Many healthcare practices find themselves accepting payments across different environments. Like any omnichannel business, not having the account setup properly could cause chargebacks, funding delays, or a myriad of other headaches.
Interchange+ pricing is ideal for healthcare practices because they’re often collecting low(er) dollar co-pays that people are paying with debit cards. If you’re on a flat rate or tiered pricing model, you won’t be able to enjoy the benefits of your patients using less expensive cards. Let’s take a look at the averages: Visa’s average interchange rate across all of their card types is about 1.74% and 10 cents. If you’re accepting a $50 co-pay, there would be about $0.97 in interchange fees (plus dues and assessments). If someone is paying with a regulated debit card, the interchange rate is 0.05% and 22 cents for the transaction, so that same $50 co-pay would have $0.25 in interchange fees (plus dues and assessments). That’s almost ¼ the cost of the average credit card interchange. These are raw costs that all processors have. This does not include the processor’s profit or markup.
Now, let’s say you’re on a tiered pricing model with a qualified rate of 1.99% and 10 cents for debit cards and basic credit cards that are accepted in a card-present environment. That $50 co-pay would cost you $1.10 for both the credit card and the regulated debit card. The costs set by the card brands didn’t change, but a tiered pricing model allows the merchant services provider to give you multiple tiers or buckets of prices. This means that they won’t disclose to you what their costs are, and they have control over how your cards are qualified – meaning the tier or bucket that they fall in. Tiered pricing usually has a qualified rate (QUAL on the statement), a mid-qualified rate (MIDQUAL on the statement) and a non-qualified rate (NONQUAL on the statement). Tiered pricing does include the processor’s profit, but the raw costs are hidden, so you don’t know how much they’re making off of you.
With tiered pricing, the rates usually look something like this:
- 99% + $0.10 = Qualified Rate
- 99% + $0.10 = Mid-Qualified Rate
- 99% + $0.10 = Non-Qualified Rate
How the rate is qualified is usually determined by the card type and how it was accepted. Qualified cards are usually debit cards that are accepted in a card-present, EMV environment. Sometimes basic credit cards that don’t have rewards can fall into this category. Mid-Qualified cards are usually qualified cards that are accepted in a card-not-present environment like taking a payment over the phone and keying it in or taking the payment online. This could also apply for card-present transactions of qualified cards that are accepted via magstripe and not EMV (chip or contactless). Non-Qualified rates are usually for rewards cards and hospitality brands like AMEX and Discover.
Using the previous example of a regulated debit card being accepted on tiered pricing as a qualified card, that same regulated debit card would be downgraded to mid-qualified if you accepted it over the phone or online through a hosted payment page or payable invoice. The crazy thing is that because the interchange rates of regulated debit cards are regulated by the federal government, their costs don’t change when the payment acceptance method changes. This means that the cost the merchant services provider pays is always going to be 0.05% and 22 cents whether you accept it face to face, over the phone, or online, but they’re charging you much, much more. So, a $50 co-pay that’s keyed in will cost the merchant $1.60 on this pricing platform while the merchant service provider’s cost is still only 25 cents.
Historical data shows that most healthcare practices with an average ticket less than $75 tend to accept mostly regulated debit cards. Even when the average tickets are significantly higher, there still tends to be a decent portion of regulated debit cards. For this reason, interchange+ pricing is always recommended. Your merchant services provider’s profit shouldn’t be determined by the types of cards you accept of the method by which you accept them. With interchange+ pricing, our margins are fixed regardless of card type or acceptance method.
Our Magothy Payment Gateway is designed for omnichannel healthcare practices to be able to address every processing environment through a single platform. We have EMV and contactless pin pads that are connected to our software through the front desk computer allowing you to quickly process transactions when you have patients in-office. The virtual terminal allows you to process payments that patients call in over the phone. We also have the ability to setup a hosted payment page on your website so that your patients can pay their invoices themselves. Our platform was also designed to securely store their payment information in the Customer Vault for future outstanding invoices or payment plans that you setup. Lastly, we offer an interchange optimization program that allows the processor to submit Level II and Level III data on your behalf to get lower interchange rates on corporate cards. This is ideal for practices that accept digital payments in the form of credit cards from the insurance companies. These cards are [usually] passed through with corporate merchant category codes and have higher interest rates if you’re not submitting Level II and Level II data.
We’ve found our solution to be beneficial to the following types of healthcare practices:
- Massage Therapy & Acupuncture
- Physical Therapy Practices
- Mental Health Practices
- Primary Care Practices
- Chiropractic Practices
- Optometrist Practices
- Urgent Care Facilities
- Pediatric Practices
- OB/GYN Practices
- Dental Practices