Believe it or not, the success of many dental practices is partially shaped by the availability of credit card processing. Today, an increasing number of dental professionals, who run their own practices, agree that credit card acceptance results in higher cash flow for their business. However, if you are planning to extend credit card processing options to your patients, you should note that paying transaction fees becomes mandatory as well.
Also, the amount you need to pay can fluctuate due to a variety of factors. For starters, the transaction rates may vary according to your merchant category, how the credit card transactions are processed, as well as the types of cads that are used for purchases. At the point of making a sale, it is possible to reduce the cost of accepting cards, by making sure that you qualify for the best possible rate.
“Okay, so I know now that I need to examine how credit card sales are processed to qualify for the lowest transaction cost” “But where do these costs come from?” Let’s turn our attention to understand interchange.
When it comes to credit card processing for your dental practice, discount rate is a commonly misapplied term. Individuals tend to apply it to the concept of merchants paying a percentage of each sale when processing credit card related sales. However, by calling it a discount, you would be suggesting that something is being reduced. It is not!
In fact, it is a fee that merchants need to pay to their processor to handle the deposit of credit card funds and transactions into their business’s bank account. Next, you should note that discount rates begin with interchange, and it is the fixed fee that is distributed to card-issuing banks and is assessed by credit card organizations. While there are over a hundred different rates and categories, interchange makes up a large portion of the so-called discount rates.
How does it affect transaction costs?
As mentioned, interchange fees can fluctuate based on a variety of factors, and it applies to all entities which process credit cards, including MasterCard® and VISA®. These factors include:
- Amount of data you submit with each transaction: Card associations have various levels of qualification. For example, you did not meet the requirement for Address Verification (AVS) when you accepted a payment via telephone, and only provided a partial address. The transaction is then assessed with higher rates.
- The way card account numbers are captured: In most cases, you can receive a lower processing rate if transactions can be swiped through the magnetic-striped reader of your credit processing machine.
How you can start reducing your overheads
For starters, it is pertinent that you do not omit any required data when prompted by your credit card terminal. By doing so, you easily save money. This is very important because you do not want to risk failing to qualify for the best rate. So never ignore terminal prompts, and make sure your employees understand this as well. If you adhere to this new found practice, you will start to qualify for the best possible rate every time, and save more dollars on credit card fees. Start saying “no” to downgraded transactions today!