Dental Credit Card Processing Decisions
“Dental Credit Card Processing” is a guest post for us this week. Last week we read an article about the importance of our software systems. And this week, we hear from an expert in the field of credit card fees and processing. Enjoy the article and all Kent has for us here.
* * *
One of the biggest decisions a dental office makes is choosing a credit card processor. This decision can have a huge impact on both operations and bottom-line profits.
We were excited when April asked www.dentalpuritypay.com to become a guest writer and provide in-depth content and guidance on merchant credit card processing to AsTheDrillTurns.com readers.
The truth is, card processing can seem confusing and overwhelming. But it doesn’t have to be.
Our goal will be to help you understand key terms in processing and explain things as concisely as possible.
We truly hope our content helps you avoid the pitfalls and gotchas that are so common in the credit card processing industry.
So let’s get started!
Credit Card Processing … A Fee-Based Service
As good of a place to start as any is understanding key costs associated with credit card transactions so you’ll be better equipped to select a processor that meets the needs of your practice and helps you save money.
There’s no getting around it. Accepting credit cards costs money. While there are new ways to avoid processing costs altogether — which we’ll get into in future articles — the fact is each time you accept a credit or debit card, part of the cost of goods and services goes to your processing company.
What Are Interchange Fees?
“Interchange Fees” is the industry term used to describe what you pay for accepting cards. Interchange pricing is driven by the payment brands (e.g. Mastercard, Visa, American Express) and paid to your patients’ card issuers (e.g. Chase, Bank of America, Local/Regional Bank Card Issuers). Interchange fees vary based on the risk associated with that card, the type of card (e.g. debit, credit, reward) and how you process that card (e.g. do you swipe or insert the chip, key card numbers when patients call in, take payments on your website). In short, it’s the cost you pay for accepting credit cards and is payable to the card issuing banks
Interchange costs can range from .50% to well over 3% depending on the type of card, the way it’s accepted and the “richness” of the rewards of a credit card. A debit card is usually cheaper than a standard credit card. Credit cards with reward benefits are more expensive because you as the merchant help to pay for cardholder perks. Business, corporate and insurance company issued cards usually carry higher costs. In all, there are over 300 different interchange categories with different rate structures.
Authorization Costs
Besides interchange costs, you’ll want to look at authorization costs, also known as transaction costs, and any mark-ups charged by your processor. Authorization costs plus processor mark-ups can result in a per item charge from .05 to .20 or more depending on your processor.
Effective Rate
You might think: How in the world do I make sense of this and know what I am paying? A good first step is knowing your “effective rate”. By taking the total cost of your monthly statement and dividing it by the total monthly volume, you’ll arrive at an overall rate. If it’s much higher than 2%, you may be paying too much.
Dental Credit Card Processing Help
Have I scared you away with details yet? I hope not. The truth is, we think it’s important to first understand the key costs of a transaction. This will help you select the best deal possible, save money, avoid pitfalls, process more efficiently and choose the best processor for your practice.
We can’t wait to “drill down” and share more information in future posts to help you as a dental staff make the best decision possible for your practice. Be on the lookout!
About the author:
Kent Nanke is the founder and owner of Purity Payment Solutions, the parent company of Dental Purity Pay. Kent has dedicated his 17-year payment industry career to helping healthcare offices make sense of merchant credit card processing needs and is focused on offering pure, transparent and honest processing with low rates and no long-term contracts. For specific questions on processing or to receive a no-obligation quote/comparison, call Kent directly at (515) 778-8995 or visit www.dentalpuritypay.com.
