Summary: Orthodontic practices often incur high costs from credit card processors due to inflated fees and additional charges, which significantly impact their finances. Understanding and auditing merchant statements can help mitigate these expenses and optimize financial outcomes.

Key Takeaways:

  1. Credit card processing fees for orthodontic offices range between 2.5% to 4.5%, with various factors influencing these rates.
  2. The most effective way to reduce processing fees is by negotiating with current processors without switching.
  3. Cash discounts and surcharges are alternative strategies, but they require careful consideration of their impact on patients and business operations.

By Eric Cohen

Merchants often face inflated fees from their credit card processors, resulting in significant annual costs that are otherwise avoidable. Beyond inflated processing fees, these same processors can add more costs such as penalties for recurring payments and missing data, adding further financial burden to the orthodontic practice. Offices must also contend with insurance constraints, as they cannot share the burden of fees with patients. Understanding exactly what goes on in your merchant statement every month is crucial to mitigate excessive expenses and optimize financial outcomes.

Understanding credit card processing fees

Average credit card processing fees range between 2.5% to 4.5%, which varies based on a number of factors, including what kind of purchase it is, the merchant category, and what card is being used. Interchange fees are paid to the card issuer, such as Visa or MasterCard, while the payment processor adds their own charges for facilitating the transaction. These fees can be per transaction, monthly, by statement, or even for equipment leasing.

The sheer amount of fees can be overwhelming for orthodontic offices, which is one of the ways processors get away with overcharging. Fortunately, it is possible to understand what each fee is and break down a merchant statement to see where businesses can save money. And there are several ways to combat rising processing fees.

#1 way to combat rising processing fees

The most effective way to combat rising processing fees is to simply get rid of them by negotiating without switching processors. Processors are often open to negotiating their fees, and there are experts in the space who will audit your merchant statements and facilitate the negotiations for you.

Other ways to combat rising fees

Other common ways businesses combat rising fees are through credit card surcharging or offering discounts for paying in cash. These strategies allow businesses to cover part of their swipe fees without raising prices but can be tricky to implement in the healthcare space. Most importantly, you need to be aware of how these strategies impact your patients.

If you’re considering a surcharge program, a cash discount may be a simpler option

Operating costs for orthodontic offices are, like many other businesses, higher than ever, with credit card swipe fees being one of the leading costs. Still, many patients also struggle to afford the care they need for their oral health, even with dental insurance. You don’t want to drive patients away with surprise fees or higher costs, so be sure to consider your options carefully before implementing a surcharge program. Cash discounting can be a good way to avoid processing fees as it cuts out the processor entirely while offering clients a form of a “discount” for the transaction at the same time.

Regardless of how you want to implement strategies to combat inflated fees, the most important thing orthodontic offices can do is to become more familiar with the credit card processing landscape and their own merchant statements to reduce their processing fees. OP

This is Part 1 of a four-part series we will be bringing you in the coming weeks. Part 2 will talk about why skipping your annual PCI survey will cost your practice. Part 3 will discuss how to avoid unfair fees when your payment processor is embedded in your practice management software. And Part 4 will explain how practicing good payment processing hygiene can strengthen your practice’s valuation.

Eric Cohen is the CEO and founder of Merchant Advocate, which works with merchants, including private practice owners, to reduce credit card processing fees from the unregulated credit card industry without having to switch processors.