If you’re trying to build or grow your dental practice you need to make it as convenient as possible for your customers to pay you. Particularly when it comes to face to face transactions, 80 percent of customers prefer to use plastic (and more specifically 42% prefer to pay with debit and 38% with a credit card). So, choosing to not accept credit or debit cards isn't really an option for successful dental practices.
Unfortunately, however, accepting credit and debit cards is one of the most expensive ways for a dental practice get paid with anywhere from 1-4% on average going to the dental practice's credit card processor (Meaning for every $100 your practice gets paid, you only get to keep $96 to $99). Thankfully, there are a number of ways that savvy dental practice managers can significantly lower their effective credit card processing rate and keep more of the money from the sales they make inside their practice.
- Compare Apples-to-Apples Pricing
Credit card processing is generally priced using one of two pricing structures, interchange plus and tiered pricing. There’s a fair bit of debate about which credit card pricing model is the best from the small business owner’s perspective. But lost in the minutiae of whether interchange plus is better than tiered pricing is the overarching point that credit card processing rates are very negotiable, and that if you request a quote from 5 different credit card processors, you’re likely to get 5 different prices. So the first tip to lowering your credit card processing fees, is to get multiple quotes.
Unfortunately, unless you’re comparing apples-to-apples pricing, the complexity of credit card pricing models will often simply confuse dental practice owners. Thus, a good rule is that regardless of whether you currently use tiered pricing or interchange plus pricing, stick with the pricing structure that you’re on. Then make sure that all of the pricing quotes you receive also use the same pricing model, and that all display your qualified, mid-qualified, and non-qualified rates, your per authorization rate, and all monthly and fine print fees. That way you know you’re comparing apples to apples.
- Swipe Sales vs. Phone Sales Whenever Possible
Dental practices have a significant amount of control over how they accept credit card payments. Therefore, to the extent possible, you should configure your practice to accept face-to-face debit and credit card payments (swiped or EMV chip), as opposed to card-not-present transactions (e.g. phone based or keyed in payments). The reason, is that face to face swiped payments have much lower rates of fraud, and as a result your credit card processor will charge your business significantly less to accept them.
There are a number of good ways to slightly tweak your business model to increase the rate of face to face "swiped" transactions. For example, Pedlar Dental, a Katy Texas dentist, utilizes portable iPads to accept credit card payments which they bring to the patient's chair side if there is an increased charge for unexpected services that occur during the course of treatment. That card-present payment option is used as opposed to the office manager simply keying in the increased amount with the credit card on file for the patient, which would be considered a card-not-present transaction and subject to higher fees.
The difference in pricing between a card-present payment and a card-not-present payment can be as much as a 2.5% difference, which over the course of a year can mean literally thousands of dollars in additional profits to the practice, so it’s worth making the effort.
- Complete Your Annual PCI Compliance Quiz
PCI is a data security standard created by the credit card brands (Visa, MasterCard, American Express, Discover, etc.). It requires a lot of very technical steps for big businesses to maintain PCI compliance and is designed to help prevent the sort of massive credit card data breaches that have become all too common over the last decade (see e.g. Home Depot in 2014 and Target in 2013.
But for small businesses like dental practices, PCI is really just a source of unnecessary additional revenue for the credit card processor. That’s because it only takes about five minutes for the average small business to complete the required annual survey and become “PCI Compliant” thereby avoiding what can amount to $450 in annual “non-compliance fees”. Unfortunately, most credit card processors aren’t that motivated to remind you to complete your annual survey, so put it in the calendar to complete once a year, and make sure it gets done.
Conclusion
Starting and building a dental practice is flat out tough, and once it's running, attempting to squeeze out additional profits can be even tougher. The last thing you need is to pay unnecessary transaction costs simply to accept debit and credit card payments. Thankfully, practice managers and dentists who take the time to seek multiple apples to apples quotes, structure their business model to minimize card-not-present transactions, and follow through on completing simple annual tasks like maintaining PCI compliance can dramatically reduce their internal cost of accepting credit and debit card payments.