Healthcare Credit Card Processing: Choosing Merchant Services for Your Small Medical Business [with Statement Photos]

Healthcare Credit Card Processing: Choosing Merchant Services for Your Small Medical Business [with Statement Photos]

Over the past several years, doctor’s expenses have gone up faster than before, while payments from insurance companies have come down. Recent estimates have found that the average medical practice overhead these days is between 60% to 70%.

Coupled with numerous healthcare regulations, lower insurances reimbursements and more paperwork, docs have to find ways to save money.

As a medical practitioner, you may not have control over the insurance reimbursements you receive, but you can control your expenses. And one of the first things you should be looking at your credit card processing costs.

Why? Simple: if you’re dealing with healthcare credit card processing, there’s a good chance that you’re overpaying. 

Many healthcare facilities — small medical businesses included — are spending over $1,000 a month to take their patients’ Visa and Mastercard payments, and they don’t realize that they’re overpaying by several hundred dollars a month.

This post will talk about how you can take to calculate your payment processing fees. We’ll also walk you through the steps you can take to find the right merchant services provider for your medical or dental practice.

By the end of this article, you should have a clear idea of how much you’re paying and you will have a plan of action for how you can reduce credit card processing in your practice.

Read through the post or jump to a relevant section below:

  • Figuring out your medical practice’s credit card processing costs
  • Factors to consider when choosing a new merchant services provider
  • Lowering your payment processing costs: a real-life case study

How to Calculate Healthcare Credit Card Processing in Your Business

How would you know if your medical business is overpaying for merchant services?

Answer: you need to calculate your effective rate. To do that, divide the total dollar amount that you processed by the total fees charged by your processor. Follow the formula: Effective Rate = Total Fees Charged / Total Amount Processed x 100


Here’s an example: As you can see in the statement below, the merchant’s sales volume was $158,207.91 and they were charged processing fees amounting to $2,430.74. If we apply the effective rate formula, we’ll find that this particular merchant’s effective rate is 1.54%.

Payment Depot Merchant Account Statement

Knowing your effective rate will enable you to determine if you’re overpaying for payment processing. You can do that by comparing your effective rate with the average interchange costs (i.e., the fees charged by credit card networks like Visa, Mastercard, Discover, and Amex).

Put it simply, interchange rates are the wholesale rates of credit card processing. These are the fees charged by the networks, and anything you pay beyond the interchange would be the markup of your credit card processor.

At the time of writing this, the typical interchange fees are as follows:

  • American Express – 2.5% to 3.5%
  • Discover – 1.56% to 2.3%
  • Mastercard – 1.55% to 2.6%
  • Visa – 1.43% to 2.4%

As you can see, with an effective rate of 1.54, the merchant is NOT overpaying for payment processing. But if, say, a merchant discovers that their effective rate is 5%, then it likely means that they’re being overcharged.

Run the numbers for your medical practice to find your effective rate then compare it with the industry’s average interchange fees. If the rate is immensely higher, then you should consider shopping around for a different merchant services provider.

And this brings us to our next step…

Factors to Consider When Choosing a New Merchant Services Provider

If you’re reading this, chances are you’ve discovered that your medical business may be overpaying for credit card processing. If so, it’s a smart idea to shop around for a new provider to see if you can lower your costs.

Below are some of the factors you should consider when shopping around for a healthcare credit card processor


Naturally, if you’re trying to lower expenses in your medical or dental practice, then the processor’s fees would be a top consideration. At this stage, your objective is to determine whether switching to a new provider would lower costs.

One way to do this is to look at the proposal of different merchant services providers (or ask their sales rep) to see if they can provide an estimated effective rate. If they’re unable to do so, chances are the provider is looking to tack on additional fees to inflate your costs — in which case, you should consider turning to a provider who can give you adequate information.

Another way to ensure that you won’t be overcharged is to look at a provider’s pricing structure. We talked about this at length in our in-depth guide on choosing a credit card processor, but here’s a quick rundown of the typical pricing models in credit card processing:

Tiered pricing – The payment processor will group your transactions into three categories qualified, mid-qualified, and non-qualified. The processor will charge you lower fees for qualified transactions, while those that are considered “non-qualified” will come with higher rates.

This is the worst and least transparent pricing model. Stay away from companies that use tiered pricing.

Blended pricing – Sometimes referred to as flat-rate pricing, providers that implement blended pricing combine all processing fees and markups into one flat fee, making this pricing strucutre easy to understand.

Interchange-plus pricing – With this model, the processor separates its markup from the interchange rate. It’s a more transparent pricing model because it tells you how much you’re paying in wholesale fees and the percentage that your processor is taking from your sales.

Membership pricing – Membership pricing is similar to interchange-plus in that it also separates the processor’s markup from the non-negotiable fees. But what sets this model apart is that membership processors don’t take a cut out of your transactions. Instead, they charge a flat membership fee in exchange for access to the “wholesale” credit card costs — i.e., the fees charged by the banks and card issuers.

Out of all these pricing structures, we can unequivocally say that tiered pricing is the least favorable option for merchants, so be wary of providers that are using it.

As for the choice between blended pricing vs interchange-plus vs membership: the “right” option will depend on the size and nature of your medical practice.

Smaller medical businesses that don’t process a lot of credit cards may benefit more from the simplicity of blended pricing, while those that process large card transactions will likely save more from interchange-plus or membership-based processors.

Figure out the best option for your business by doing your own calculations or consulting with a payments expert.

Features and Offerings

Pricing is important but you also want to make sure that your payment processor has all the features and functionalities you need. As a healthcare facility, such features may include:

  • Ability to implement partial, subscription, or recurring payments
  • Ability to accept payments in-person, online, over the phone, or through manual billing
  • Strong security features and encryption capabilities to safeguard patient data

Compatibility With Your Systems

Ideally, your payment processor should also integrate with your existing hardware and software. Does the processor work with your POS system, online shopping cart, or credit card machines? If not, will the provider help you reprogram your equipment or offer solutions to ensure that your systems run smoothly?

Iron out these issues before signing on the dotted line.

Customer Support

Don’t forget to evaluate customer support. If you’re running a 24-hour operation, for example, then you’ll likely lean towards vendors that offer round-the-clock customer service.

You should also consider the customer support channels that you’re comfortable with. Do you prefer hashing out issues over the phone or are you fine with email or live chat? Do you need in-person support?

Take note of your customer support needs, and find a provider that can meet them.

Case Study: How a Medical Office Saved $605+ by Switching Payment Processors

We’ve talked about the steps you should consider when switching providers, now let’s look at a medical practice that’s actually done it.

Arlington Dental signed up with Payment Depot and they went from paying $1,000+ per month to just $500 in payment processing fees.

As you’ll see in their statement below, Arlington Dental reduced their merchant services fees by $605.71 in their first full month.  That’s a 51.4% savings in one month.

Medical Office Merchant Account

If you look at the Wells Fargo statement above, Arlington Dental was paying about 3.44% of their total amount processed to Wells Fargo. Once they switched their credit card processing to Payment Depot, they paid only 1.85% of their total sales.

How Does Payment Depot Save Medical Businesses So Much Money?

Payment Depot members get the True Cost from Visa and Mastercard, without an added percentage. This is the new way to take credit cards that is saving medical offices and other businesses hundreds of dollars a month. While traditional credit card processors add 1-2% to the actual rates from Visa/MC, Payment Depot members pay $0.05 to $0.15 per transaction (depending on sales volume) and just a flat membership fee that starts at $49 per month

Ready to Learn More?

So is your medical office overpaying by 51% for card processing? Analyze your data or better yet, send us your statement and we’ll analyze it for free. We’ll show you exactly how much you could have saved by switching to Payment Depot for your merchant account. There is just no reason for any doctor to be using any other company.

Want to save 40% on payment processing? Let's Talk!