How to get a handle on credit card processing fees

"Accepting credit cards is an exciting addition to payments at my practice that hardly costs me anything at all, and reading my statement feels like Christmas," – said no one ever.

Whether it's for an office visit, full treatment or even just for a co-pay, plastic payments far outweigh paper, making credit card transactions a necessary evil in this day and age. But you shouldn't have to pay excess fees and overages for them, nor should you have to worry about your rates changing as often as you get new waiting room magazines.

Most monthly statements aren't easy to read; however, if you look closely, you'll find them largely composed of three main parts.

1. Interchange, which is the direct cost of credit card transactions. Every time you process a card there are rates associated with it. These rates are set by the credit card companies themselves and are the same across the board for every provider. Interchange rates are based off of several critical factors including business size, industry, customer card type, and how the transaction is being processed. Exact rates are available online if you're interested, but averages for swipe transactions are around around 0.05 percent for debit cards and 1.5 to 1.65 percent for other types of cards.

2. Markup, a percentage placed on top of all transactions so traditional providers profit from your volume.

3. Ancillary fees. All those line item fees and hidden charges, like batch fees, statement fees, PCI compliance fees, monthly minimums, IRS fees, customer service fees, and more.

If you read through the three basic components of a merchant statement and found yourself saying interchange is the only legitimate charge, you are correct. Why should someone else be making variable profitability on the volume run by your office? Anything above interchange is going straight into their pockets. Negotiate it. If it goes well, get a commitment that your rates won't change. If it doesn't, switch providers. 

You can also save money based on the type of cards you are accepting. Make sure you're accepting PIN debit. As mentioned above, the average debit transaction is only 0.05 percent at cost as compared to an average 1.5 percent credit card. So if you don't accept PIN debit transactions, get yourself a PIN pad and make it happen.

Among credit cards, don't be scared of American Express. In the past, AmEx's 3.5 percent average rate was daunting and discouraged businesses and practices from accepting their cards, but they have introduced a new program called Opt Blue, which deconstructs different rates based on industry type and ticket size. For doctor's office tickets under $150, the rate is as low as 1.85 percent; between $150.01 and $2000, the rate is 2.15 percent. Ask your merchant services provider about details on the program.

The moral of the story is that although credit cards are an important and indispensable form of payment for your business, extra fees are not. The era of credit card processing with handcuffs and markups is a thing of the past, because you can empower yourself as a negotiator with these providers to make sure you're safeguarding your practice. Savings and simplicity, like laughter, are truly the best medicine.  

Suneera Madhani is founder and CEO of Fattmerchant, a subscription-based merchant services provider, offering unlimited credit card processing at direct cost.