Credit card transaction fees aren’t cheap. Do you know how much you pay?If you offer cosmetic dental procedures, you probably should know. Because dental insurance typically doesn’t cover cosmetic services. That means your patients are paying out of pocket, making it likely that credit card processing fees take a noticeable chunk out of your revenue. You may think this is just the reality of doing business. But the truth is this: You don’t have to pay credit card processing fees. Here’s why you should care about dental credit card processing fees and how your dentistry can stop paying them.

You made a big investment to enter dentistry! Take care of it

You’ve made a good decision to offer cosmetic dentistry services at your practice. Most importantly, you can boost the oral health and confidence of many people. You can improve lives and literally help people smile brighter. Also, the market is truly great. As research shows, the cosmetic dentistry market already nears $20 billion and is expected to eclipse $32 billion by 2026. With solid growth and incredible revenue, you can help people and earn good money. To get to where you are, you’ve made a massive investment in yourself. You attended dental school for four years, did countless hours of training, and obtained a license in your state. Getting started also costs you a lot of money. After all, dental school tuition is expensive. That’s why, according to the American Student Dental Association, the average debt of a dental school graduate exceeds $285,000. In addition to education expenses, you made a big investment to start your practice. As a Bank of America report notes, opening a dentist office costs between $350,000-$500,000.On top of all that, you have to care for patients and manage the office and staff every day. With so much on your plate, it can be hard to pay attention to how you process credit card transactions. But you should take some time to make sure you have the best possible point of sale system and strategy. Without the best credit card processing for dentists, you're losing money for no good reason. Here’s why: If you earn a good deal of revenue from cosmetic dental procedures, such as dental implants and teeth whitening, credit card processing fees definitely eat at your margins. If you can get rid of those fees, you stand to gain a lot. In fact, you could boost your profits by more than 5-10% (or even more). That equals a better return on your investment and the opportunity for your dentistry to enjoy greater success.Motivated yet?

How much cosmetic dental revenue do you lose to credit card transaction fees?

Cosmetic dentistry involves a lot of different procedures, from dental bonding and dental crowns to inlays and onlays. Prices for these services vary from under $100 to more than $5,000.Considering the high cost of services, it’s very possible 50% or more of your revenue comes from credit card transactions. As data from the Federal Reserve shows, the higher the purchase, the more likely people are to use credit cards. The chart below shows the average transaction value of various credit cards.

Average value of transaction per credit card worldwide in 2016, by brand (in U.S. dollars)

Source: Statista

So, a significant portion of your revenue is subject to credit card transaction fees. But how much do you actually pay in credit card transactions? According to industry data, you probably pay 3%+ per transaction. The chart below details fees for each credit card. Add in the merchant service provider (MSP) markup, and you’ll get to 3%+ on average.

Average credit card processing fees

Source: ValuePenguin

That may not seem like a lot. But if you do thorough analysis of your finances, you’ll see it is. This makes it even more crucial you have the best credit card processing for dentists. So that you have a better idea of how much dental credit card processing fees affect your practice’s finances, let’s do an example with actual numbers. Let’s say your practice offers all types of cosmetic dental procedures and achieves the following revenues and margins:

  • The average patient spends $800 and you serve 900 patients per year. Your total revenue is $720,000, which is just over the average revenue for dental practices.
  • Your total overhead is 70% of your revenue, or $504,000. So you earn $216,000 per year in profits. Not bad! But you could do much better.
  • 60% of your revenue comes via patients swiping the plastic. That leaves $432,000 subject to credit card transaction fees. If you pay an average fee of 3.5%, you fork over $15,120 in card processing fees per year. That’s a ton of money you’re leaving on the table!

Now, imagine you could eliminate those credit card transaction fees. Your profits would jump from $216,000 to $231,120. That’s an increase of 7%! And all you had to do was get the best credit card processing for dentists. Now, think of all you could do with that extra money. You could improve benefits for staff, save more for retirement, add to your children’s college funds, take a vacation, and more. As you can see, you can benefit tremendously from not paying credit card transaction fees. But how do you eliminate those fees? Isn’t it impossible? It’s actually not. By taking two steps today, your cosmetic dental practice can stop paying credit card processing fees.

Step one: Find the best credit card processing for dentists

You need two things from your merchant service provider (MSP):

  1. The ability to handle your transactions. Since cosmetic dental offices aren’t high-traffic retail stores, you don’t need the latest system. But you also don’t want something that has clients waiting a minute for the transaction to process.
  2. The lowest possible credit card transaction fees. Why pay more than you need?

So, you must shop for an MSP. Fee structures can get confusing, as many MSPs aren’t as transparent as they should be and the industry remains unregulated. Moreover, they know dental practices are busy places, and therefore may not inspect the fine print! Be sure to look for all potential fees and ask the MSP questions so you’re clear on how much you’ll pay per transaction. As you shop for a credit card processor, check pricing models. Some offer pass-through pricing and others offer tiered pricing. Only opt for those with pass-through pricing because credit card transaction fees are more transparent with this model. You know what you pay with pass-through pricing. Tiered pricing often results in business owners paying high fees for mid- and non-qualified transactions. Once you have a list of MSPs with pass-through pricing, compare their fees. Look at the following:

  • Interchange fees (charged by the card-issuing bank)
  • Assessment fees (charged by the card brand)
  • Processor markups (how the MSP makes money)

Processor markup charges can get confusing, as MSPs may assess extra fees through monthly subscriptions, same day funding fees, online funding charges, and more. After you’ve gathered all the data on those fees, crunch the numbers. Narrow down your selection to a few MSPs with the lowest credit card transaction fees! Then, you get to the fun part: Negotiation!Yes, you can negotiate how much you pay in credit card transaction fees. While you can’t negotiate interchange fees and assessment fees, you can negotiate the MSRP markup costs. We’ve regularly seen business owners get a 5-10% discount on MSP fees. Lastly, choose the best MSP for your cosmetic dentistry. That should be a processor with low fees and good services.

Step two: Use a cash discount program

What’s a cash discount program? Like it sounds, a cash discount program offers cosmetic dental clients a discount for paying in cash. At NadaPayments, for example, our cash discount gives patients 3.95% off.But how does that eliminate credit card transaction fees? It’s simple! When clients take care of their bill, you can offer them a discount for paying in cash or have them pay a slightly higher price for using a credit card. The slight markup covers the credit card transaction fees, ensuring your bottom line doesn’t take a hit. The passing of the Dodd-Frank Act makes cash discount programs completely legal and compliant for cosmetic dental practices. That gives you a strategy for taking home 100% of your cosmetic dental revenue! Interested in learning more? Feel free to contact us at NadaPayments. We’re ready to help you boost your profits with a cash discount program. Call us at 1 (929) 293-1800 or click the link below.

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