7 Rules for Lower Credit Card Processing Fees

Swiped debit transactions are least expensive.

Of debit cards, those issued by major banks that are federally regulated will yield the lowest rate.¹ Regulated banks are those with over $10 billion in assets (about 60% of all banks).

Encourage payment at time of service.

A swiped/chip-read transaction is usually less expensive than a keyed transaction for the same card.
Any time a transaction must be keyed, it’s important to enter Address Verification System (AVS) information [street number and zip] to get the lowest possible rate on processing that card, and to avoid a $.10 per keyed sale “Transaction Integrity Fee” from Visa.
This is a new regulation:

• For “address,” enter only the numbers from the cardholder’s billing street address or P.O. box.
• For “zip code,” enter the cardholder’s 5-digit billing zip code.
• Be sure to enter the CVV (3-digit code on the back, 4-digits on the front for Amex) for protection in the event of a chargeback. If a patient disputes a keyed transaction, and AVS and CVV match, you’ll stand a much greater chance of prevailing in the dispute.

Encourage use of debit cards like Flex Spending (FSA) or Health Savings (HSA) cards.

Offices are now seeing more health/flex cards, which often run as debit cards. Since patients can receive tax deductions on these, it can benefit you and your patients to use this type of payment.

Rewards cards are more expensive to process.

If someone is getting airline miles or cash back, someone is paying for those—and it’s not the bank or the airline. It’s you, the merchant, through higher fees. Unfortunately, regulations prohibit merchants from refusing a credit card payment because it’s a rewards card. The best option is to encourage use of other payment types. You might post a sign: “Help us keep our costs low. Pay with a check or debit card. Got an HSA or Flex card? Don’t forget to use it!”

Insurance payments made via credit card often process at some of the highest rates.

You may notice that some feature a one-time-use credit card number linked to a pre-loaded claim account. Try calling the insurance company to request payments via check as the preferred payment for “bookkeeping reasons.” Some will send checks instead of card payments, but only upon request. These cards often fall into keyed-corporate interchange rates, which are among the highest cost. Unfortunately, per Visa/MasterCard regulation, you do have to accept this form of payment, should they decline to send checks instead.

Void transactions (rather than refunding) when possible.

Voids can only be processed while the batch is still open (the same day as the original transaction). This is especially important if a cardholder “changes his or her mind” about which card to use.²

Be PCI-compliant.

PCI compliance requires each merchant (you) complete an annual Self-Assessment Questionnaire. We call this Payment Card Industry (PCI) requirement, “HIPAA for credit card processing.” If you’re processing cards online or with a terminal processing over IP (ethernet)—as opposed to over a phone line—you’re required to have quarterly network vulnerability scans.

If you fail to complete PCI requirements in a timely manner, a monthly non-compliance charge is assessed and passed on to you. You should receive an email within 30 days of expiration of your compliance. Don’t ignore these. More than 80% of statements we analyze show PCI non-compliance fees of $18-30 per month.³