications
Decisions
Identities
Transactions

Underwriting Cheat Sheet

MCC (Merchant Category Code) 0742 is designated for Veterinary Services, encompassing businesses that provide medical care and health-related services for animals. This guide from Gratify offers an in-depth look at the unique characteristics of the veterinary industry, its implications for payment processors, and strategies for managing associated risks effectively.
Typical Business Types

MCC 0472 applies to various Veterinary and Animal Healthcare Services

#1
Veterinary Hospitals and Clinics
Providing medical examinations, surgeries, vaccinations, and emergency care for pets and livestock.
#2
Specialized Treatment Centers
Offering niche services like oncology, cardiology, orthopedics, and rehabilitation for animals.
#3
Retail Sales
Many clinics sell pet-related products such as prescription medications, dietary supplements, food, and accessories.
High Level Information for Payment Processors
  • Transaction Types:
    • Small to Mid-Range Payments: Routine check-ups, vaccinations, and minor treatments.
    • High-Value Transactions: Surgical procedures, emergency interventions, and specialized treatments.
    • Recurring Payments: Wellness plans, preventive care subscriptions, and ongoing treatment packages.
  • Common Payment Methods:
    • Credit/Debit Cards: The primary method for in-person and online transactions.
    • Financing Options: Third-party financing, in-house payment plans, and partnerships with pet insurance providers.
    • Online Payments: For telemedicine consultations, appointment bookings, and e-commerce sales of pet supplies.
  • Business Operations:
    • Hybrid Services: Combination of medical services and retail sales within the same establishment.
    • E-commerce Platforms: Some clinics operate online stores, expanding their reach beyond local clientele.
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Key Risks and Concerns
  1. Chargebacks:
    • Service Disputes: Clients may dispute charges due to perceived overbilling, unsuccessful treatments, or miscommunication about services rendered.
    • Unexpected Costs: Emergency procedures and additional treatments can lead to higher bills than initially quoted, prompting disputes.
  2. Regulatory Compliance:
    • Prescription Medication Sales: Strict regulations govern the sale and distribution of animal pharmaceuticals.
    • Licensing: Veterinarians must hold valid licenses; lapses or revocations pose significant risks.
    • Data Protection: Handling sensitive client and patient information requires adherence to data privacy laws.
  3. Fraudulent Transactions:
    • Stolen Payment Information: Use of unauthorized cards to purchase high-value items for resale.
    • Merchant Fraud: Illegitimate entities posing as veterinary services to conduct fraudulent activities.
  4. High-Value Transactions:
    • Financial Exposure: Larger transactions increase the potential impact of fraud and non-payment.
  5. Reputation Risks:
    • Negative Publicity: Allegations of malpractice or unethical behavior can harm both the merchant and the payment processor.
Common Fraud Signals
  1. Unusual Transaction Patterns:
    • Sudden Spikes in Sales: A rapid increase in high-ticket transactions without a reasonable explanation.
    • Multiple Transactions: Several charges to the same card in a short period, possibly attempting to circumvent security limits.
  2. Geographical Irregularities:
    • International Transactions: A local clinic receiving numerous orders from foreign countries, especially for online sales.
  3. High Chargeback Ratios:
    • Frequent Disputes: An above-average number of chargebacks may indicate dissatisfaction or fraudulent activity.
  4. Inconsistent Business Activity:
    • Mismatch Between Services and Sales: Excessive product sales without corresponding service appointments.
  5. Repeated Refunds:
    • Excessive Refund Requests: Particularly for large amounts or high-value items.
Underwriting Tips
  1. Verify Credentials:
    • Confirm the authenticity of veterinary licenses and certifications with relevant authorities.
  2. Assess Business History:
    • Review the clinic's operational history, including years in business and any previous processing experience.
  3. Evaluate Financial Stability:
    • Analyze financial statements to assess the ability to absorb potential chargebacks or refunds.
  4. Inspect Online Presence:
    • Examine the merchant's website for professionalism, clarity of policies, and compliance with regulations.
  5. Set Transaction Limits:
    • Implement appropriate caps on transaction amounts and monthly processing volumes based on projected activity.
  6. Check for Compliance with Regulations:
    • Ensure the merchant adheres to laws regarding the sale of prescription medications and data protection.
Example Scenarios and Red Flags
  1. Unverified Online Medication Sales:
    • A clinic sells prescription drugs online without requiring valid prescriptions, risking regulatory action.
  2. Inflated Transaction Amounts:
    • Transactions significantly higher than industry averages, especially if inconsistent with the services provided.
  3. High Volume of International Orders:
    • A local clinic suddenly receives numerous orders from abroad, potentially indicating card-not-present fraud.
  4. Negative Reviews and Complaints:
    • Multiple customer complaints about billing practices or service quality may signal underlying issues.
  5. Inconsistent Business Information:
    • Discrepancies in the merchant's contact details, such as mismatched addresses or phone numbers.
Common Underwriting Questions
  1. Licensing and Compliance:
    • Can you provide current veterinary licenses and proof of compliance with regulatory bodies?
    • Are there any past or pending disciplinary actions against the clinic or its practitioners?
  2. Business Model and Services Offered:
    • What range of services do you provide (e.g., general practice, specialty care, retail sales)?
    • Do you offer online services or sell products through an e-commerce platform?
  3. Revenue Breakdown:
    • What percentage of your revenue comes from services versus product sales?
    • Do you offer financing options, payment plans, or accept pet insurance?
  4. Transaction Details:
    • Do you anticipate any seasonal fluctuations in transaction volume?
  5. Risk Management Practices:
    • How do you handle customer disputes and refunds?
Ongoing Monitoring
  1. Regular Transaction Analysis:
    • Continuously review transaction data for anomalies or deviations from established patterns.
  2. Monitor Chargeback and Refund Rates:
    • Keep chargeback ratios within acceptable limits; address issues promptly.
  3. Compliance Updates:
    • Stay informed about changes in laws and regulations affecting veterinary practices and payment processing.
  4. Periodic Merchant Reviews:
    • Reassess the merchant's risk profile periodically, especially if there are changes in services or transaction volumes.
  5. Communication and Support:
    • Maintain open lines of communication to assist the merchant with compliance and risk management.