Understanding Credit Card Processing Rates

By Keith Drayer, Vice President, Henry Schein Financial Services

Accepting credit and debit cards has become a necessity for dental practices. Patients increasingly want to pay their dental bill by credit or debit card because of the ease, convenience, ability to better manage their finances and the opportunity to earn points, miles and other rewards. There are many benefits to your practice as well, including increased cash flow, reduced collections and improved staff productivity.

The rates and fees often associated with a merchant services account generally represent only a very small percentage of patient receivables, yet they can seem complex and confusing. Here is a quick primer on some of the more common rates and fees:

Discount Rate:

The basic fee that you pay your merchant services provider for processing each credit card transaction and depositing the funds into your bank account.

Transaction Fee:

An additional fee sometimes added to each transaction to mitigate risk and cover costs.

Authorization Fee:

A fee assessed by the provider of connectivity services between your practice and the card companies.

Rate Tiers:

Credit card transactions generally fall into one of three categories or tiers:

• Qualified: Usually the lowest of all rate tiers; applies to transactions when the card is physically present.

• Mid-Qualified: An additional percentage assessed when a credit card payment does not meet the standards for the Qualified tier. Occurs if the card information is manually entered into the terminal, instead of swiped.

• Non-Qualified: An additional percentage assessed when a card payment does not meet the standards for either the Qualified or Mid-Qualified tier. Often occurs if card information is manually entered; if address verification is not performed; or if the transaction is not settled within the allotted time frame.

Surcharge Fees:

Assessed when accepting specific types of credit cards, such as rewards, corporate or international cards.

Billback Fee:

Assessed when one or more of the qualifying requirements have not been met.

Address Verification Services (AVS):

A fee assessed for verifying the address and zip code, for card-not-present transactions.

Chargeback Fee:

Applies if either the cardholder or bank that issued the card disputes a transaction.

Monthly Minimum Fee:

Assessed if your total card processing fees do not meet a preset minimum amount.

Statement, Setup and Annual Fees:

A processor could assess these fees for the corresponding services.

Termination/Cancellation Fee:

Assessed if you terminate/cancel your merchant services account before your contract expires.

Rates and fees fluctuate broadly from one payment processor to another. One surefire way to ensure your practice is receiving the best rates and fees possible is to work with a processor that offers a rate guarantee, similar to Moneris Solutions’ $500 Rate Guarantee. Partnered with Henry Schein Financial Services, Moneris Solutions offers a $500 credit to practices if they cannot beat or at least meet current credit card processing rates.

About the Author:

Keith Drayer is Vice President of Henry Schein Financial Services (HSFS). HSFS helps health care practitioners operate financially successful practices through our diversified suite of financial and business resources. HSFS’ portfolio of resources is designed to give our customers the financial advantage critical to success in today’s changing marketplace. You can reach HSFS at 1-800-443-2756 or hsfs@henryschein.com.