Home Practice ManagementOperationsCredit Card Processing Stay Informed: How to Check Your Credit Card Processing Costs

Stay Informed: How to Check Your Credit Card Processing Costs

by TPD Editor

Here are some important things to look for on your credit card processing statement.  Hint, they are all red flags to being overcharged!

  1. Is your effective rate over 2.7%?  To calculate your effective rate, you need to take your total fees charged and divide it by the total volume.  For example, if you were charged $270 in fees and processed $10,000 this would be a 2.7% effective rate.  This number is important as it is what you’re actually paying, not what you think you’re paying.  By way of reference, 2.75% what Square™ charges.  Yet I see many dentists paying 4-5% and we can get them down to around 2% or less depending on your clientele.
  2. Are you on a flat rate program?  The reason flat rate programs exist is that the processor makes more money than if they gave you a competitive interchange plus program.  Also, because they don’t disclose what cards you are actually taking, this keeps a competitor from being able to prove anything.  For example, if your interchange plus pricing effective rate is 1.5%, why would you want to pay someone a flat 2%?  Conversely, if you have a wealthy clientele giving you nothing but rewards and business cards, the interchange on these card types is around 2.5%.  Do you think they’re going to take a loss with their 2% flat rate?  I see merchants paying a 2.9% flat rate for new and different ways to accept payment like pay by text, etc.
  3. Are you processing through your dental software?  It’s been my observation that most merchants processing through dental software have an effective rate of between 3 and 5% because you must use their preferred provider.  We can get you closer to 2%.
  4. If you’re on the Medical/Healthcare, or any program that says medical or dental in it, it’s a marketing scheme.  Most merchants I see on this program have effective rates of over 3.5% with many over 5%. 
  5. Does your statement show that you took Visa™/MasterCard™ and they charged you fees with no breakout of card types?  Does your statement show a dollar amount that you took and just the fees charged, once again with no disclosure of cards being taken?  These are called non-disclosed statements and it’s a way to hide your true costs and prevent anyone from doing a true comparison. Calculate your effective rate.  It is over 3%?  4%?  Higher? 
  6. Does your statement show charges for PCI Compliance or Non-Compliance, Regulatory Fees or other miscellaneous fees that you don’t understand? Most of these fees are profit centers for the processor.  Due to recent events where offices have been closed with little to no processing being done, you now can see how much you’re paying in fixed monthly fees.  We had one office recently share a statement with over $150 in monthly fees – and NO processing.
  7. Are you processing through a friend or your buddies at the local bank?  I’ve ruined more friendships and bank relationships due to the merchant being overcharged by their buddy.  Trust but verify!
  8. Were you given a credit card terminal by your processor?  Are you using the same terminal to take credit cards that you use for patient financing?  Free terminals are always very costly because you usually get charged higher rates to make up for the cost of the equipment.  Processing through your patient finance company is costly due to them trying to offset their loan risk.  Plus, these terminals must be returned if you ever cancel your processing with them or you’ll pay a ridiculously high price for the equipment. 
  9. Did you realize you’re being overcharged and found out you had a huge termination fee?  They can’t charge you a termination fee if you don’t cancel the account.  Leave the account open but dormant and take the savings we can offer.  We recently saw a processing contract that addressed this issue and are charging fees after 90 days of no processing.  Read your contract carefully!  Call us for help in getting out of your contract.
  10. Are you getting “free processing”?  It is a horrible idea to surcharge your clients to pay for your processing.  Visa™ & MasterCard™ are cracking down on the surcharge and so called “cash discount” programs.   Do you realize you have to pay taxes on the surcharge but don’t get the profit?  Why upset your clients to allow some company to make a fortune off them?  The money they make from surcharging your clients is way more profit than any legitimate processing company would charge.  We recently saw a sign at a merchant that stated the merchant isn’t getting any of the 3.5% surcharge that they recently implemented.  If I pay with my regulated check card, the interchange on that transaction is .18%.  So that means that the processing bank is making over 3% profit on that transaction!  I’m going to take my business elsewhere.  Don’t put yourself in this situation of losing customers to make someone else a lot of money.  
  11. Do you key in a lot of cards?  Are you seeing a card type of EIRF or have a high number of cards falling in your non-qualified rate category on your statement?  If so, you may not be set up correctly to do address verification on your terminal when keying in a card or your staff may just not be answering the questions correctly.  Visa™ is raising this cost to over 3%.  Understand, if you’re on a 1.69% rate program your non-qualified is going to increase dramatically.  There’s no telling what you’re going to be charged.  Your processor makes more money when you don’t key in cards correctly on a tiered program.  That’s why you’re not set up for address verification.

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