Effective rate: What your card processor isn’t telling you

When most of us receive our monthly credit- or debit-card statement, complete with all of its complexity and tiny type, we do exactly what we should not — glance at it (at best), schedule it for payment and move on with our busy day. But especially for businesses that run up a large number of transactions and thus fees, that’s a huge mistake that can cause a big hit to your bottom line.

Depending on what company you use for processing the credit and debit cards you accept, the effective rate you pay can be hard to break down, and often not what you expected. And that’s just what some processing services want.

So how is my rate calculated, and how can I compare my options?

It’s a multi-part calculation, but here it is in a nutshell.

On your statement, the effective rate is listed as a percentage; basically, it’s your total credit/debit-card processing fees divided by your total sales volume. Calculating an effective rate enables you to make an apples-to-apples cost comparison between processors that have different pricing structures.

An effective rate includes an interchange fee as the cost of accepting the cards. Each card brand publishes its interchange rate every year.

Added to that is an assessment (or “auth fee”) charged for any accepted credit or debit card. They’re subject to change but they’re announced if a change is made. And they’re not negotiable with your card processor.

Finally, there’s a transaction fee, additionally charged by card brands for every transaction you generate. It’s a set price, such as 10 cents per “sale.” 

On their face, none of these seem particularly high. But even a small difference in the fees you’re being charged for transactions can add up to significant, ongoing operational costs for you.

Simplifying the process and saving $$s

intakeQ’s practiceQ Payments^™ makes every effort to save you money and simplify what you might consider a rather complicated process. We charge one flat fee, regardless of which credit or debit card brand your clients are using. For us, your cost is 2.75% and $0.30 per transaction, with a 1% additional fee for all international transactions. 

Many companies advertise fees such as 2.9% and $0.30 per transaction. But in reality, few transactions will be even that low (Ever hear of “low-balled?”) Your payment-processing firm likely advertised a low rate when you signed up for their services. But in reality, few of their clients will ever be able to get those “ideal” rates initially offered. With most card processors, rates typically vary, depending on which kind of card it is — such as Visa, MasterCard, Discover or American Express — an international transaction, or even whether or not the card was present at the time of the transaction…such as when patients are paying their co-pay or outstanding balance at checkout following a medical appointment. Those “hidden” variables can really add up!

So how do I get the best value?

The effective rate you’re paying will provide the most straightforward and accurate way to compare your card-processing options. We encourage you to examine your statement based on what we’ve explained above, or send it to us and we can help you review it. 

We’ll tell you if pQ Payments can save you time and money by having your payments fully integrated as part of your practice-management processes (and always have a direct link to see your payments dashboard and reports as part of our one-stop solution!) Simplify and save on card processing to help you optimize your operations.

Just as we say that “not all online forms systems are created alike” when talking about the robust yet intuitive features of intakeQ’s digital forms, the same is true of payment processors. practiceQ Payments was most definitely designed to streamline what can be a complicated process and save you money.

And to anticipate just a few questions…Yes, of course practiceQ Payments is fully HIPAA- and PCI-compliant. Also, pQ Payments accepts HSA/FSA cards as long as they’re issued by one of the major card brands. (Accepting ACH transfers is a planned future enhancement.) If you have a current Stripe account, we can also transfer that card data over to practiceQ Payments to make the transition even easier. 

If you’re not already using practiceQ Payments for your U.S.-based business, check out this Support page for a short video and more information, see a pQ Payments FAQ page, or contact us at hello@intakeQ.com.