3 Tips to Understand Credit Card Rates in 3 Minutes

It’s tough managing a medical practice. When your job responsibilities include hiring employees, renewing leases, training, and whatever seems to break that day, practice managers tend to prioritize the urgent and not-so-urgent task. Often, tasks like evaluating a merchant statement to determine the cost of accepting patient debit/credit cards, are not high on the priority list. The reason this task is not a priority is 1) merchant statements are confusing and hard to navigate and 2) merchant companies seem to always promise a better rate and not deliver.

But why should you care about merchant fees today?

1)  Merchant fees can increase with little notice

2)  Merchant fees directly affect your bottom line

3)  Costly PCI penalties can be easily removed!

Here are 3 easy tips to understand your merchant fees in just 3 minutes:

#1 Grab your most recent merchant statement to determine your effective rate. This is the rate that captures your holistic merchant fee picture and includes card rates, monthly, per item, and authorization fees. To calculate your effective rate, simply divide the total monthly fees deducted from your account by your total sales for the month and then multiply by 100. You should see rates from 2.6%-3.4% depending on your credit card volume, the type of cards patients use to pay, and where transactions take place.

#2 Determine the top 4 cards presented to pay your practice. If your patients are paying with debit cards, you will see significantly lower rates (1.65%-2.4%). And if your rates are higher (over 4.00%), your patients are likely paying with reward credit cards and/or your staff is keying in all payments. Surgery centers will have higher rates because payments are not made in person whereas pediatricians will have lower rates because most payments are made in the office.

#3 Look for any Non PCI Compliance Fees which are usually on the third page of your agreement. PCI compliance fees range from $19.99-$69.99/month and easily removed by logging into your merchant account and taking the PCI questionnaire.

If you have successfully walked through these 3 steps, you should have a better understanding of your effective merchant rate, the types of cards used to pay, and removed any unnecessary monthly fees on your account. This information will help you evaluate your merchant fees and their impact on the practice.