This is a guest post from Dr. Jennifer Mogan. She is an anesthesiologist in my neck of the woods…Rochester, NY. She is also a “Doctor in Payments” as a senior account executive at Park Place Payments. Park Place is a women-owned company fundamentally changing the experience businesses and medical practices have with their payment processor. In this post, she is going to share with us tips and tricks to take advantage of the often overlooked but easiest way to find practice savings and increase practice revenue! You can reach her at [email protected]
A year ago, I didn’t even know there was such a thing as a credit card processing company. A practicing anesthesiologist, I was clueless about what happens between swiping my card at the store and paying my bill at the end of the month. Forget having any appreciation for the integral role a credit card processor can play on the bottom line for a business. It wasn’t until Coronavirus threw my world into a tailspin, and through a series of unlikely events, that I became an expert in this field and adopted the title of “Doctor in Payments!”
So many of us in private practice medicine also find ourselves in the role of business owner. It is therefore only prudent to be informed about this essential but frustrating part of running a business. Doing so will increase practice savings and revenue.
A Necessary “Evil?”
For those of you who are as uninformed as I was, every business that accepts credit cards must use a payment processing company. Whether it is a traditional credit card processing company, a bank, or a merchant aggregator like Square, Stripe, or PayPal. For years now, the payments industry has been operating like the Wild West. There is little regulation, no standards for comparison, and absolutely no transparency. They have kept business owners in the dark and confused. This is in an effort to make as much money as they can off of our ignorance. The best way to minimize this expense is to arm ourselves with knowledge!
Making a Confusing Industry Even More Confusing
Even if we fancy ourselves as good negotiators or pat ourselves on the back for hiring a financially savvy office manager, it doesn’t translate to being able to sniff out a good deal when it comes to our credit card processing rates. On the surface it would seem easy to determine if we are receiving fair rates (like using the Kelly Blue Book to shop around for the best deal on a car). But, there is more to it than meets the eye, and most payment processors are not forthcoming with information.
If you have ever looked at your monthly merchant statement, it is akin to opening up your organic chemistry textbook for the first time, or trying to read a foreign language. You will feel like you need an interpreter to make heads or tails of it. Even if you think you can calculate your rate, there is so much more to it.
Take a moment to answer these questions:
Are you paying a flat rate (where you pay the same percentage for every transaction, as is the case with Square, Stripe and PayPal)? Is it the lowest rate of a tiered pricing model (often used by many banks)? Or are you lucky enough to have a processing company that quoted you with interchange plus pricing (which is essentially wholesale pricing based on interchange rates)? How do you know how your rate compares with the practice across town? Is your rate creeping up over time? Are you being charged a laundry list of hidden or unnecessary fees that you were not informed about? Is your processing company pocketing extra cash from your practice by not helping you stay PCI compliant?
Unfortunately, despite our years of education, these questions are difficult to answer without some help. And not knowing causes the practice to lose precious savings. It is bad enough to have to negotiate with the insurance companies. You shouldn’t have to waste your time negotiating with your payment processor too!
I Want to Understand More…Or Just give me the CliffsNotes!
For those of you interested in learning the basics, here they are in a nutshell. (The rest of you can skip to the last paragraph. There I’ll share how to fast track to finding out if you are being taken for a ride!) Every credit card (and there are hundreds of different cards out there) has a different interchange rate dictated and charged by the credit card brands (VISA, Mastercard, Discover, AMEX) just for the convenience of using their cards.
These rates vary on a continuum. They range from very low regulated rates for debit cards all the way up to much higher rates for business and corporate cards, with basic bank cards, rewards, points, and miles cards in between. You then pay your credit card processing company to securely process each transaction that goes through your business and ensure that you get the money owed to you from every payment. How and what they charge you varies greatly and can be an opportunity for significant savings for your practice. This is where having the answers to the questions above can come into play.
- Using the bank where you do all of your other business is easy, convenient, and will ensure you a good deal.
False! While you may think that going directly to your bank for payment processing allows you to skip the middleman, this is not the case. The bank uses a payment processing company too, so you often are paying twice the fees!
2. Using a Merchant Aggregator like Square, Stripe or PayPal is just more straightforward.
False! While it may seem simpler because it is based on a flat rate, this is most often way more expensive than other pricing models! In addition, by using a merchant aggregator you do not have your own merchant account and are not protected. You are lumped together with all of the other merchants using that company, just as if you opened a joint bank account with your whole town!
3. It is such a hassle to research and switch processing companies.
False! Getting a comparison can be easy with a processing company that is transparent. Collecting the information takes just a 10 minute phone call. And with the newer technology that exists, the actual switch is pretty much plug-and-play! Attentive customer service can make all the difference.
Here are a few simple things you can do on your own to help minimize your processing expenses:
- You will pay much lower rates for debit card transactions than credit card transactions. Encourage your patients to use their HSA/FSA debit cards!
- You will pay lower rates for in-person transactions than for transactions completed over the phone or online. If possible, encourage patients to pay prior to leaving the office rather than sending an invoice.
- Make sure you are PCI compliant to avoid paying PCI non-compliance fees. This requires often overlooked yearly paperwork. And most payment processing companies have no incentive to help keep you PCI compliant because they get to pocket a portion of that fee.
Can You Just Tell me if I am Getting Taken for A Ride?
While the practice savings from the above suggestions might be small, every little bit helps. The more significant way to look for cost savings is to educate yourself. You can also get a free Payment Checkup™ done to find out more about your pricing model, rates and fees. A Payment Checkup™ is a simple analysis of your current payment setup. It will provide you with a side by side comparison against a fair standard. I affectionately compare this process to doing a quick H&P and ROS of your practice, running your merchant statement through the MRI machine, and then providing you with your results and a treatment plan!
I have been fortunate enough to join forces with a female-founded and run credit card processing company. Our mission to bring education and transparency to the payments industry. Further, I am on my own mission to bring that knowledge to my colleagues in medicine! Park Place Payments was founded to combat all of the poor practices that have dominated the dark side of this industry for years. Together we have educated practices across the country about this part of their business and saved most of them significantly on their bottom line. Whether it is a couple hundred or a couple thousand dollars a month in cost cutting, it is the easiest, most risk-free “passive income” source you can find! Personally, I have found practices overpaying by as much as $30,000/year!
Just as we encourage our patients to get their annual wellness visits, mammograms and eye exams, we should check in on the health of our payments
Increasing your practice savings increases your practice revenue. Your bank account, vacation fund, and sanity may thank you for it!
Learn more by contacting Jennifer here!
Looking for other ways to increase your financial and overall well-being? Ready to reach financial freedom to practice medicine on your own terms? Check out these posts!
- How to Find the Perfect Balance Between FIRE & YOLO
- 5 Easy Steps for Physicians Who Hate Personal Finance
- Finance Flash Go! Episode #45: Small Cap vs. Mid Cap vs. Large Cap Stocks
- My Stock Portfolio Is Better Than Your Financial Advisor’s
- Stress Free Stock Market Investing Is Easier Than It Seems!
- Important Money Lessons That I Learned From My Wife
- Finance Flash Go! Episode #44: Understanding Growth vs. Value Stocks
What do you think? Is your practice optimizing its payments and savings? How could your revenue increase by optimizing this aspect of your business? Let us know in the comments below!
Love the blog? Don’t forget to sign up for our newsletter mailing list below (under the comments) or to join our Facebook group of like-minded individuals on the path to financial well-being!