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Cut Overhead Costs By Reducing Credit Card Processing Fees

Doctors seeking to reduce overhead expenses often overlook the cost of credit card fees. Doctors should review their credit card processing fees with the goal of reducing their rates.

However, that rate is only a small part of the total transaction cost. While your Merchant Service Provider (MSP) may offer an excellent rate for qualified transactions, a significant number of transactions may not fall into that category. That’s because many patients utilize rewards cards (mileage, cash back, etc.) which process at more costly rates.

Credit card processing has grown significantly more complex, with over 150 different processing categories and different rates for each type of transaction. These rates are known as “interchange” and are set rates determined by the major card associations, Visa, MasterCard, and Discover. Doctors should think of the interchange as a set “wholesale” rate (published at,, and Interestingly, Walmart recently sued Visa for more than $5 billion, claiming the card network charged unreasonably high fees when their customers paid with plastic. Walmart also claimed that the way Visa set those “swipe fees” (interchange fees) violated anti-trust rules, and generated more than $350 billion for card issuers over nine years at the expense of Walmart and its customers.

Doctors who process payments using the published interchange rates are using the Interchange Pass-through Pricing program. In addition to the interchange fee, which is paid to the card issuing bank, two other fees are added to the total processing cost. These are association assessment fees paid to Visa, MasterCard, and Discover, which are a set percentage based on processing volume, and the Merchant Service Provider (MSP) processing fee.

The MSP is responsible for providing all support and servicing of the doctor’s merchant account including overseeing the authorization, settlement, distribution of fees received, risk, and charge back management.

While having a good processing rate is important, it does not assure that the transaction is processed properly and routed to the least expensive interchange category. For example, simply failing to enter a zip code can result in an increase of 0.50% in fees. Furthermore, if an improper code is utilized, the transaction is disqualified from receiving discounted pricing.

Since most of the cost of accepting credit card payments goes to the card issuing banks in the form of interchange fees, it’s imperative for doctors to use an MSP that is knowledgeable in interchange optimization, a system whereby the practice processes a credit card correctly with the data required by the card association in order to qualify for the least expensive interchange rate possible.

Any incorrect interchange classification generally occurs due to improper processing methods as well as technical and operational inefficiencies at the merchant (doctor) level. In order for the doctor to obtain the best interchange rate, the transaction detail must conform to the rules established by the card brands (Visa, MasterCard, and Discover).

In addition to merchant processing fees, many MSPs add other charges including monthly or annual membership fees, gateway transaction fees, downgrade fees, and non-PCI compliance fees, which can significantly increase costs. Some payment processors will roll the processing fees into the following month’s statement, making a true analysis of fees extremely difficult to calculate. Certain fees may be charged only quarterly or annually, and without a review of each monthly statement, these fees can be easily overlooked.

Ultimately, the goal should be to accept payment in the most efficient manner for the practice, while reducing expenses through interchange optimization. An experienced payment professional can provide you with up to date industry knowledge, personalized support, and the tools necessary to reduce your expenses. For a complimentary credit card account review, contact Bryan Facterman, President of Elite Payment Processing, at, or call 877.330.3313. Bryan has helped several doctors save $600-$24,000 annually in credit card fees.


The McGill Advisory is designed to provide accurate and authoritative information with regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal or accounting advice or other expert assistance is required, the services of a competent professional should be sought.

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