Credit card processing for a medical office

Originally published January 30, 2011 by Ho Sun:

I’ve been told that you should always collect all fees for a visit on the day of the visit.  Use your practice management system eligibility checker to verify coinsurance or a deductible, and make every effort to collect at the time of service. Once a patient leaves the door, your chances of getting paid goes down significantly.  Many people do not carry around more than $40 nor do they walk around with their checkbooks.  That’s why you should consider taking credit and/or debit cards in your office.

In order to accept credit cards, you need to sign a contract with a credit card processing service, which may be  a bank or merchant services company.  I found a good website that compares merchant services based on all the fees and features:

Although it wasn’t the best deal, I ended up going with U.S. Bank because I had my equipment loan with them.  In fact, I transferred all my personal and business checking and savings accounts over to U.S. Bank from Chase, who wasn’t willing to help in anyway with my startup. In fact, I really don’t want to bank with Chase ever again.  I am still holding onto my Chase business checking because it’s tied to my Medicare EFT, but I plan to move over all deposits to U.S. Bank as soon as I get them.

Although I probably could’ve found a better deal, I’m ok with what I got. They do match any retail company’s rate by the way.  Some companies will make you buy your own credit card terminal, which I’ve seen go for $150 to $600.  U.S. Bank will give me a terminal, that gets processed through my PC, for $30 a month for 48 months.  I’ll also be paying a $5 monthly maintenance fee, but no other gateway fees or statement fees.  I’ll be charged 1.69% per each standard transaction along with a 20 cent swipe fee, and the money will clear the next day.  For some credit cards like American Express and rewards cards, I’ll be charged 2.49% to 3.49%.  It’s so interesting that this is how credit cards can afford to give out “cash back” bonuses to consumers.  I never knew that.   I paid an additional $99 for an ATM PIN pad, and will be charged 0.75% for each transaction. I’ll need to charge a minimum of $25 a month.

Here’s his follow up from September 15, 2011:

Speaking of getting hustled, I just found out that my merchant services (credit card processor) has been charging me $29.95 in penalty fees each month for the past 3 or 4 months because I didn’t “comply” with some lame security training course.  Apparently, it was my responsibility to find this requirement in a section of my contract.  Part of it is my fault because I didn’t really pay attention to each specific line item bill.  I looked through it in detail for the first time last week, and saw a $29.95 “Non-PCI” charge.

I called my merchant services company, and they told me that I had to complete an online course and perform a security scan on my computer to become certified.  I was being charge a  $29.95 penalty each month for not being “compliant.”

So once I do become compliant, turns out I’ll only be charged $175 a year for the annual certification fee! Otherwise, it would be $175 + $360.  *sigh*

I’m definitely reaping in the benefits of a credit card processor, but I wish I had known about all these hidden fees.  Last month, I paid $135.76 for $2,400 in charges.   Of this amount, $29.95 was the penalty fee, and $31.68 was the equipment lease fee (4 year commitment).   So if you take out the $29.95, I paid about 4.5% for my charges.  Definitely higher than the 2%  I was quoted.

And here’s Howie’s input:

Credit card processing is the Wild West and not very regulated. So there are a lot of companies who, to say it politely, stretch their advertising. They promise you 0.000001% over the actual rate, but then tag on all sorts of processing fees, batch fees, deposit fees, verification fees, swipe fees, etc. They may give you a teaser rate for the lowest tier cards (non rewards), but then move up all cards into more expensive tiers. It’s hard to comparison shop unless you actually get numbers from a real customer. Even then, their area may have a different mix of debit, credit, and rewards cards. Debit cards cost much less to process.

Rather than buy a terminal, I use iPhone (other practices use a old iPad) to process credit cards. Use a hand me down when you buy a new iPhone, or just get one on eBay. It’s connected via Bluetooth to the card reader which cost me $80.

I have went through four credit card processing services. A very common card service is Square. But their rates are high, 2.75% swiped and 3.5% keyed. Square is very widely used and in my opinion tends to be better for business just starting up with under $100 in charges per month.

I started off with Intuit go payment which is 2.4% swiped, 3.4% keyed with a fee of 25 cents per charge. They had different plans and I was averaging about 2.3-2.4% out the door with all fees.

Amazon actually had a card processing service with a 1.75% teaser rate for about six months and then 2%. So I switched from intuit. But unfortunately they went out of business. Ho Sun said it was one of the worst days, but we eventually found something better.

But as first I switched to Capital one spark pay, which was $20 per month and 2% swiped and 2.8% keyed. Again I averaged about 2.4% out the door with all fees. They stopped their service too.

Now I have switched for the last time. One of our colleagues in our google group came up with a group offer from a company that charges much lower rates for debit cards than the companies I discussed above. They claim to charge just above actual rates. I had to pay $80 for a Bluetooth reader, while for the above companies the readers were free.

They do tack on some extra fees and have a annual fee of $320, but I along with others in the group are consistently getting 1.7-2% out the door with all fees, including annual, added in. So I believe their pricing is legit. If your volume is higher or you’re in an area with more debit than credit cards your rate will be lower.

Based on a quick google search for “credit card processing mobile 2018” the best company I could find is called Payline and reviewed here. I’ve never had any experience with them, so don’t roast me if the fees are much higher than what they actually advertise.

Just don’t ever do business with a company that has a early termination fee or won’t prorate the annual fee if you change your mind after a trial period.

As Ho Sun’s experience with US Bank illustrates, the bigger banks are usually the more predatory processing companies.

3 thoughts on “Credit card processing for a medical office

  1. If you are a Costco business member you can go through them for merchant services. I use them. I don’t recall the exact fees but I shopped around before I chose them and they were definitely the lowest I could find.

    • I’ve heard that Costco merchant services is legit but no one has told me their out the door rate. Before everyone in our google groups switched to the same company, everyone was swearing up and down they had the lowest rate 🙂

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