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Look Out for Hidden Fees


In today's economy, there is increasing pressure to offer patients every possible method of making payment.

In today’s economy, there is increasing pressure to offer patients every possible method of making payment. So, after you decide to sign up with a credit card processing company and start accepting Visa and MasterCard, you have nothing else to worry about, right?

Not so fast. If you think like this, you may be losing a lot of money.

“With many companies there are a lot of hidden charges doctors don’t see on the surface,” says Paul Soparnarat of Heartland Payment Systems. Many processing companies take advantage of the complexities of interchange rates, markups, other related fees, and complicated fee structures to keep physicians from knowing exactly how much each transaction costs them.

Take a look at some of the more common tricks credit card processors use:

  • Fee increases -- Visa and MasterCard adjust rate categories one to two times each year. When rates go up, some companies and their agents use the opportunity to inflate them even more -- and then deceptively blame the increase on Visa/MasterCard.



  • Fee reductions -- Annual fee adjustments by Visa/MasterCard may also include reductions in some card transaction categories as well as incentives for certain categories of merchants and card types. Yet, merchant acquirers and their middlemen rarely pass these reductions on to small- and medium-sized merchants.



  • Middlemen -- Card processing is a fairly simple process that requires four entities at most: a bank, a Visa/MasterCard, a telephone or Internet connection, and a processor. In some cases, however, as many as 12 additional, but different, entities get involved … each one taking a cut.



  • Surcharges and bill-backs -- Visa/MasterCard charges as many as 110 different interchange rates. These are set by Visa or MasterCard and cannot be changed by a merchant acquirer. However, many merchant acquirers or their middlemen significantly inflate these set fees with surcharges -- often called “bill-backs” or “enhancements” -- that frequently are deducted the month following the actual transaction without disclosure.



  • Reasonable equipment costs -- Availability of card processing equipment has become widespread, with warehouse clubs, consumer electronics stores, and online auctions routinely providing this equipment at very reasonable costs. Yet, many merchant acquirers sell the concept of multi-year leasing, locking physicians into costly, non-cancellable, long-term commitments.

Take the time to look carefully for these signs in your statements. If you have a question, ask your customer service representative. If you do not get a satisfactory answer, start thinking about doing business with another company.


What else to look for in a processing merchant:

  • Encrypted card numbers and secure transactions



  • Real-time fraud and transaction monitoring



  • Live customer support 24/7

Card processing services can be a high expense many small- and medium-sized practices unknowingly incur, hidden on their P&L statement as “bank fees.” Often these costs are unnecessarily high; careful attention to the details of your credit card processing can really pay off.


Despite the complex nature of credit card economics and the potential for bottom-line erosion, it still may be worth it to accept them. Offering patients the option of making payment via credit card could be better for your practice than sending endless bills that may or may not get paid.

Karen Zupko is a seasoned senior advisor who has been helping physicians navigate America's healthcare system since 1974. Her perspective stems from more than 25 years of consulting, coaching, and training experience with physicians and those who manage them. She is a member of the American Marketing Association and Women in Communications, and she has served on the board of trustees of Chicago's Grant Hospital. Karen is a graduate of the University of Kansas and a Chicago native. You can contact her at kzupko@karenzupko.com.

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