The Hidden Costs of Dental Credit Card Processing Fees and How to Reduce Them

Dentists juggle numerous responsibilities daily, from patient care to managing expenses—including credit card processing fees. The financial burden can be overwhelming, especially when many dentists graduate with significant debt. According to the American Student Dental Association (ASDA), the average dental school graduate in 2017 had over $239,895 in debt, with 30% owing more than $300,000. Additionally, the British Dental Journal (BDJ) reports that half of all dentists experience high levels of stress that negatively impact their practice. The last thing dentists need is to be overcharged for credit card processing fees by dishonest merchant services providers.

Unfortunately, this is a common issue. Most healthcare practitioners, including dentists, earn more than the average business owner but have less time to scrutinize their credit card processing agreements. Many unknowingly pay excessive fees due to hidden charges and complex pricing structures. Understanding these costs and implementing cost-saving strategies can help dental practices retain more revenue and operate more efficiently.

What’s a Fair Dental Credit Card Processing Rate?

If you accept major credit card networks like Visa, Mastercard, American Express, or Discover, you’re likely paying between 1.5% and 2.9% in processing fees. If you’re at the higher end of that range, you might be overpaying.

A review of typical dental practice credit card processing fees reveals that many dentists are on multi-tiered pricing plans, which include hidden surcharges. These fees can add up to $300 to $500 extra per month. Considering that the average dental practice has a profit margin of 40%, reducing these unnecessary expenses should be a priority.

Common Ways Merchant Services Providers (MSPs) Overcharge Dentists

Many MSPs take advantage of dentists by using confusing pricing models. The best way to compare quotes from different MSPs is by evaluating the effective rate using pass-through pricing.

Understanding Key Terms:

• Effective Rate – The total percentage of fees you pay per transaction, including the MSP’s markup.

• Pass-Through Rate – Includes fixed interchange fees paid to the card-issuing bank and assessment fees paid to the card brand.

• Interchange Fees – Set by the credit card networks and paid to issuing banks.

• Assessment Fees – Paid to the card brands (Visa, Mastercard, etc.).

The pass-through rate is non-negotiable, but MSPs manipulate fees by offering misleading pricing structures. Some MSPs will only disclose their markup rate while omitting pass-through costs, making the effective rate seem lower than it actually is. Without full transparency, dental practices may unknowingly pay much higher fees.

How Credit Card Processing Fees Impact Dental Practices

Credit card processing fees can significantly impact a dental practice’s bottom line. Consider a practice generating $100,000 per month in credit card transactions. At an average 3% processing rate, they would be paying $3,000 per month—or $36,000 annually.

How to Reduce Credit Card Processing Fees

Many dentists are unaware of their options for lowering credit card processing costs. Here are several effective strategies:

• Implement a Cash Discount or Surcharge Program : A cash discount program allows dental offices to offset processing costs by offering discounts to patients who pay with cash. Alternatively, a credit card surcharge program passes the processing fees onto patients who choose to pay with a card. Both options can help practices reduce or eliminate these fees entirely.

• Negotiate Lower Processing Fees : Not all payment processors charge the same rates. Dental offices should shop around and negotiate their rates with providers. Some processors offer membership-based pricing where practices pay a flat monthly fee instead of a percentage of each transaction, leading to significant savings.

• Choose an MSP with Transparent Pricing : Look for payment processors that offer interchange-plus pricing, which ensures a small, fixed markup over interchange fees. Avoid tiered pricing models, as they often lead to excessive charges.

• Encourage Debit and ACH Payments : Debit card transactions typically incur lower fees than credit cards, while ACH (bank transfer) payments usually have flat fees. Encouraging patients to use these payment methods can significantly reduce costs.

• Ensure PCI Compliance : Non-compliance with PCI DSS (Payment Card Industry Data Security Standard) can result in additional fees. Ensuring compliance helps practices avoid unnecessary penalties while maintaining secure payment processing.

• Use Automated Payment Solutions : Integrating automated billing solutions with practice management software can streamline payment collection and reduce administrative costs. Features such as recurring billing can minimize manual processing fees and improve efficiency.

• Monitor Statements for Hidden Fees : Regularly reviewing merchant account statements helps detect and challenge unnecessary charges. If a processor unexpectedly increases fees, it may be time to renegotiate the contract or switch providers.

Conclusion

Dental credit card processing fees can be a major expense, but they don’t have to be. By implementing a cash discount program, negotiating lower rates, selecting transparent processors, and encouraging alternative payment methods, dental practices can substantially reduce their costs.

Additionally, staying informed about hidden fees and leveraging modern payment solutions ensures more revenue remains in the business. Taking proactive steps to lower processing fees improves profitability and allows dental offices to reinvest in patient care and business growth.

If you’d like to learn more about how The Billing Company can work with you to reduce credit card processing fees and set up a cost-saving program in less than a week, give us a call at +1 201 614 5389.