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Keeping It In The Cards: Getting the Best Deal for Credit Card Processing Services


Credit card processing fees are small but add up over time. We look at how to get the best deal for credit card processing services for your practice.

Keeping It In The Cards: Getting the Best Deal for Credit Card Processing Services. Image courtesy of Kawee/stock.adobe.com.

Keeping It In The Cards: Getting the Best Deal for Credit Card Processing Services. Image courtesy of Kawee/stock.adobe.com.

It's under 5%. So, usually, it's a small percentage of your revenue. Plus, you like having a credit card option for your patients to pay. So, it's worth it, whatever you pay for your credit card processing.

Isn't it?

Maybe it is, and maybe it isn't. Credit card processing fees are small but add up over time. We take a look at what you should understand about credit card processing fees and how you can get the best deal for credit card processing services for your practice.

Ben Dwyer, Founder & President of CardFellow, a free interactive marketplace of credit card processor quotes, says that dental practices should understand processing fundamentals before looking at the options.

What dental practices should not do is type into search "best credit card processors" or "lowest credit card processing fees."

"What you're doing is running into a battle without any weapons," Dwyer says of the searching the internet approach. "You've got to know the fundamentals of processing before you start looking at options. Processors set pricing on a per-case basis, so there's no such thing as the best processor."

Working knowledge of what you can control and can't in credit card processing fees is essential. Dwyer thinks an excellent first step is understanding how credit card processors make money, which a person can gain with solid research from reliable sources.

"Go down the rabbit hole to discover the fundamentals of processing," Dwyer says. "If you give it the time it deserves, by the time you start shopping, you'll probably know just as much or more than most salespeople out there."

What Are The Fundamentals of Credit Card Processing?

Dwyer's CardFellow Blog has a lot of information on there, including an article specifically for dental practices. Defining terms is an essential starting point:1

  • Interchange: The part of your fees that pay the credit card's issuing bank.
  • Assessments: The portion of expenses that goes to the card brands, e.g., VISA, MasterCard, Discover, etc.
  • Credit Card Processor: The company that makes this happen—and the one you pay for your merchant account.
  • Merchant Account: What your practice establishes to accept and receive payment.

Interchange and assessments are non-negotiable portions of your overall rate. The banks and credit card brands determine these rates, so they are the wholesale costs, which are the same for every credit card processor. A dental practice aims to find a processing company whose fees after markup are as close to wholesale cost as possible.

Dwyer sees 2 initial paths when considering processing for a dental practice: using the system integrated into your dental practice management software (PMS) or a standalone one. Dwyer understands the convenience of using an integrated card processor in the PMS but cautions it could mean paying more than you would through an independent agreement. It also means the company bundles the charges, making it hard to determine the credit card processor's markup.

"So, for a dental practice manager, the intersection of whether it's worth it or not is what your time is worth? First, you have to know your HR costs," Dwyer says. "You'll also have to know how intertwined payments are with the management software. So, before you start shopping, you should make a short list of management software you are looking at because that's a whole other day of research."

Going the independent route requires understanding if doing that precludes engaging the core functionality of the PM software. In addition, how many extra steps would it take, and is that too much pain for the administrative staff?

"I've found that the payment apparatus in the practice management software is pretty rudimentary these days. It's not very feature-rich, so I don't usually find a lot of value-add being lost by missing payments. It's usually just a time thing," Dwyer says. "I've helped hundreds of dental practices, and it's not uncommon for a practice to come through CardFellow and say, 'We're currently using [insert practice management here]. If we start processing outside, can you tell me how much we'll pay?' And for me, that's a lot easier than determining it the other way."

So How Much Will a Dental Practice Pay?

It's natural to wonder what the rate will be at this point. But unfortunately, there is no set rate for credit card processing. To make matters worse, it can change, often without you noticing it. Matt Rej, Partner at Merchant Cost Consulting, a cost reduction firm that helps businesses lower their credit card processing costs, says that the rate a practice pays depends on several variables. Still, many PMS’s integrated credit card processing companies average well over 3%.

However, standalone credit card processing is not always a better rate. Rej says that's because processing fees are a free market and not regulated.

"If you are using a standalone, typically it's a little less expensive, but it depends on how you're set up," Rej explains.

Rej says you can negotiate a better deal, even through an integrated PM software system. Merchant Cost Consulting does a lot of that for their clients. But, like Dwyer, Rej believes understanding how it works is the first step to getting better pricing.

There are several different pricing structures a sales rep might recommend such as:

  • Tiered or bundle pricing: In this scenario, the processor dictates the rate charged based on three rates given ahead of time for different categories of cards.*
  • Flat-rate pricing: This one is self-explanatory; it's the same for every card.**
  • BackBill/ERR Pricing: Enhanced Recover Reduced (ERR) pricing means the processor charges you one rate, then back bills for more on those transactions the next month if it wasn't enough.
  • Membership Pricing: In this pricing structure, you pay a monthly fee, and they will process your card processing fees at wholesale rates up to a specified amount of processing each month.
  • Interchange Plus Pricing: This method uses the interchange rate by the card network and a markup by the processor, a transparent bill that shows who gets how much and why.***

* Rej describes this as the worst deal in his article

** Rej describes this one as the second-worst deal.

*** Rej says this is the best pricing structure for merchants.

"Understanding which ones are competitive and good for your business versus the ones that are not is huge. Just being on the right pricing structure saves you a ton of money," Rej explains.

Rej says that many times doctors do not address this expense. It becomes something they don't like but don't understand well enough to fix. Spending an hour online can show you how it works and give you some numbers to compare. However, Rej warns dentists to be careful; many website reviews are sponsored, so they are less impartial than the dentist wants.

"You might even type in as a dentist, 'best dental credit card processing,' and again, people are paying to show you those landing pages versus you organically ending up there because they are good at what they do," Rej explains. "That's something that you have to be careful of when you are doing research."

Getting a Better Deal

In both cases, CardFellow and Merchant Cost Consultants have services that will do the legwork for you, which is one way to get the best deal. However, Dwyer and Rej would still advise you to have a rudimentary understanding of everything. If you go it alone, remember a few things that might help you get a better deal:

  • Always get your quotes in writing. Rej says it sounds basic, but many people don't do it.
  • Get the full pricing schedule on the merchant service contract before you sign anything. Rej says this is eye-opening because there will be many more fees than were discussed with the sales rep. (However, some won't apply to a dental practice, or at least won't very often apply there, which could be why the salesperson never mentioned it, he says.)
  • Read the merchant service agreement. Dwyer says reading the contract is imperative, so you understand the details. For example, it will spell out your processing limit, which should be high enough that you can stay under it.
  • Don't assume everything the salesperson said will end up in the agreement. Dwyer says just because a salesperson told you there was no cancellation fee doesn't mean that's what you will sign in the contract.

Keeping a Better Deal

Once you have signed a great deal with your credit card processing company, you are done, right?

Not so fast.

"The biggest mistake that dental practices tend to make is not looking at the statements," Dwyer says.

A common misconception in the industry is that the total cost resulting from a quote, called the effective rate, can be calculated ahead of time. However, this is only an estimate. Too many unknown variables exist to give an exact percentage. Dwyer says interchange and assessment charges qualify on a per-transaction basis, and you don't know the final cost until the transaction is settled.

"No processor can tell the future. They can only estimate the effective rate you will pay," Dwyer explains. "The important thing you're looking at in a statement is whether the markup is consistent."

Dwyer and Rej both say that many contracts have clauses that the card processor can raise rates whenever they want. So, the rates can increase even if you have reasonable intitial pricing in the agreement. Dwyer says processors include these notifications with a lot of tedious information in the notification section, like interchange and assessment updates.

"Typically, they'll put a payment message at the bottom of the merchant statement that says, 'We're increasing your fee in two months. If you do not agree to this, you can cancel without penalty in the next 30 days,'" Rej says. "Those are things you must look out for; it's one thing to get good pricing; it's another to keep it."

If you don't read the statement, Dwyer and Rej suggest calculating the effective monthly rate by dividing the fee amount by the total transactions. The answer is the effective rate you pay.

"Every month that should stay relatively consistent for a dental practice, in the 1.6% to 1.9% range for a practice with competitive pricing," Dwyer says, adding that the actual number varies depending upon a few variables about the cards used. "Ideally, you want to look at every line of the statement and go through it, but I understand that seldom happens. So, calculate the effective rate, write it on top of the statement and move on. Then, if it's higher than normal, figure out why."

"If you don't do it at least quarterly or every other month, or at a bare minimum every 6 months, you are susceptible to these price increases," Rej agrees.

Merchant Cost Consultants will do a monthly audit with software and manually. Rej says they look at every card taken at the practice to determine the type of card used, the cost of it, and the markup involved with it. They also note fee fluctuations in VISA, Mastercard, and other brands.

What You Should Know about PCI DSS and HIPAA Compliance

One fee that affects the effective rate paid each month is Payment Card Industry Data Security Standard (PCI DSS) compliance. PCI DSS are fees assessed if the practice does not validate compliance per PCI DSS guidelines.

There are 6 requirement categories for PCI DSS, which include:1

  1. Having a secure card processing network
  2. Safeguarding cardholder information and data
  3. Defending against malware
  4. Implementing robust access control measures in place
  5. Examining and assessing your networks
  6. Establishing and managing an information security policy

The processor sends a monthly survey to assess the data security standards of the practice. The processor adds a fee if the practice doesn't turn it in or answers a question wrong. Rej has seen a range of costs for non-PCI DSS compliance, from $30 to $200 a month. Regardless of compliance, some processors also a monthly fee for the PCI DSS program charges.

"Most doctors have no idea how this works," Rej says. "And, again, this is one little item in the whole scope of running a business that you must do, and it takes up so much time if you don't know what you are doing."

"This is a good thing to ask when a practice is looking at processors," Dwyer says. "Discover what assistance they get with PCI. For example, most processors will partner with a qualified security assessor to assist in getting practice compliant. So that help does exist."

Dwyer writes that many practices are concerned about HIPAA compliance when they set up credit card processing. However, at a basic level, the activities around accepting cards for payment are not part of the HIPAA compliance requirements. The Health and Human Services website explains that it is because these are "normal" banking or financial transaction services.1

Exceptions to this might occur if the card processor handles things like invoicing or patient management for the practice, then their activities would fall under HIPAA requirements. In this case, that means signing a business agreement with the company.

Also, the card processor should not receive sensitive patient information. Per Dwyer, this means leaving off any comments or notes in the online payment form, including follow-up visits or treatment details.1

In addition, the card process shouldn't send a receipt to patients in an unsecured channel. For example, they cannot text receipts or send them in an unencrypted email. Dwyer writes that the dental practice should discuss how receipts are provided to patients and double-check that any settings set for those receipt delivery systems are changed.

"HIPAA is much less sensitive than you'd think," Dwyer says. "It doesn't have a lot to do with payments."

The Key Takeaways for Keeping It in the Cards

Rej says the time spent learning how it works, how different cards get different rates, and other details are worth it. Whether you use a consultant or negotiate on your own behalf, this knowledge will serve you well.

"Go online," Rej says. "There's a ton of information about how credit card processing pricing works, and understanding that is a huge leg up to get good pricing at the get-go."

Dwyer agrees, adding that the payments industry is competitive. Dental practices can leverage that to get a better deal than the first offer.

"Don't think that because you call a payment processor, and they have pricing posted online that it's not flexible," Dwyer says. "It's always flexible."


  1. Dwyer, B. (2018) HIPAA-Compliant Credit Card Processing for Dental PracticesCardFellow Credit Card Processing Blog. Available at: https://www.cardfellow.com/blog/credit-card-processing-for-dental-practices/ (Accessed: 5 December 2022).
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