Guest Column: Eric Cohen – Add 5% To Your Net Income– Stop The Silent Money Siphon

Editor’s note — for most small businesses, including dentists, accepting credit cards is an expensive business necessity.  And if you have ever tried to compare the total cost of two different credit card plans, you know how confusing it can be.  So when knowledgeable experts can attack this problem for you, and get paid based on a percentage of the saving they produce, we are intrigued.  Read on…

By Eric Cohen
Expert tips can help protect your practice from needlessly losing money on credit card payments.
The system that allows you to collect money from your patients can cost you a lot more money than it should. There are hidden costs that reduce your bottom line without you realizing it! You know that running a practice costs money. You have all the typical expenses: rent, employee salaries and benefits, insurance, marketing, equipment, etc. When you accept credit cards, that costs you money also. Chances are, this revenue collection system costs you significantly more money than it needs to, acting as a “silent siphon” that slowly takes money out of your practice.
There are ways to reduce this cost and optimize the fees that you pay WITHOUT switching providers. Unfortunately, the credit card industry has made it impossible to understand exactly what it is you are paying for. There are hundreds of different cards (over 700 different VISA®, MasterCard®, and Discover Card® categories at last count), most have different costs spanning a wide range: from 0.05 percent to over three percent of the transaction total. Additionally, there are dues and assessments imposed by the card associations, monthly fees, equipment costs, transactions fees, PCI compliance and non-compliance fees; the list goes on and on! Most practices run their patients’ credit cards through their practice management software, so the cost of accepting credit cards increases because there is a middle man potentially taking a piece of your hard-earned money.

Choosing a credit card processor is not all about your rate. Many times I’ve heard, “I have the lowest rate. We have looked at this many times.” It’s not always that simple to see what your true rate is. Many factors make up the total cost of accepting credit cards besides the markup your processor is charging you, and a busy doctor or office manager cannot interpret all the intricacies of this industry. What can you do? You can have a third-party expert that understands all aspects of the industry, knows all the costs of accepting cards, and can help your office analyze the information to ensure you are processing optimally and at the lowest cost.

Your office must use proper procedures when accepting a card. The same card taken by your office will cost you different amounts depending on how it is accepted. Most practices know when the patient presents their card in the office and it is swiped into the terminal, it costs less than taking the payment at a later date and the card number is keyed in. Did you know that the data entered into your system when the card is keyed will determine the cost of the transaction? There can be several reasons why your practice is not getting the lowest rate possible on every credit card keyed in, such as:
The team member keying the credit card was not educated on proper procedure or is too busy.
Your processor set you up incorrectly-the processors make more money this way!
Depending on your rate structure, your processor may make more profit when you don’t enter in all the required information for each transaction. Sometimes, processors will intentionally set up your equipment improperly to increases profits. These reasons can siphon off anywhere between 0.5 to three percent of your gross profit, which can translate to over five percent of your net income. Having an expert to identify this can increase your income five percent!
Another factor affecting your rate is coding. There are simple coding errors that can cost you thousands of dollars a year. When you initially sign up for processing services, a human being data enters the information and sets up the account in the processor’s system. If the person entering this information is not paying attention, had a bad morning, etc., they can make mistakes, such as:
Incorrectly entering your SIC (standard industry code).
This can increase your cost to accept certain credit cards. We have seen this happen many times. One example we discovered was a not-for-profit organization charged thousands of dollars a year additional because someone entered the wrong code.
These are just a few examples of errors that go undetected because no one monitors your account to ensure that you are processing optimally. The processors have no incentive to save you money! What all merchants need is an advocate who works for them, who is on their side, and whose incentive is to keep processing costs as low as possible.
Eric Cohen is CEO of Merchant Advocate
For more information and a free analysis, call Cheryl Donahue at 720-526-5318,
or email