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Introducing the "Orthodontic Products Podcast", a journey into the dynamic realm of orthodontic innovations. Each episode dives into fresh research, transformative technologies, and the methodologies redefining the field. Expert interviews seamlessly blend with in-depth analyses, offering listeners a comprehensive look into the ever-evolving world of orthodontics. This isn't just a podcast—it's a portal to the future of orthodontic practices and breakthroughs.
Alison Werner: Hello, and
welcome to the orthodontic
products podcast. I'm your host,
Alison Warner. Today we're going
to look at credit card
processing fees specifically why
you as small business owners
need to understand the ins and
outs of your credit
card statements. The fact is
these fees can not only affect
your patient payment experience,
but also your practice
profitability. Joining me to
talk about this is Eric Cohen,
CEO and founder of Merchant
Advocate a company that helps
businesses get the best credit
card processing fees and rates.
This podcast is actually part of
a four part article series that
Eric has written for us and will
be available on our website and
go more in depth on these
issues. But to get an overview,
we have Eric with us today,
Eric, thanks for joining me.
Unknown: Yeah, thank you for
having us, Alison. Great. So
Alison Werner: to get started,
can you tell our audience about
what merchant advocate does?
Unknown: Sure, so Merchant
Advocate helps businesses reduce
the cost of accepting credit
cards, but without leaving their
current processor, which is
very, very important, especially
in this industry. Our whole goal
is, can we help the practice,
eliminate any hidden fees,
miscellaneous fees, things that
should not be in their merchant
statements, or increases
whatever they may be that drives
the cost up? And again, I think
the most important thing is we
do this all without a practice
leaving their current processor.
Alison Werner: Okay, so can you
talk a little bit for those who
aren't familiar how to credit
card processing fees work within
the orthodontic practice?
Unknown: Yeah, so credit card
processing fees? First of all,
what everyone should know is the
credit card processing world is
unregulated. Okay, so there's
three parts to it. There is the
bank side, which is regulated
there is Visa MasterCard, which
has some rules. And American
Express and Discover I just
generalized Visa, MasterCard.
But then there's the processing
side that has no regulation. And
what happens is the processors
will take the hard cost, and
they'll mark up the fees and
send you a statement or actually
don't even send you the
statement. The statements are
online. And they're cryptic,
which means you don't know the
fees are going up. You don't
know what's real, you don't know
this pure profit. Is it a visa
fee? Is it not a visa fee? Very,
very hard to decipher. It's
almost like 10 times worse than
a cell phone bill. And I know
most of us don't understand our
cell phone bills. And that's
what's really important to
understand is it's a foreign
language. I always say that if
you don't have a master's in
Merchant Services, you're
probably paying too much.
Alison Werner: Okay, so then
what are the types of fees or
ways that practices are kind of
being, you know, losing money or
paying more to do business? So I
know there's inflated processing
fees? Let's maybe start there.
Unknown: Yeah, so what's first
of all, it's the fee is called
your discount rate, which is
surely not a discount. So it's
kind of misleading, a little bit
there. But there are hidden
fees. So there are percentages,
there are transactions, there
are extra costs, especially with
reoccurring billing. orthodontic
is big for real reoccurring
billing. There are penalties. So
what we all know that when you
don't have the card present,
most of us understand that the
fees are higher. But what most
practices don't understand is
there's also penalties if you're
not set up correctly. Okay. And
what we find in a single
location or even multi locations
is the credit card processors
tend not to set up every account
correctly. And it causes these
penalty fees, or these
miscellaneous fees. The other
thing that we know about the
industry is most practices are
integrated into some sort of
software, or practice management
software. Now, the reason that's
important is most of the time,
you only have one choice of who
your credit card processor is
when you're in a software like
this. And that's where we come
in the credit card processors
understand this. And one of the
things that the way they make
money is they will continue to
raise the rates. Or they'll add
a new line item, right? There
are line items that appear to be
real Visa, MasterCard fees,
because it kind of sounds like a
fee. And when you call customer
service, unfortunately, the rep
will say yeah, that's a real
fee, when we know that they're
actually petted. So very, very
easy for the processors to do
this because no one really
understands these merchant
statements and they kind of get
away with it. Okay.
Alison Werner: And then before
we kind of get into how do they
combat that. There's also an
insurance angle here for how
they could be seeing more fees
or having more costs.
Unknown: Yeah, so one of the
things we've seen in the medical
community in medical Dental is
if you are taking insurance, we
are seeing that insurance
companies or third parties to
insurance companies are now
trying to remit payment for
insurance via virtual credit
card. And those virtual credit
cards last more than every other
credit card that's out there.
Now you don't have to take them,
you could push back on an
insurance company. But there are
ways to reduce those cards. So
it's really the insurance people
or practices that take some sort
of insurance and those companies
that use third parties to remit
payments, right, so you have to
be really careful. And what we
find is, practices will push
back sometimes, but then all of
a sudden, they start creeping up
again and insurance companies.
And when you think about it,
these companies and their third
parties, I mean, just like a
consumer wants their miles and
their points. They get miles and
points every time they send you
a card and use the card. Ah,
Alison Werner: okay. Okay, so
then what's the best way for an
orthodontic practice to kind of
find ways to save money on these
credit card processing fees or
combat these inflated fees?
Where should they start? Yeah.
Unknown: Well, I mean, they
should probably use a company
like honesty, but yeah, without,
you know, using a sales
approach, or it's a, you know,
I'm half joking there. But they
really have to have their
accounts monitored on a monthly
basis, they have to have someone
in the practice that understands
the fees that understands the
lingo that looks for, you know,
penalties, even a penalty that
that, you know, is easy to find
is something called a non PCI
fee. Right? You know, if you
don't answer what's called a PCI
survey, which is impossible to
answer, because it's written in
a foreign language, your fee
could be as little as $10 a
month, we've seen up to $500 a
month in penalties, right. And
the reason people use a company
like ours out there is we
understand the language, we have
technology that reads these
statements. And if you're not
doing that on a monthly basis,
if you're not checking them,
your processor is going to start
increasing the rates. Right? And
it's really about learning the
lingo, but also learning the
rules behind it. Right? Like,
why would you get charged, for
example, the non PCI fee, which
are supposed to answer a survey
once a year? Or why is there,
you know, an extra penalty fee
on one of your transactions?
Right. So I think the easiest
way for them to really monitor
this is look at what their
overall cost is. And a lot of
times people are not looking at
what their overall costs is. I
mean, we have practices that
will send their merchant
statement. Well, first of all,
we'll ask them to send a
merchant statement, and they're
like, where do we find them?
Time? They don't know where to
find them. Okay. But what's
really important is, what is
your overall costs? Right? What
are you paying overall? Forget
about all the details, what is
that figure. And that's
something to monitor as well as
to make sure that that is
consistent. Now, obviously, you
want to get it as low as
possible. And you can always
call a processor and ask for
lower fees. But again, if you
don't understand the lingo,
they're gonna lower one fee. And
then the next month, they're
gonna raise the fee back up
somewhere else to make up for
that. Okay.
Alison Werner: Okay. So what are
some best, you know, oh, let you
keep going. Sorry.
Unknown: Yeah, one of the things
I was going to say is people are
going to hear this and say,
Well, what do you mean, I signed
the contract? How could they
raise fees? Well, the Visa
MasterCard guidelines says that
a processor can change rates,
whenever they want to change the
rates, as long as they give you
30 days notice on the statement
that most people don't look at
and don't understand. So just
because you signed up for fee
doesn't mean that that's what
you're gonna get long term,
those fees can change as long as
that process or gives you 30
days notice.
Alison Werner: Okay, so this is,
you know, kind of a pay
attention to those statements
every month and read the, I
guess, read the fine print,
because I'm guessing this is in
the fine print. What are some
best practices? As you're
setting up like, say you're a
new practice and you're getting
set up? What are some best
practices to kind of help
yourself at that point, and
maybe avoid some of these extra
costs? Yeah,
Unknown: I mean, it's, it's
really hard because when you're
setting up a practice I was
saying before, most practices
are integrated into some sort of
patient management system or
patient billing system. And they
don't really have a choice of
what credit card company to use.
So we think especially if you
have reoccurring billing, I
think the most important thing
is find out who is using that
company, maybe find a peer to
choosing the company that has
some low rates. Again, they
could always call us if they
choose to but you know, they
want to go about it and find
out, you know, before they buy a
suit stuff, right? So it starts
with the system they're going to
use. So if it's a new practice,
you want to try to find a EMR,
right, that allows you to use
more than one processor. And
there's not many of them. But if
you can't find that, you always
you want to talk to someone that
use the EMR, right? Because most
of the EMRs out there will
integrate the credit card
processing. And once you're
integrated, and have recurring
billing, you're not unraveling
it, you're stuck. Okay, so you
really want to talk to some
peers as well, what's the best
system is the credit card
processor, easy to deal with?
And a, most of them are gonna
say no, because a lot of them
are very, very hard to deal
with. And also, again, make sure
that they have someone on staff
that could monitor these
accounts, or using a company to
again, monitors the accounts,
it's really, really important,
because if you think about it,
if you're paying 2% Too much,
I'm not saying 2%. All in I'm
saying if you're paying 2% Too
much, that's on your gross
sales, that could be five, six
10% of your net profit. That's
being taken out. Right, so a lot
of times we hear you know, I'm
only paying an extra half a
percent. But that's on your
gross sales. What's that mean?
Out of your bottom line?
Alison Werner: Yeah, okay. Well,
kind of extending from that is,
one of the things you write
about in the article series
we're going to be putting on the
website is about having good
payment processing hygiene, when
it comes to your practice
valuation, especially when it
comes time to sell or have some
kind of transition. Can you talk
a little bit more about that?
Unknown: Yeah, so we're
obviously seeing in the medical
world, there's a lot of roll
ups, there are a lot of sales
happening, a lot of private
equity has come into the market.
And you know, we hear it in any
medical, but we're seeing it in
dental as well. You know, if
you're overpaying, if you're a
practice that, let's say is, you
know, doing a couple, couple
million dollars a year, right or
million dollars a year, and
you're gonna sell your company,
or sell your practice, you're
gonna get valued based off of
EBIT, you're gonna get valued
off of earnings, and maybe
you'll get a five or a seven or
10, I'm not really sure what the
multiples are in your industry
here. But if you lower the cost
of your credit card processing,
it's going to increase your
overall valuation when you go to
sell. So if you're in a spot
today, where you're saying, You
know what, I may exit in six
months, or I may exit in two
years, or maybe I'm getting
towards the end of wanting to
practice, right, there's a
subset of practice, and doctors
and dentists that know that
that's coming. Yeah, they should
clean up their merchant account
as soon as possible. Right,
because if they say, for
example, if they save, I don't
know, $30,000 a year, that can
mean a couple $100,000 in
increased valuation, when they
go to sell their practice. Right
now, the PE firms and the people
buying them understand this,
right? They understand that if
they look at something, some of
them are smart enough to know,
oh, we could reduce the credit
card service, right. And the
reason I know this is we work
with a couple of these firms
that look at this and have due
diligence before buying some
right and seeing if there's
value there. But if you're, you
know, if you own the practice,
you want to look at all of your
contracts. But this is one that
I would say 90 plus percent of
your revenue is probably credit
cards in today's world. Yeah,
this is one of those easy fixes.
That is not let's say 500 a
month, it's let's increase your
value by 234 $100,000 when
you're going to exit, so I think
that anyone that has in that
mind frame, whether it's six
months or a couple years or
something coming up, this is an
area to really look at.
Absolutely. Okay. Well,
Alison Werner: before we wrap
up, is there any like last words
you have for our audience in
terms of what they should be
thinking about in terms of
saving themselves? These costs?
Unknown: Yeah, I think one of
the best pieces of advice is,
you know, we you all need to
accept credit cards, there's no
question about that. The credit
card salesperson that's selling
is not your friend. Okay? The
way the credit card industry
works is, the salesperson in the
company earns a percentage of
every transaction, the more they
charge you, the more money
they're going to make every
month. So you really have to
scrutinize those relationships,
especially when we're talking
about new practices. Very, very,
very important. You also want to
make sure that you're not
getting these penalties or
you're not getting, you know, a
semi annual fee or, you know,
we've even seen things in in
this industry where there's a
line item for some service that
is let's say A reputation
management service that the
credit card processors resell.
And they bill you for it, but
you don't even know about it.
You don't even know how it
works. So it's really, really
important for every line item to
be scrutinized on this thing.
And, you know, you said us good
hygiene. I mean, that's kind of
a perfect way of saying it. This
is one of those areas that it's
very easy for people to take
more money than they should. And
again, that's why we exist, I
think. Yeah, merchant Africa was
created for transparency and
really helping the business
owner and not get, you know,
taken advantage of by these
large processors. That's why the
company exists today. Yeah.
Well,
Alison Werner: and it just seems
like, you know, most a lot of
orthodontic practices that are,
you know, the private ones.
They're small businesses. And so
like you said, they're the small
fish and of working with a very
big pond. So with the credit
card processing big companies,
so yeah, absolutely. Well, Eric,
thank you so much. Thank you so
much for speaking with me today.
And you can find Eric's four
part series that he wrote for us
on our website. And if you want
to learn more about merchant
advocate, merchant advocate.com
is the website.
Unknown: Yes, no. SS just
merchant advocate.com.
Alison Werner: All right. Well,
thank you, Eric. I appreciate
it.
Unknown: Thank you for having
us. Awesome. Great.
Alison Werner: As always, thank
you for joining us. Be sure to
subscribe to the orthodontic
products podcast to keep up with
the latest episodes. And be sure
to check out orthodontic
products online.com to keep up
with the latest industry news.
Until next time, take care