AADOM LIVEcast: What AADOM Members Need to Know About Passing the Fee to Patients
Approved for 1 CE towards AADOM Designations when viewed in AADOM’s Learning Management System.
AADOM Members log in HERE to watch the recording and accrue CE.
Video Description:
Passing on credit fees (also known as surcharging, cash discount, and dual pricing) has been a hot topic over the last few years and is only growing hotter. Some see fee passing as a way of offsetting the cost of doing business with credit cards, while others consider it an undue toll levied on loyal customers and clients. This eye-opening discussion will cover the pros and cons of these programs; including who truly benefits, compliance, and any legal requirements, helping you to make an informed decision for your practice.
Course Learning Objectives:
- Learn what fee-passing and surcharging programs are
- Find out who benefits the most
- What you need to know if you decide to surcharge
- How to stay compliant
- Identify what’s hiding in your merchant statements
Sponsored by: Merchant Advocate
What Every AADOM Member Needs to Know About Fee Passing to Patients
Operating costs for dental practices are higher than ever, with credit card processing fees consistently cited as a leading business expense.
At the same time, patients are struggling to afford care.
A study conducted by CareQuest Institute revealed that more than half of surveyed Americans with oral health problems did not seek treatment, citing affordability as a key factor. Two in five people deferred medical care during the past year due to financial struggles despite having dental insurance (Commonwealth Fund survey).
Given these inherent challenges, what is the best way forward for a practice?
Let’s discuss what is meant by fee passing, or as it is most commonly known: surcharging.
Traditional Surcharge Program
A traditional surcharge program adds a fee to all credit card transactions—excluding debit. The first challenge here is how to distinguish debit from credit. Some businesses assume that a debit card is any card processed with a pin number. That is not the case. Pin number or not, a debit card is any card that takes money directly from a consumer’s bank account. This represents around 50% of all transactions.
The consumer may tell the merchant to run their debit card “as a credit card” without the pin—regardless, it’s debit and illegal to surcharge under the Durbin Act. The only way to run a true surcharge compliant program is to use a credit card machine or point of sale system that determines if the card is debit or credit before applying the fee. To complicate the issue further, some industries are tied to specific POS systems that do not have this ability.
Cash Discount Program
Next are the Cash Discount programs, originally designed as a way for processors to creatively add a service fee to all card transactions and then offer a discount for those paying by cash.
Essentially, they changed the name of the program from “surcharge” to “cash discount” and added a fee, just to take the fee off. This is really a surcharge program which means it’s also illegal to offer a cash discount on a debit card. A true, compliant cash discount program lists the actual price and takes a discount off the listed price if the patient pays with cash.
Compliance Regulations
To compound the confusion, the tax implications are also a bit fuzzy. Practices must let their merchant acquirer and relevant card networks know they are planning to start a surcharge program—and you will need to make sure the processor is providing you with 1099K paperwork during tax season.
If the money accrued from surcharging isn’t reported correctly, there’s a good chance it will come up as a red flag.
Best Practices
The safest way for a practice to participate in a surcharge program is to use a true cash discount, incentivizing patients to pay with cash, rather than penalizing them with a higher price for using credit cards.
There is zero need to involve a processor, and all that’s needed is a well-priced merchant account. There’s no reason to have the processor charge a higher fee just to discount it!
The simple answer to reducing these fees is for businesses to gain a better understanding of the credit card processing landscape.
It is vital to become more familiar with monthly statements—particularly potential hidden or junk fees—and use these data points to negotiate lower fees.
This can happen through more vigilant auditing on a practice manager’s part or working with a third-party expert, like Merchant Advocate, who can help decipher these confusing statements.
Learn about the presenter:
Steven Pishko has over 20 years of experience working as a cost reduction consultant to healthcare-related organizations. Steve has been an essential part of the Merchant Advocate team heading up relationships and optimizing merchant pricing for the members of several large organizations, saving members over a million dollars in excessive fees.
I work with a RPA company robotics processing automation that not only covers all of your credit card fees, but provides a service that grabs all transactions and returns them back to the ledger of the patient balance automatically… Literally does the work of another employee for pennies, huge savings of time, Reduced frustration, Peace of mind and certainly increase profit! Can we talk?