The Hidden Costs of Credit Card Processing in Aesthetics

 

Credit card processing is a necessity for every aesthetic practice, but the fees behind each swipe aren’t always as simple as they seem. Hidden costs can eat away at profitability without you even realizing it.

In this episode, host Jay Shorr sits down with Tim Ryan, Founder and CEO of Blueswipe, to uncover how payment processing really works in the aesthetic industry. You’ll learn how to identify and eliminate hidden charges, avoid overpriced EMR-integrated systems, and negotiate transparent, cost-effective solutions that protect your bottom line.

 

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00:00:40:04 – 00:01:54:17
(Jay Shorr)
Welcome to Shorr Solutions:, the podcast. And I’m your host. Jay Shorr, CEO and founder of Shorr Solutions:. We are a team of national and award winning practice management consultant with experience running a multimillion dollar cosmetic dermatology and plastic surgery practice. We’re here to share strategies and insights that will help you grow your practice efficiently and profitably. In each episode, we’ll explore the steps and actionable insights to guide you through your journey to increase efficiency, boost revenue, and decrease costs. Tune in and discover how to improve your patient experience and take your esthetic practice to the next level. Well, welcome to another episode of Shorr Solutions:, the podcast, and I’m your host, Jay Shorr. Today we’re going to have episode number 137. Wow, how time flies. And our episode topic is the hidden costs of credit card processing in aesthetics. And I actually have the pleasure of having a special guest. Tim Ryan is the CEO of a payment processing company based in Richmond, Virginia. And we use this processor for our clients as well. BlueSwipe and Tim began his career in merchant services at the age of 17, and has since personally helped over 1500 merchants streamline their payment processing. You know, now, Tim specializes in addressing the unique challenges of health care and esthetic businesses and developed tailored solutions that improve efficiency and profitability. Welcome, Tim, and thank you for being a guest on episode number 137.

00:01:54:19 – 00:02:22:21
(Tim Ryan)
Yeah, it’s my honor. Very excited for this.

00:02:22:21 – 00:04:00:05
(Jay Shorr)
Thank you. So let’s define what payment processing is. Let me let me start off with sharing that payment processing. Credit card processing is how your practice handles credit card payments. We all accept credit cards, but we do it in different ways. And it’s behind the scenes systems that make sure that you get paid. When a patient pays with their credit or their debit card, and there’s always fees associated with the payment. And sometimes those fees can be a lot more complicated than they seem at the first glance. When you first have to align yourself with a processing company, they give you this arduous contract. And most people don’t understand what these contracts are, and I’m one of them. I understand the ball now, but I’m always one that’s afraid to sign a contract that I don’t really understand. Now, I understand why they have to be contract based. But Tim, can you explain a little bit about that journey? You know, I will make a disclaimer that sure Solutions actually has BlueSwipe as their preferred vendor. We just started with BlueSwipe a little while ago. We were working with other vendors and we happened to have seen and heard a blue swipe, and I made a phone call and I was hooked up with two wonderful sales agents who have guided us along the journey. And here we are today. And, you know, I just want to try to go over about the complications of credit card processing. So may Tim, maybe you can share about a time when you helped a practice save a significant amount in their payment processing fees. How did that all come about?

00:04:00:05 – 00:05:45:14
(Tim Ryan)
Yeah happy to do that. And yeah again appreciate you having me on the show. You know when it comes to payment processing I’ll speak in generalities. I think anybody will be able to get value from this. But I oftentimes talk about the the component of credit card processing is really profit protection. You know, every 1% or half a percent that you can save is money that can go to lasers, marketing team staff. I mean, there’s a lot of things that can go towards it. And when it comes to aesthetics, oftentimes found that this is a a big profit league. And so, you know, for anybody in the stacks I think it’s an important thing to look at. You have to be you know you just have to be aware of where’s that money going. We had a practice actually in Connecticut, of all places, that had given us a call, reached out to us, got in contact through one of our partners, and they called us because they thought they were. They were paying too much, and they’ve been with the same processor for roughly was like 13 years. We took a look at three statements. They have some pretty large volume fluctuations. But they they were fluctuating volumes between about 15,060 6000 a month in terms of actual, you know, cards that they were they were processing. We saved them an average of 38% from their current provider. And, that actually ended up, over the course of a year, ended up totaling to an average of $1,292 per month. So it was it was a big bonus to the, you know, bottom line. So, you know, there’s a lot of stories we could give, but I was pro from the standpoint of, okay, like where, you know, where’s that money going? And it’s not about squeezing every dollar out of all your vendors. You know, if I’m in a practice, I want my payment processor to make money. However, I want the fees to be transparent, and I want to be at least at market. If not, maybe something a little bit more competitive.

00:05:45:14 – 00:05:46:19
(Jay Shorr)
All right, so now comes terminology that nobody understands. It took me a little bit of time to fully understand it because when I look at it personally now not business wise, but when I look at a visa, Mastercard, American Express, discover show you how far back I go. Diner’s Club, all right.

00:05:46:20 – 00:06:19:12
(Tim Ryan)
Yes. The original.

00:06:19:14 – 00:06:57:19
(Jay Shorr)
All right. I look and I used to look at all these cards are all the same to me. The only difference was it had a different picture and had different company name on it, until I realized what the differences were. So let’s talk about the difference between interchange and fee based processing. Now we’re going to group visa and Mastercard and American Express and Discover all together, for example, for the purpose of this question. But let it let let’s talk about the difference between that word interchange and fee based processing, so that the people that are listening will understand why they’re being charged, and then we’ll get into the different types and the different rates on different types of cards.

00:06:57:19 – 00:09:21:05
(Tim Ryan)
Yeah. How we do it. So interchange grading for example, would be think of it like sales tax. It’s set by the card networks and you can’t avoid it. So everyone’s going to pay the same. But the markup on top that’s where your practices typically get taken advantage of. So interchange is what you know. The you know visa Mastercard discover all these cards are charging. And you know, if you get a platinum reward card that you’re processing at your practice, guess who’s paid for all those airline miles or reward points? Unfortunately, it’s the it’s the businesses that are processing those cards. Others do. It’s not the credit card company just being generous. And so those fees of course are going to be higher. However, it’s going to be the same. The fee is going to be the based on what type of card was processed. The method in which it was processed, like was it was a key dinner or was it swiped, etc.. And then it’s going to be based on the industry type. So you really can’t avoid those. Those are in fact, I actually think it’s a really good thing to see the word interchange on like a statement where you’re looking at your billing. That means that you’re likely getting billed. Likely. It doesn’t mean it’s not a guarantee, but likely getting billed the true cost of the credit card. And, you know, that’s that’s going to be standard for everybody. The other fees are going to be fees that your processor is adding on top in order to process your payment. And you’ll see a lot of different prices structures out there. One is will be referred to as interchange plus. Another acronym is Cost plus pricing. And another way to describe and that is wholesale pricing. They all mean the same thing. It basically means that you’re going to pay the true cost to process that credit card from the card networks, and then you’re going to pay a fee on top of that from processors. It’s the most transparent, and as long as the market isn’t too high, it’s typically going to be the least expensive way to process your cards. So we recommend that that’s what we will standardly set all of our customers up on because it’s transparent. And that way, if the card isn’t a platinum reward and it’s maybe like a regulated debit card or some type of less expensive card type, you’re going to pay that smaller fee and then a small percentage on top of that. If it is a platinum card, hey, you’re going to pay that bigger fee up, but then it can only that small markup. So you’re really going to be able to get tight on the margins. The other one, as I was starting to reference, is where you have, what we call bundled fees or tiered pricing. So you’re going to have a swipe fee, a key dinner fee. Maybe like a reward card fee. That’s a common structure. Another one is where you pay a swipe rate in a non swipe rate. That’s another pricing structure. Most people are familiar with that because they’re used to seeing like Square and Stripe and some of these big brands that you can easily go to their websites you’ll see posted, you know, 2.9%.

00:09:21:05 – 00:09:37:20
(Jay Shorr)
And that’s the standard number in the industry, 2.9 yeah.

00:09:37:20 – 00:10:29:22
(Tim Ryan)
And you know, it’s not even that it’s a bad thing. Which by the way, that’s not the full disclosure. If you have a reward card, they’re going to bump it to 3.5 or higher. So there’s other fees on top of that. I think a lot of times as a consumer, I like that. If I’m a practice like, oh, it’s simple, I can I can feel like I can budget around that. It feels less complicated than a interchange plus pricing model. But the reality is it’s usually going to end up being more expensive. And so we always say a little bit of complexity goes a long way when it comes to your pricing. So that way you can really shave off the margins. Again, profit protection. How do I make sure I keep as much money in my practice as possible? That can go towards everything else and needs get paid for.

00:10:29:22 – 00:13:02:11
(Jay Shorr)
So it’s very interesting and I don’t want to take any money out of your pocket. However, I’m going to ask a question so that for transparency as a processor, it might seem like we’re trying to take money out of your pocket, but hey, every dollar saved is a pure profit dollar, right? So if you have interchange plus, which means that that is the fee, that is not negotiable. That is the fee that visa, Mastercard, American Express Discover charge is based on the type of a card and how you process it. Then comes the merchant process source fee. And that is what is negotiable, right? And they charge fees. I will call them bips or basis points. So it could be whatever the credit card company charges plus 40 basis points on down. All right. I want to start on a high side plus x amount of cents per transaction. Now I’ve seen them as high as 4050 basis points 30 $0.35 a transaction. And the more revenue that you process as a client, naturally the lower you can negotiate those extra fees. Now, to be very transparent, my relationship with BlueSwipe is that our goal as a consultant is to get our client the lowest rate. So it’s not about. So our deal is to bring as much business as we can to you so that we can say, hey, my client can process 50, 75, $100,000. In my former practice, I was probably processing 150,000 plus a month. All right. And got a really skinny bare bones. Right? And every time I went to renegotiate rate with another processor, they told me, thank you very much, but you’ve got the best rate. And that was because of the volume that we were processing. All right. So how do rates differ between the different card types? It used to be nobody wanted to take American Express because they were always the highest. But then American Express for Medical Industries came out with a 2.55 rate, I remember. So can you talk about a little bit of the differences between the different card types and what should practices know about these differences?

00:13:02:11 – 00:14:06:00
(Tim Ryan)
Amex did become a lot more competitive. And, you know, at the end of the day, like if I’m looking at my practice, I don’t ever want to turn somebody away because the cards like they have. But what I do want to make sure is that I’m not overpaying. And when you are looking at a statement, you’re going to see like, okay, these are that’s going to be your typically lowest card types. Most of the time there are some, you know, platinum visas and all that mastercards can be a little bit higher, discover’s can be a little bit higher, and Amex is going to be the highest in most cases. You can find exceptions in all four of those categories. But, you know, I think the things that I look for, if I’m if I’m a practice is I’m going to go to my statement and I want to be able to see the is it list, you know, interchange fees and you know, you’re paying for interchange if it’s got all sorts of crazy rates on it. So it’s going to say like 2.35. It’s going to say 1.4. It’s going to say five basis points in 20s it’s going to say all of these crazy things. Well, that’s at least an indicator that I’m truly probably paying the real card cost, which means I’m probably getting the, you know, as long as the market is not too high, competitive, the competitive pricing model is probably the best way to say that. The next thing this is where a lot of times our team comes in, is we’ll take a look at a statement and see like, okay, is the interchange padded? Because sometimes you’ll have the fees listed out, but they’re not the true cost. There’s like it. They’ve basically padded it. It’s what we it’s what we call is added in another three weeks.

00:14:06:02 – 00:14:22:20
(Jay Shorr)
Somebody know that.

00:14:22:22 – 00:14:47:05
(Tim Ryan)
You could you can do a little ChatGPT research. So you could you could, you know, take one of the card types. You will say, what is the true interchange cost of this card type? And if you did that for enough card types, you could probably figure out a case. If you know ten of these, check out that they they’re not marked up and like they’re not paying markup. There could be some nuances to that. And that’s where like a lot we have a we also have an AI tool that we can upload the statement to, scrapes the PDF, and will then give us a side by side comparison showing, okay, is there any pattern in the interchange. And then you know what would be what is it a good competitive rate based on the volume that, that customers, you know, actually processing.

00:14:47:07 – 00:15:06:05
(Jay Shorr)
So is that diminishing the integrity of the processor?

00:15:06:07 – 00:16:58:19
(Tim Ryan)
You know, I think it’s helping with that in. Well, yes, it’s helping with the integrity of the industry. I think now that, you know, I was there, we we built this tool. We actually started building this tool back in 2017. And we really use it in-house. And now we’re putting it in the hands of all our partners to be able to, be able to do analysis on a credit card processing statement. It definitely can help you understand if you if you’re not seeing interchange, though, I would just say that that means likely you’re not on this competitive pricing model. To give it some. If I was literally like looking at a statement right now, I would say if you’re paying more than 3%, you are paying for your processor’s vacation fund. If you’re at 2.5 and less, you’re probably in the ballpark where he should be. But that that’s a very broad generality because, you know, if if maybe a certain practice gets a lot of like EMC, a lot of discover that’s going to skew some of those numbers. So those are broad generalities, but those are good things to kind of look for when you’re looking at a statement. Another big thing I would say, if someone’s just wanting to do a kind of a little bit of a self-check is monthly fees for the most part. If you have monthly fees beyond like 30 or $40, you just paying for junk fees. And I’ve seen I’ve seen it as high as 1000 $1,500. Which really kind of brings me to the esthetic industry in general, and a lot like telehealth. It ends up fitting into a category that most processors call high risk. And what that means is they’re going to pay additional fees because they consider the chargeback possibilities to be a little bit higher. Well, we created something at our company called BlueSwipe IQ, and it’s a qualification matrix where when a business comes through our application process, we look at the risk profile and we figure out what is the right bank and back in that’s going to be underwriting the account. A lot of people don’t realize this, but every merchant account has to be underwritten. And if you have the right understanding, the right risk profile set up on the front end, it creates a less back end problems. And a lot of times they can eliminate what they would refer to as high risk fees. And some of the high risk fees are monthly fees. And they can be really high to the tune of, again, 1500 $2,000.

00:16:58:21 – 00:17:24:16
(Jay Shorr)
What? Yeah, let’s get into that. What industries typically are really high risk?

00:17:24:16 – 00:18:13:07
(Tim Ryan)
I mean, true high risk to me is going to be something that has a gray area for legality. So, you know, people are selling, you know, certain paraphernalia online, things like have in the CBD, the marijuana and the marijuana industry, especially online sales, where people a lot of times will use, purchases, in that category with fraudulent credit cards, things of that nature. But when you’re talking about the esthetic industry, I mean, this is not a high risk industry, but a processor doesn’t have correct experience. They’re going to put it into that category. And when they really it’s just, okay. Yes, you can have tickets that are a thousand 1500 or $2000. And because those tickets seem higher, they get these little green flag. It is high risk. It’s not high risk.

00:18:13:09 – 00:18:58:12
(Jay Shorr)
They are not high ticket items in the esthetic industry, 1000 or $1500. That’s not a lot. You know, we go in in our surgeries 30, 40, $50,000 to I mean, all right, let’s get into typical fees per transaction, you know. And how can they vary across different processors. Now let’s talk about fees which include that interchange and per. I remember in years past I saw Naboo fees and I saw monthly fees and I saw PCI compliance fees and nobody it’s like looking at my own bill or my electric bill or, you know, you go into a hotel and you look at all these different fees and taxes. It’s like, okay.

00:18:58:14 – 00:19:01:20
(Tim Ryan)
Yeah, so true. Which, by the way, what’s what’s ironic about what you just shared a moment ago is that in the payment processing world, anything over $500 is a lot of times flagged as a high, like a high treatment. High ticket. It’s something. Depends on the processing bank, but sometimes 500 to $1000. When radiuses are very low tickets like this, when you start looking at surgeries, etc..

00:19:01:22 – 00:19:19:06
(Jay Shorr)
They might be average ticket items in our business.

00:19:19:06 – 00:21:57:18
(Tim Ryan)
Exactly. So it’s it’s not high risk. It just has to be set up the right way. And that’s where you want to work with somebody who understands your business thoroughly. But yeah, to get back to your question, I think the, transaction fee is going to range anywhere from $0.05 to $0.30. And there’s there’s kind of two components to that. You have authorization and settlement. So when a card gets swiped, even if the target’s declined, you are going to incur a authorization fee. Then when it actually settles it’s typically referred to as a transaction fee. So sometimes those things are going to be split apart. And that does create a certain level of transparency. And there’s a really practical piece of that. Right. When the authorization is taking place, there is communication that’s going to the bank to prove it. And then once the settlement actually happens, the capture is taking place. In other words, the money’s been removed from the bank account or the credit line, and it’s getting deposited in the business owners bank account, if that. That’s where you’re going to pay a rate. Of course you’re going to have the interchange rates we were referencing. We’re going to be the same for everybody. And then you can have that markup that’s going to be that smaller piece that’s going to go over top of it, and then you can have a maybe a small monthly fee or administrative fee to have a merchant account. There is a hard cost like we at BlueSwipe, we have a hard cost with every account that we set up. But again, it should never be above $40 unless there’s some type of solution that’s being bundled in. And that is a, that is a thing that we’ve done, you know, subscription based processing before. We’ve kind of bundled things into it to make it easier. But, you know, general, you want to make sure those fees are relatively low. And so those are a few like transaction fee or authorization fee. You have your, percentage rate. That’s going to be for the actual capturing of the funds. And then you’re going to have a monthly fee. So those are the three big ones are going to see. And if you see, other things like annual fee, that’s just some of the processors thrown in there. PCI compliance fee, you know, yes, you can have a client service if that’s above $10, in my opinion, is too much. Shouldn’t be more than but you should have a PCI. That’s a whole different topic in of itself. But your processor should be helping make sure that you are PCI compliant, that they’re helping you do the scans that they’re giving you data on if anything is showing up on the scans incorrectly, that you know how to fix it, and then also providing you a breach protection coverage that would cover you in case any type of, you know, data leakage or whatever come back to that individual practice. If the response occurred, you got some type of insurance, quote unquote, that’s going to cover you. So that is a really important thing. It’s very rare, but you don’t want to be the rare case that has to deal with PCI compliance issues.

 

00:21:57:22 – 00:22:00:11
(Jay Shorr)
We’ve come a long way. When I first started, every time we picked up a credit card, we had a call into an 800 number or a local number and actually get a physical authorization and write it on that carbon form. And then, you know, you had to put it in the machine and swipe it across.

00:22:00:13 – 00:22:37:14
(Tim Ryan)
Those knuckle busters. Right?

00:22:37:14 – 00:23:48:22
(Jay Shorr)
We’ve come a long way. So here comes, a question that I get all the time. There is standalone and there’s Point of sale. And in our industry we call the point of sale that merges along with the EMR slash slash practice management system so that when you chip, tap, swipe, all right, a card in the system, it automatically through the EMR will take it off of the super bill. And that to zero versus it comes up on the EMR $1,000. And then you have to click a button credit card. And you strip tap swipe the card. And then you physically go in. This is the business. Physically go in and put down $1,000 in the credit card and that’s it to zero verses. I mean, the one I just explained was the standalone. You have to manually enter it versus the POS, which does it automatically. Can you explain the differences in the costs that are associated? Because we set up a couple of different merchants with you and others with other companies in the past, the POS actually saves time and actually reduces error. I don’t know how much time it really saves, but I think it does reduce error. All right. Why are the costs so much different.

00:23:49:01 – 00:23:54:18
(Tim Ryan)
Yeah it’s a really great question. So this is the integrated EMR trap. A lot of times static practices don’t realize their EMR is making money on payments.

00:23:54:23 – 00:23:55:15
(Jay Shorr)
That’s if we have more has a payment processor embedded with them.

00:23:55:17 – 00:23:59:23
(Tim Ryan)
That’s right.

00:23:59:23 – 00:24:20:05
(Jay Shorr)
I try to share that there there also the company is profiting from that.

00:24:20:07 – 00:26:19:15
(Tim Ryan)
That’s right. Yep. And that’s what you come in and educate your clients on. And people don’t realize that like you could take some big businesses like a Shopify. I think it was five years ago, 80% of their revenue came from the actual subscriptions for their software. They were charging today, 80% of their revenue comes from payment processing. And a lot of software companies have duplicated that model. They figured out, like, hey, we can make money on the payments piece of it. We’re going to we’re going to match what you’re going to see out in the marketplace. The that the big the big processors have popularized, the 2.9% and $0.30 is what gets advertised, even though there’s all these other fees. And I’ll tell you about and, it seems simple. Go ahead and get it set up. But what happens is you you end up paying an extra five, ten, 15,000, $20,000 a year to have that processing. And just because you your payments is built into your EMR doesn’t mean you’re stuck. You always have options. And that was what you were referencing is you can have like a separate, device that you can process those payments on. Now, what we have done is we’ve really been able to kind of bridge the gap between the two. We have a solution that actually sits on top of whatever software that someone’s using. And as long as the software is not blocking us, we have the ability where they can still have their software, that they’re using their EMR solution, and they can then pull up a screen to process the payment on a device, and it’ll talk back to the EMR and let them know that that sales been completed. And so there is many ways to work around that. And and we’ve worked on some of those. And whether it’s with us or other companies, it’s just worth evaluating. Like it’s that extra 10,000 you’re spending on your, you know, payment processing. Is that really worth it or is like a very simple workaround, worth having. And in my case, I think it’s a, it’s a great profit potential to put back into the bottom line every year.

00:26:19:17 – 00:28:38:09
(Jay Shorr)
For those of you who are listening, I really kind of have, asked you to challenge your software company. Some of them will tell. And I’m not going to mention any software’s EMR for, I don’t want to be prejudiced in this conversation. You can ask me that on a sidebar conversation, but some EMR EHR companies actually tell you that you can only process credit cards with that system. All right. That is their rule. That is not really, true. But that’s their particular rule that they don’t want it because then you’re cutting them out of whatever type of ten, 15, 20 basis points. Because if you work with us, we’re able to sit on top of the software and be able to do that and cut out that middleman, meaning the EMR. And then people will say to me, well, then, Jay, how do you make money? All right. The idea is when we’re processing credit cards for our clients, we’re not in this to looking to make money. Our job as a consulting company is to save our client money. That’s why we’re not payment processors. We’re consultants that tried to bring the best and the the least expensive solution to our client. All right. So you can get rates from us and blue swipe that you would not be able to get anywhere else because they’re in that business to make that money. We’re not looking to do that. All right. So also be very, very careful if you’re going to be dealing with these, processors that want to lease you the terminal, if they’ll lease you the terminal, you’ll probably pay at the end of three or 4 or 5 years, several thousand dollars for that terminal. I’ve seen the most outrageous rates per month, all right. That really can cost you so much money for something that with processors, you could either get the machine for free or at an inexpensive investment for that. Now, understand that many times when you are given these terminals for free, I have seen it that if you cancel with your processor, you can’t take the terminal with you. That might be locked. All right. And there’s really nothing wrong with that. If you’re given something for free. All right, then you can’t complain that it’s locked and you sit somewhere else. All right. Now, how should a practice choose the best vendor for their needs? Because I will share with you. I’m with you on this call. This is an ugly business.

00:28:38:11 – 00:29:03:18
(Tim Ryan)
Yeah it is.

00:29:03:20 – 00:30:43:09
(Jay Shorr)
And the reason it’s an ugly business. I have come to you for your company and gotten the best rates that I have seen. And I’ve come back to my client and say, look, we’re able to save you 1000 $1,200 a month. And what did they do? They took that quote and went right back to their existing vendor, and their vendor matched it. Unfortunately, you didn’t get the business. But let me reiterate what I said. Even though you are our choice preferred vendor, our goal is to save our client money. So at the end of the day, we saved our client 12 to $15,000 a month. Whether or not they went with our preferred vendor or went back to their vendor. My question is always to the client, our client, why don’t you hold your vendor accountable and say, well, why didn’t you give me this best rate? Why do I have to constantly do that? Speaker 3 Let’s take a quick break. If this episode has you thinking about what you’re really paying in credit card fees, or if you want to see if you can secure a lower rate, we can help assure solutions. We partner with BlueSwipe to make payment processing more transparent and cost effective for static practices. You can reach out by scanning the QR code on your screen, or by visiting the payment processing page on the Shorr Solutions: website. Speaker 3 From there, we’ll set up an introductory meeting to assess your needs and explore just how much you could be saving. So how do you choose the best vendor? From the very beginning, Tim.

00:30:43:11 – 00:31:25:22
(Tim Ryan)
Yeah, it’s a great question, and this is probably my favorite question you’ve asked me the whole time. It’s because it’s really black and white, and it’s going to save people a lot of headaches in their practices. So there’s three things that I would look at if I’m evaluating any credit card processor. Number one, the first question I want to ask them is what is their NPS score and what is their C stack rating. Now what is an NPS score? That’s if you’ve ever had a company ask you that question of on a scale of 1 to 10, how likely are you refer this service to somebody else? If you hit a ten, they get a plus one. In fact, anything between an eight and a ten gives you a plus one between a six and eight gives them a zero. Anything. Anything below a six gives them a negative one. In our industry, many competitors who will remain nameless have a negative NPS score. In other words, the majority of their customers would not recommend them. Then others that are better are in the low 20s and 30s. And so that’s going to tell me everything. It’s like, how do.

00:31:26:00 – 00:31:45:09
(Jay Shorr)
You hold them to test, to know if what they’re telling you is the truth?

00:31:45:11 – 00:35:48:18
(Tim Ryan)
That’s a good question. I guess they could always fudge it. But I mean, again, I first you can always ask ChatGPT see if you could find out. But if they don’t know it, it’s also reveal or to feel like, hey, I’m not sure like means that they’re not really tracking it well. Or again, is customer experience really an important priority because, you know, it comes to running a practice? Lastly, I want to be thinking about is credit card processing. I need to run my practice. I need to run efficiently, but if I have an issue, I need update my bank account. I have a refund or something that maybe isn’t going through correctly. I need to check a transaction. If I need something done, it’s got to be lickety split so I can get back. It’s gotta be an amazing customer experience because it’s going to tie right back to my customer, my patient experience. You know, that patient experience is great. It’s the Ritz-Carlton effect. If you can give them that Ritz-Carlton experience, the likelihood of them coming back is going to be so much higher. And if there’s some type of transactional component that becomes kind of wonky, that’s going to really negatively affect that, that experience. So number one is NPS score. And then C state is your customer satisfaction rating. What is that. And world class is going to be 70 and above for both of those components. So I want to work with a processor that’s going to be NPS scores seven and above. Also when it comes to CSat rated the same thing. So that’s that’s first. And foremost. Next I want to know are we doing an interchange plus pricing model okay. So are we getting a cost plus pricing model. What is the market on top of that. Because I mean it could be, you know, could be a cost plus a pricing model. But if it’s cost plus, you know what, you know, 1.5%. That’s that’s not a good rate. That means you’re building is probably about three and a half, 4%, which we’ve seen plenty of times. So when it that’s going to be the next question. And then and and like I said this earlier, but I want my vendors to make money. I want my payment processor to make money, but I want to make sure it’s transparent where there’s a lack of transparency, there’s typically lack of accountability. And so we want to see that there’s transparency and accountability. And then lastly, I want my device to be something that’s clean, something that’s sleek and ideally communicates back to my EMR solution. You know. So those are the big three I’ll put it there. So if I have a device that I feel like I have to hide in my closet or put under the desk, that’s not fitting, that’s not fitting the ambiance that I’m trying to create. So those are those are my big three you can add on top of that some other things like the importance of getting funds quickly. I want to get my funds next day. So okay, how fast is my funding coming in. Are they going to help you with PCI compliance? I want to make sure that that’s buttoned up, that not that I have to do a bunch of like work or my staff has to do, but like they’re going to get on a call with my staff, they’re going to make sure that the PCI compliant scans are done in the I’m not paying an arm or a leg for it either. Should never be more than $10 we typically included in our service, but I’m going to be generous and say that if you’re getting charged a small fee for it, it’s okay. And then I’m going to throw in some other things. Are there do we have card on file? I think it’s really effective if you have, you know, repeat, you know, patients that are coming through the door, but like, hey, do you want to use a card quarter file. No problem. Do I have text to pay? I think that’s a really convenient feature, especially, you know, sometimes people are on work breaks. They’re kind of jumping in and out and the ability to kind of like come in and come out very quickly is really valuable. So that way they’re not, you know, they’re not having that that process can actually be a deterrent to how soon they’re going to come back sick. Having like, getting in that’s so complicated. They’re like, I’m going to I have a busy week. I can’t go get my I can’t go get, like, a routine treatment. You didn’t even know what we’re talking about. Obviously, surgery on your schedule for in advance, but a lot of times treatments can be done the same day. You know, if they’re going to come back for the next one. Like, again, you just want to make sure that process is really smooth. Second file text to pay next day on the second plan support. And this are some of the, you know, kind of basics. But again the big one for me is I want to make sure if I have an issue is going to get take care of super fast in that to me, it’s going to reflect very directly to that NPS and see start reading.

00:35:48:18 – 00:36:39:19
(Jay Shorr)
All right. So I have a question that has become ever so popular. However, that now I’ll make another disclaimer. I am not a proponent of this in the medical industry, but there are so many vendors out there that say free credit card processing. And I say, look, there’s no free lunch in town. I know that there’s no free. And I call them up just to hear what their pitches and they say. And I ask one simple question, are you passing the credit card fee off to the end user? And they said, yes, of course. I said, well, that’s not free. I’m charging my client, my patient, more money. Can you give us a little bit of a summary on the popularity and the effectiveness of the merchant charging their end user, in this case, the patient, the credit card fee?

00:36:39:19 – 00:37:31:12
(Tim Ryan)
Yeah, you’re going to get a lot of mixed reviews on this. And it is a it’s a business decision and it’s a customer experience decision that is going to tie directly back into that. Is that something that you want to do is to charge your customer a convenience fee. Effectively. It’s what we call dual pricing where you can either have a cash discounts, in other words, or so there’s a built in markup. It’s usually around 4% to everything that somebody pays with cash or ACH, it’s going to eliminate. The other one is to have a surcharge when every credit card, not a debit card, but a credit card is used, which is usually about 3%. It is a common way to pass on those fees. And the thought process around it is that, well, everyone has a choice. It’s their choice. If they want to use a card and so it’s not if the customer is going to pay, it’s just how are they going to pay? You’re going to pay because I haven’t built into my pricing or the going to pay because I’ve added it to the bottom of a credit card.

00:37:31:12 – 00:38:03:20
(Jay Shorr)
I have never found. On a personal note, paying 3% or 3.5% is worth the points that I get for airlines and hotels, it’s cheaper to actually pay for the room or the airline.

00:38:03:20 – 00:38:38:00
(Tim Ryan)
That’s right, that’s right. It’s cheaper to pay for the room. And you know, it’s a business decision. I can argue it on both sides. I would say my I typically probably mean art or esthetic practices to not do surcharging or cash discounting and rather use alternative means like you referenced and then work with a processor that’s going to give them a really affordable rate, because I think there’s something simple about people seeing whatever the price is listed, and when they go to pay for it, it’s that price in plus any tax. So maybe that’s being added, but there’s something about that. But additional fee that I feel like sometimes can, you know, it just kind of takes away from that experience. But you could argue it the other way around too.

00:38:38:06 – 00:39:05:11
(Jay Shorr)
Second to last question, when a client is going to come to you and they’re on the fence about switching processors because, you know, people don’t like change. I don’t like change even in my pocket. All right. If I can’t fold it, I don’t want to hold it. That’s my mantra. All right. But what advice could you say to help them make the right decision? With confidence in switching processors?

00:39:05:11 – 00:39:42:16
(Tim Ryan)
You have to do the research and it doesn’t need to be a lot of research. I think you can eliminate a lot of concern right away by doing okay. What’s the C stop rating? What’s the reviews of this company that’s going to tell you a lot, because if they have bad reviews, it’s probably a bad switch, a process that is a little assumptive and maybe not always true, but it’s worse if it’s forced investigating the second thing. So I want to know what does the switching process look like and what is the true risk? In most cases, you can actually change processors without having to cancel service. In other words, if you have an external device, you can actually get that external device set up. And then so you can start using it and let’s say the Funding’s delayed, it’s not working well. You can just stop using their device and continue using your existing processor that’s fully integrated. So that’s a common switching strategy that allows as long as there’s not a built in cancellation for your contract, it gives you that ability to track both.

00:39:42:18 – 00:40:10:06
(Jay Shorr)
Well, that’s leading me to my last question. So don’t jump ahead yet.

00:40:10:11 – 00:42:09:02
(Tim Ryan)
Yeah. Well and that’s a simple so I think it’s it’s looking at okay what’s the customer service experience. What is their switchover process. Do they have a switchover process in place and a procedure for it. What is their onboarding. Wait we came out. And so back in you know 2017 a lot of what we were seeing at that time period and hasn’t changed a lot today, was that there was all these kind of feet on the street, sales reps that would go into businesses and say, hey, I could save money. In many cases they could. The problem was there was no support team, there was no onboarding. The sales rep were basically come back with the device and try to plug it up on a Saturday. And then when they were having issues, they would call the sales rep OP. Well, sales reps are horrible customer support. People should never be involved in sales and in any type of support role. So what we did is we said, that’s silly. We’re going to create a customer service experience. That’s world class. We studied Zappos, we studied Southwest Airlines, we studied Airbnb. We studied a lot of companies that said, okay, how do we create an experience? A second on the Ritz-Carlton experience, well, we did that. And at that point in time, I think we put out a score on, you know, our portfolio. And it didn’t come back horrible, but it come back great either. I think it came back in like the 40s, which is still pretty low today. We’re very proud to say we have a 90 to Net Promoter score, and I’ve held that in the index for over five years. So I bring that up because I think what you know, I’m sure there’s other companies that have great NPS, I’m sure they have great onboarding. But that’s going to be the thing I’m going to look at as a kid. What does that change over? What’s the onboarding? What does that support? Do I have a relationship with somebody or the US based? Is there a team in place? Has this company invested into supporting the clients? So it’s saying that they’re going to help save all this money too. Because if you can, if you’re if you’re saving money, but even that but then your team is having to spend time calling and figuring stuff out and handling challenges. You kind of lost the savings in the time wasted. Whereas what we’ve done is say, yeah, we’re going to give a competitive rate, but then we’re going to make everything easier for that back office staff, because we’re going to make sure tight onboarding, tight support, and then even just make sure that we’re limiting, like manual billing and, constant follow ups and collect. So like we have text, we have quarter file text to pay. We’re going to make sure that we can have the auto sync feature. So that way it goes back into the EMR solution. So next day funding. Make sure the funds are coming through easily.

00:42:09:04 – 00:42:12:08
(Jay Shorr)
Oh, I do have another question before the last question, which is equally important.

00:42:12:08 – 00:42:31:10
(Tim Ryan)
Okay. Go for it when charging.

00:42:31:12 – 00:42:32:06
(Jay Shorr)
Yeah. This became a very big issue because reconciliation was always a big issue. Yeah. Why will some vendors pay you net versus gross and then a fee at the end of the month? Let me explain to those listening.

00:42:32:08 – 00:43:10:16
(Tim Ryan)
Yeah. Explain that.

00:43:10:18 – 00:43:47:20
(Jay Shorr)
Yeah $100 charge might net out on a daily transaction at $97 because they took that say that 3% out versus you being funded $100 and that $3 multiplied by 100 trans 200 transactions or whatever. We’re charged as a one time fee debited from your bank account at the end of the month. So when you get your statement, that fee that is on your statement was really a fee associated with the prior month’s processing. All right. I have seen it where they take out the individual transaction fee right per transaction, and it almost makes it impossible to balance when you’re doing your daily. Because I’m looking at transactions that are $100, $500, $700, and I’ll never see it because on the statement, it’s netted. All right. Why would a processor do that?

00:43:47:20 – 00:43:50:13
(Tim Ryan)
Yeah. They get their funds more quickly okay. So they’re going to get they’re not even funds their fees. They’re getting their fees more quickly. Excuse me. Can you.

00:43:50:15 – 00:43:59:09
(Jay Shorr)
Negotiate that on the front end.

00:43:59:09 – 00:44:12:12
(Tim Ryan)
100%. All right. Yeah I would I would 100% negotiate that that way you’re not having that accounting nightmare of trying to reconcile what day was which.

00:44:12:12 – 00:44:37:08
(Jay Shorr)
It is a nightmare. I’ve been through that. And my last question is the length of the term of the contract. All right. Can you negotiate that without a penalty?

00:44:37:10 – 00:46:48:05
(Tim Ryan)
Yes. In fact, if I was talking to a payment processor and they had a any type of cancellation fee or penalty for canceling, I would be very nervous to work with them. It is a at the end of the day, they’re they’re paying to process payments. It’s it’s a there’s no investment necessarily. There’s they have team investment. They have sales investment. But if their service is worth its salt, there should not be any reason that you’re wanting to leave them. And so therefore if they have a penalty cancellation fee, termination fee, anything like that, to me it’s a red flag that they’re trying to get somebody to sign up knowing that maybe the service, the follow through, the customer support is not going to be great. The fees are going to be great. And then they essentially have you locked in. So I would have I would avoid and highly recommend anybody to avoid anybody that’s going to charge. The type of penalty should be negotiated upfront. And even if they have it, it’s already to me like a yellow flag as to like, well, if you have a why do you have a termination fee? Even if they take it away, I’m probably still a little skeptical because why do they have it to begin with? Right. Make. Oh, well, it’s not like we’re giving you, like, a, you know, a $3,000 piece of equipment or, you know, software that they were hoping we’re going to get back. And that’s different. Like, you talk about free equipment. Okay. Maybe we have that built in, but that’s an easy one. Pager that somebody to fill out says if you cancel you have to return this device or you can separate that from the processing very quickly. But I would be very leery because the reality is, even if you’re getting a great offer up front, the cancellation fee can be in place and they can still change your pricing on you after the fact. So rate hikes can absolutely happen, and you’re essentially stuck in a contract in at that point. But they have the ability to change the pricing on you. And it will be written into all the terms conditions that fees can’t change. It’s just part of the it’s part of the game. And so your protection as the business owners IP is getting to vote with your dollars if that processor is good to use them. If they’re not, you got to you have to make that change.

00:46:48:05 – 00:47:37:18
(Jay Shorr)
Yeah. Ladies and gentlemen, if you haven’t learned a lot about your credit card processing today from Tim, then you missed the boat. All right there. It’s so complicated. But yet so easy. The bottom line is to get a well trusted vendor that comes from, well, trusted referrals. Whether it’s your EMR company, a consultant, your accountant, your attorney. So with that, Tim, thank you so much for being our preferred vendor. Thank you for educating the people that will be listening. Episode number 137 will live on all the podcast channels. And good luck and God bless. Don’t go anywhere just yet. If you enjoyed today’s episode, make sure to subscribe so you never miss the latest insights! New episodes are released every two weeks. For more valuable information and resources to elevate your practice, sign up for our newsletter. You’ll get the latest industry updates, expert tips and exclusive strategy straight to your inbox. Also, don’t forget to follow us on social media at Shorr Solutions:. If you’re ready to take your practice to the next level, schedule a free consult with our team today. Thank you for joining us on Shorr Solutions:, the podcast.

 

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