Dental Office Payment Processing Statements
Dental office payment processing statements, or credit card statements, can be tough to digest. These print-outs present us with pages of numbers. Some of these numbers we understand. Maybe some of these numbers make no sense. Perhaps, we decide to really look at it more closely another day.
Maybe today is the day. This article is the second in a series of three articles. Kent Nanke shares his knowledge and expertise with us today in credit card processing fees. I know dentists and practice managers alike will benefit from this information. Especially in the times we find ourselves today. Our third article prints in February. Enjoy!
3 Common Pricing Models
In our last article we touched on the costs associated with a credit card transaction and how to determine your effective rate. This is a great place to get a baseline understanding and a raw percentage to help you shop for a good processor.
But what about those pesky credit card processing statements that are nearly impossible to read? It’s true, there’s a TON of detail in many statements, depending on who you process through. It’s important to have a clean, easy-to-read credit card statement that is color-coded and breaks out the types of credit cards and costs for the cards you accept. If you don’t have that, I encourage you to be vigilant.
To better understand your statement, it’s important to understand the three common pricing models a processor may offer:
Dental Office Payment Processing:
Pricing Model #1 – Tiered Pricing
A Tiered Pricing Model breaks out every credit card processing card and transaction type and interchange rate you pay. As we mentioned in our previous article, there are over 300 forms of interchange.
A tiered plan is the most common form of pricing and also the one most likely to have hidden rates, item charges and fees buried within the details of the statement. It is not a bad pricing structure if you’re confident you’re with an ethical and honest processing company or representative but if you’re not sure, you could end up paying much more than you should with this plan.
We encourage you to be vigilant in comparing rates and fees versus tiered pricing. While anytime is a good time to compare, we recommend doing so in May and October. This is due to the fact that the card associations (Visa, Mastercard, etc.) often take rate increases in April and September, therefore many processors like to tack on their own rate hikes at that time.
Pricing Model #2 – Interchange Plus Pricing
Interchange Plus is a fairly new pricing model and one we like best at DentalPurityPay.com. With interchange plus, you can easily identify what your processor-controlled mark-ups are and what you’re truly paying for servicing your merchant processing account.
With Interchange Plus there is a consistent mark-up regardless of the card type or how you accept it. Here is an example of an Interchange + 20 pricing model and how you can break it down: If an unregulated debit card carries a cost of .90% and your processor is charging you 1.10% there is .20% mark-up — or “20 basis point mark-up” on that charge, e.g. Interchange + .20. Likewise if a credit card interchange rate is 2.50% for a reward card, with this pricing model, you’d pay 2.70% for that card type.
The nice part about Interchange Plus pricing is you know exactly what you’re paying for the servicing your processor offers. It’s clean and transparent. Then, you simply have to look at monthly fees charged by your processor.
Pricing Model #3 – Flat-Fee Pricing
Many payment aggregators (e.g. PayPal, Square, etc.) use flat-fee pricing to entice you into signing up with them. They may tout a 2.60 + .10 for transactions when cards are present and taken through a credit card processing device and not keyed in. Or, have a 3.5% + .15 when cards are not present and taken through your website. Some may offer a flat rate fee of 2.50 and then charge a flat monthly fee of $99.
Many of the largest and most profitable companies use flat-fee pricing. These companies used to have a flat percentage without per transaction fees but that structure is not offered as much any more. The truth is, these profitable companies began to buy business in their start-up days and then added per transaction fees because they could not keep up with the increasing cost of accepting cards due to higher interchange rates with reward and business cards offering more lucrative reward and charging higher interchange rates.
If it’s still hard to tell what type of pricing structure your on from reading your statement, we encourage you to reach out to a trusted source for processing who can do a comparison to see if you’re paying too much and whether you’re on the best pricing model for your practice.
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.