Does your merchant service provider (MSP) think you’re an idiot? They might, if you’re trying to make “cents” out of how MSPs and financing work.

By Courtney Roberts, FAADOM

dental front office financing(Click Photo to see the full article)

Merchant service providers know this is a pain for you, which is why many dental practices are vulnerable to getting ripped off.

(For those of you who need a refresher, according to, “a merchant services provider is an umbrella term that covers banks, third-party processors or any other entity that provides businesses and individuals with the products and services necessary to accept credit cards, debit cards and other forms of electronic payment.”)

I had a strong feeling the rates were too high in our dental practice, and yet our bank continued to increase these fees. I finally decided to take on the daunting task and ask, “What the heck is the deal with our credit card rates?” I wanted to know what these rates meant, if we were paying too much, and why they kept increasing. The result of my wearisome journey? I saved our practice over 60% a month in credit card processing fees. Take that, merchant services!

Let me tell you, starting this adventure was borderline terrifying. I quickly realized that finding unbiased and honest answers from merchant services reps was practically impossible. So I cleared my schedule and dedicated three whole days to figuring this thing out. I scoured the deep dark pits of the Internet for hours to share the information you’re about to read here. Merchant services is not a sexy topic, I get that. So I want to keep this brief and to the point. If you apply the knowledge from what you’re about to read, I can save you at least 40% every month in credit card processing fees.

STEP 1—If it comes from a merchant service rep, it’s probably a lie.
Credit card processing is an unregulated industry. This means sales reps are not required to complete any education or training. They can do as they please with virtually no one to answer to. That’s why reps are often deemed unethical and not very knowledgeable.

Here’s how credit card processing works. Every time you swipe a patient’s card, you pay fees to three separate entities. You pay interchange, which are the fees to the bank that issued the patient’s card, assessment fees to the card brand, and you pay your merchant service provider a markup fee.

Interchange fees are fixed costs that remain the same regardless of which MSP you use. Same for the assessments fees; they are determined by the credit card company and not the MSP. Only the markup fees will vary among processors (the MSP), so this is the only negotiable
STEP 2—Get quotes to compare to your current contract
This step is terrible. Here’s what you look for. You want to compare quotes by looking at the effective rate under pass-through pricing. So, what is pass-through pricing? The MSP bills interchange fees (fees to the card-issuing bank) and assessment fees (fees to the card brand) directly to the practice, for no additional cost. The alternatives are the MSP pays interchange fees and assessment fees on behalf of the practice. The MSP then overcharges the practice rates that are purposefully confusing. Many offices have no idea this trap is in their contract.

What’s an effective rate? It’s the average percentage of all fees you have to pay per transaction. This is another trap you can outsmart. Most MSPs only quote their markup fee for their services, so you’ll assume that’s the only fee you have for every swipe. But we know there are two more entities that must be paid on every swipe. This tactic makes it difficult to compare providers because quotes that show just markup fees are less than quotes that show effective rates. They’re betting you don’t understand the difference between the two rates. So you select the seemingly cheaper quote, which is classic bait-and-switch.

Here’s what will happen next, the MSP will ask for your last three credit card processing statements. Do not give this to them. It’s a trap. All they’re trying to figure out is what you’re currently paying so they can bring the rate down just enough to convince you to make the switch to their company. They have no interest in giving you the lowest rate possible. If the rep tries to give you any hassle about not providing the statements, hang up the phone. It they give you trouble about this, they’ll give you the runaround for the other demands you have.

STEP 3—Stop asking and start telling
Not only do you want a quote to include an effective rate with pass-through pricing, here are a few other conditions that must be met to earn your business:

Best offer first—You want the absolute lowest fee. You’re busy and have no time for haggling.
Full disclosure in writing—Require each processor to provide a fully disclosed quote in writing that lists every rate and fee they charge.
Demand pass interchange credits—Here’s another way MSPs will try to pull one over on you: When you issue a credit card refund, you should receive a credit from the issuing bank for a portion of the interchange fee paid on the original transaction. However, many processors pocket this credit instead of giving it to you.
Equipment reprogramming—Most of the time a MSP will try to lure you in with a “free terminal.” There’s no such thing as a free lunch. What they’re actually doing is giving you a proprietary terminal, a terminal that will only work for that particular provider. So if you ever want to switch providers, that “free” terminal is useless. If you’re dealing with an honest processor, they will reprogram an existing credit card terminal at no extra cost. If you absolutely need to purchase a new one, be sure the equipment is universally compatible.
No cancellation fees—Under no circumstance should you agree to a cancellation fee. A processor may claim that it can’t waive a cancellation fee, or that it can’t edit its bank’s application in order to waive a cancellation fee in writing. Guess what? They can.
Here’s my favorite demand—They must agree that your rate will never, ever increase. Is that even possible? You bet it is. Processor companies will argue this. But I promise they can absolutely agree to locked-in rates, they just don’t want to.

STEP 4—Courtney, are you crazy?
I’m sure you’ve never heard of a MSP that would agree to all of these demands without a fight. I received quotes from 19 MSPs and I don’t think I’ve ever been more stressed than I was during this research process. You may be wondering how it ended, and I’m happy to share. I found a place called CardFellow. CardFellow is like the Priceline or Orbitz for MSPs. I signed up for a free account online and entered my estimated credit card sales and the estimated sales that were keyed in. This process took me about three minutes.

This next part is where I nearly cried tears of joy. CardFellow instantly gave me detailed quotes for 13 MSPs. The mind-blowing part? Each of these companies adheres to every one of the demands I listed. This is because in order for CardFellow to contract these MSPs, they must implement those conditions and more. Not only that, if you select a merchant service provider with CardFellow, CardFellow will provide you with free audits every six months to make sure your credit card processing statements are error-free.

If there is a discrepancy, CardFellow will work with your processor to correct the charges. CardFellow is a 100% free service.[1] Their client base surpasses $1.2 billion a year in processing volume. CardFellow keep clients’ contact information 100% confidential until a quote is chosen. No hassling phone calls or emails! I then researched every single company with every single fee CardFellow gave me from that list. The one that came out on top was a processor company called GDPay. Their quote was the easiest to understand and they were also the least expensive option with the highest number of reviews. In addition, CardFellow states they have a perfect track record in their marketplace for over five years. 2 The GDPay quote blew our contract with our big-name bank out of the water.

When I shared my contact info with GDPay I was immediately put in contact with their main person, Kevin. I spent days asking Kevin questions about their company, their contracts, and anything else pertaining to new research I came across. He kindly answered all my questions, but I asked the people at CardFellow if he was telling the truth, which he always was. After I exhausted myself with questions, research, and energy, I made the leap to change providers. We submitted an application, and within two days we were in business and I cancelled the contract with our bank. GDPay was able to reprogram our FirstData terminal for free, and it was there every step to make sure we were set up the right way.

Bottom line
The next month we saved $300 in credit card processing fees. That’s $3,600 a year. When our first statement came in the mail, I couldn’t stop staring at it. All that hard work had paid off.  Six months later I still smile thinking about how our rate will never increase.

So I leave you with this—feel free to research other MSPs versus GDPay/CardFellow. Know that I have done all of that already, and I found a key to unlock serious savings in your practice. Pull your current contract and compare with new quotes, and I can guarantee you’ll regret you didn’t do so sooner. Go get your money back!

2. Ben Dwyer, CEO of CardFellow