The Ugly Truth of Passing Merchant Fees on to Your Patients

Posted on September 6, 2023 by Holly Jensen

Lately, there has been a growing trend of businesses passing credit card merchant fees on to their patients. We’ve even seen some companies falsely advertising 0% merchant fees! This practice, known as “cash discounting” or “surcharging,” can lead to a number of problems for businesses and their customers.

Here are 10 reasons why you should avoid passing merchant fees on to your patients:

1. You need to purchase a particular credit card terminal: Cash discounting or surcharging programs require you to use a specific terminal that adds the line item fees or cash discount on the receipt. Additionally, if you process insurance reimbursements using a credit card number or HSA/FSA cards, you may need a second terminal or merchant account for those types of transactions. 

2. Bookkeeping nightmare in patient ledgers: Your patient ledgers must show the cost of the services rendered and the amount collected from the patient. When you pass merchant fees to the patient, you must account for that difference in the ledger. 

3. Legal and regulatory issues: Some states have laws or regulations that restrict or prohibit charging extra fees for specific payment methods. Businesses must ensure compliance with these regulations or risk facing legal consequences and damaging their reputation. 

4. Decreases recurring revenue: Programs that allow you to pass along the merchant fees to your patients are only for one-time transactions, meaning you cannot apply those fees to recurring payments for patients on a payment plan. Therefore, a program where you’re passing merchant fees onto your patients won’t work if you are focused on increasing revenue with automated recurring payments. 

5. Patient dissatisfaction: Don’t fall for those 0% marketing gimmicks, as these programs are designed to pass the fees to your patients. Charging extra fees for using credit cards can lead to patient dissatisfaction. Patients might view it as hidden charges or unfair pricing, which can damage the relationship with the practice. 

6. Patients cannot get the fees reimbursed: When you print a super-bill for the patient to submit to their insurance for reimbursement, the patient will not be reimbursed the merchant fees they paid, which can cause patient dissatisfaction or confusion.

7. Negative perception: Implementing surcharges or cash discount programs can create a negative perception of the practice. It may be seen as a money-making strategy rather than providing value to patients.

8. Competitive disadvantage: In competitive markets, businesses that impose surcharges or offer cash discount programs may lose customers to competitors who don’t impose such fees. This can result in revenue loss and reduced market share.

9. Complexity and confusion: Cash discounting programs and surcharging can lead to complexity and confusion for businesses and customers. For example, when calculating ledgers accurately, you’ll need to account for the fees, which can cause extra work and confusion with your team and patients, potentially resulting in errors or disputes.

10. Negative impact on patient experience: Patients expect a smooth, hassle-free payment process. Introducing additional fees can add complexity and inconvenience, leading to a negative patient experience.

What are the best practices for increasing revenue in your practice?

Instead of passing merchant fees on to your patients, there are several other things you can do to increase revenue in your practice. Here are a few tips:

  • Raise your fees by 3-5% to offset your merchant processing fees. This is a straightforward way to increase revenue without alienating your patients.
  • Ensure your rates are competitive. Research and get some quotes to ensure your rates are comparable to other practices in your area. You can also contact us for a competitive quote.
  • Increase your patient visit average (PVA). This means getting patients to come back for more services. You can do this by offering discounts for care plan packages or providing excellent customer service that makes patients want to return.
  • Increase your average case fee. This means charging more for each service you provide. You can do this by offering higher-priced services or by bundling services together.
  • Reduce patient dropout. This means keeping patients from leaving your practice. You can do this by following a Loyal Patient Journey®.

By following these tips, you can increase revenue in your practice without having to pass merchant fees on to your patients. This will help you improve your bottom line and create a positive patient experience.

Need a patient retention strategy? Read more…

About the Author

Holly Jensen, the esteemed Chief Operations Officer of Cash Practice Systems, oversees a pioneering platform highly regarded in the chiropractic community for its unparalleled ability to boost revenue and retention rates. At its core are innovative tools like The Wellness Score, Care Plan Calculator, Auto-Debit, and Drip-Education Systems, meticulously crafted to aid doctors in enhancing patient retention and revenue. With unwavering commitment, Holly has been instrumental in solidifying Cash Practice Systems as the premier choice for chiropractors seeking practice optimization. Prior to her COO role, Holly collaborated with Dr. Miles Bodzin, CEO of Cash Practice Systems, in leading a highly successful wellness practice in San Diego, showcasing dedication to patient care. Together, they've dedicated over two decades to advancing chiropractic care, inspiring practitioners worldwide. Explore for transformative tools.

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