Could lower credit card processing fees boost your profits from chemical peel treatments? The short answer is yes! But is looking for a way to accept payments even worth it? Your dermatology clinic or medical spa must prioritize your patients. That’s a busy and honorable job. After all, by offering chemical peels, you’re improving lives. As the American Society of Plastic Surgeons notes, chemical peels can improve acne scars, wrinkles, sun damage, and irregular skin pigmentation.Before you say forget changing payment systems, hear us out. Because you have to stay financially viable to keep helping clients. And the truth is credit card processing fees are probably eating way too much into your revenue. Let’s discuss what you can do.

Remember your investment to get into chemical peel treatments

First, think of all you’ve done to get here. To become a dermatologist or plastic surgeon and perform chemical peels, you had to go to school and train. You may even have debt to pay off (average student debt approaches $200,000, according to NerdWallet data). To open a medical spa or cosmetic dermatology clinic, you spent a lot of money too. Startup costs for a medical spa average well into six figures, with some owners spending $1 million. You certainly want to see a return on that investment.Second, you offer chemical peels to help people look and feel better. It’s a good thing to do. You also can reap the benefits of the fast-growing chemical peel market, which eclipsed $2.1 billion globally in 2018. Statista estimates chemical peel revenue to exceed $3 billion by 2025. As an aesthetics professional, you can profit from this boom. So, you’ve made an investment to give yourself opportunity. Why let credit card processing fees risk your profitability and sustainability? The damage credit card fees are doing to your business may be more than you think...

How much chemical peel revenue do you lose to credit card processing fees?

Since chemical peels are considered aesthetics treatments, insurance doesn’t cover your clients. That means all your chemical peel revenue comes from out-of-pocket payments. Now, the average cost of a chemical peel is $669, according to the American Society of Plastic Surgeons. Given that it’s such a high expense, chances are a good portion of your clients swipe a credit card to pay for the treatment. As consumer research from the Federal Reserve shows, credit cards are more commonly used with purchases from $50-$100 or more. Look at the average transaction value of various credit card brands.

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

Source: Statista

Knowing this, it’s fully possible 50% of your chemical peel revenue comes from credit cards. If you do 1,500 chemical peels per year at an average cost of $670, that equates to $1,005,000 in revenue from the treatment. That’s great! If you have net margins of 15%, you earn $150,750 in profits from chemical peel treatments. But you could do much better.Consider that half of that revenue came via credit card. That’s $502,500. On that chemical peel revenue, you pay the following fees:

average payment network fees

Source: Motley Fool

Once you account for processor markups, you probably pay around 3% per transaction. In the example we’re discussing here, that means you’d pay $15,075 in credit card processing fees per year. Do we have your attention now?Clearly, you stand to gain a lot with lower credit card processing fees. Imagine if you could eliminate those fees altogether... Your profits would jump from $150,750 to $165,825. That’s an increase of 10%!The only question remains: How do you get lower credit card processing fees?

Step one: Shop for lower credit card processing fees

Ideally, you want a payment processor that offers low credit card processing fees along with the capabilities you need. To get that, you must learn how to find the best merchant service provider (MSP).To start, check the MSP’s pricing model. They’ll either offer tiered pricing or pass-through pricing. Go with pass-through pricing! Here’s why:

  • Tiered pricing groups all transactions into tiers: Qualified, Mid-Qualified, and Non-Qualified. MSPs often set rates as they deem correct. And it can be confusing for you to understand.
  • Pass-through pricing passes the cost of processing onto the business. You pay fixed fees plus a processor markup. The benefit is you know what you’re paying with pass-through pricing.
  • Tiered pricing often costs more, as non-qualified transactions cost a lot more to process. You may have more of those than you think.

Once you have a list of viable MSPs with pass-through pricing, examine the following fees:

  • Interchange fees: The card-issuing bank charges these fees.
  • Assessment fees: The card brand charges these.
  • Processor markup: The MSP has to make money. They do so through monthly subscription costs, per-transaction fees, same day funding fees, and other charges.

As you can see, processor fees get complicated. But why? While reputable MSPs will offer transparency with their fee structures, the fact is the industry remains unregulated. There may be fees you overlook or don’t calculate. That could add to the cost of having a payment system. Thoroughly examine each MSP’s fee structure. Calculate how much you’ll pay each year in fees for chemical pee revenue. Then, make a shortlist of potential payment systems to purchase. Finally, negotiate. Leverage your high revenue as a medical spa to get lower credit card processing fees. Payment processors may offer surprisingly lower credit card processing fees to get your business. Just note: Only the processor markup can be negotiated (not the interchange and assessment fees). Many businesses have been known to get 5-10% knocked off the markup. So why not try it?

Step Two: Implement a cash discount program

How does a cash discount program get you lower credit card processing fees? Well, the cash discount concept is simple yet smart. You give your chemical peel clients a choice: pay for the chemical peel treatment in cash or pay a surcharge for using a credit card. You still give your chemical peel clients still have the convenience of swiping the plastic. But they can save if they pay in cash. At NadaPayments, for instance, our cash discount program saves cash-paying customers 3.95%. Completely legal and compliant, thanks to the Dodd-Frank Act, a cash discount program ensures your spa or dermatology clinic can take 100% of your chemical peel revenue. With that extra revenue, you can expand your business, save more, or take a longer vacation. Sounds nice, right? If you’d like to learn more, contact us at NadaPayments. We’re ready to help get you lower credit card processing fees through a cash discount program. Give us a call 1 (929) 293-1800 or click the link below.

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