Payment Processing Fees That Are Nothing to Smile About
Credit card processing can be particularly expensive for dentists due to several factors. Here’s a deeper dive into why dental practices often face higher fees compared to other industries and what can be done to mitigate these costs.
1. Integration with Dental Software
One of the primary reasons for high credit card processing costs in dental practices is the integration with dental software. This specialized software is often proprietary, requiring practices to use specific processing companies. This dependency can lead to normalized, inflated processing fees. Once locked into these systems, rates can be raised at any time to boost the processor's profits. Consequently, most dentists using these systems face an effective rate of 3-6%. (For example, if a practice pays $350 to process $10,000, their effective rate is 3.5%).
2. High Transaction Amounts
Dental services often involve high-cost procedures, resulting in larger transaction amounts. Since credit card processing fees are typically a percentage of the transaction amount, higher costs for big-ticket transactions are inevitable.
3. Interchange Rates
The interchange fees set by card networks (Visa, MasterCard, etc.) are a significant component of credit card processing costs. These fees can be substantial for high-value transactions common in dental practices.
4. Risk Assessment
Payment processors may view dental practices as higher risk compared to retail businesses because the services rendered can't be returned or refunded easily. The quality of the dental practice software security used can also influence the overall risk assessment. Additionally, many dental practices offer payment plans or memberships involving recurring billing, which introduces extra risk factors such as maintaining current customer information and managing recurring payment disputes. These perceived risks can all lead to higher processing rates.
5. Card-Not-Present Transactions
Dental practices often process payments over the phone or online for appointments or services. These "card-not-present" transactions carry higher fees due to increased fraud risk and chargebacks, which can negatively affect the practice’s profitability.
6. Compliance and Security Costs
Dental practices must adhere to stringent data security standards to protect patient information. Investing in compliance with PCI DSS (Payment Card Industry Data Security Standard) can add to overall processing costs.
7. Recurring Billing
Many dental practices use recurring billing for payment plans or membership programs. While convenient, recurring billing can sometimes incur additional fees, adding to the overall cost.
8. Limited Negotiating Power
Smaller dental practices might not have the same negotiating power as larger businesses to secure lower processing rates, resulting in higher fees.
Want to Learn More?
Download the Guide.
√ What hidden fees your practice is paying
√ Understand the types of alternate processing
√ How integrating with your PMS can save you thousands
√ How to set up dual pricing correctly
Want to Learn More?
Download the Guide.
√ What hidden fees your practice is paying
√ Understand the types of alternate processing
√ How integrating with your PMS can save you thousands
√ How to set up dual pricing correctly
Mitigating Credit Card Processing Costs
Understanding these factors can help dental practices explore ways to mitigate costs. Here are some strategies to consider:
1. Negotiate with Payment Processors: Don’t settle for the first rate you’re offered. Shop around and negotiate with different processors to find the best rates.
2. Explore Different Payment Methods: Consider offering alternative payment methods that might incur lower fees.
3. Implement Free Payment Processing Solutions: Solutions such as dual pricing can effectively reduce processing fees. Dual pricing allows you to offer a separate cash and credit card price at checkout, offsetting processing costs.
Conclusion
Credit card processing costs can be a significant burden for dental practices, but by understanding the contributing factors and exploring cost-saving strategies, practices can reduce their expenses. If you are looking to safely exit your high-fee processing contract and opt for a completely free payment processing solution that allows you to take payments in-office, online, or on-the-go, contact us today. We can help you implement effective strategies to save on processing fees and keep more money in your pocket.
Request a PayLo Pro Demo
√ Book a 15-minute session with a payments specialist
√ Receive a personalized walkthrough of PayLo Pro products
√ Gain insights into requirements and pricing
√ Discover your potential savings!
Request a PayLo Pro Demo
√ Book a 15-minute session with a payments specialist
√ Receive a personalized walkthrough of PayLo Pro products
√ Gain insights into requirements and pricing
√ Discover your potential savings!
