Our Client Thought Credit Card Processing Was Costing Her 3%. We Found the Real Number Was Higher.
By ProfitWise - a Visa Business Plans company
A dentist came to ProfitWise because she wanted to take a closer look at her practice’s operating expenses. As we reviewed the financials, one expense caught our attention: credit card processing fees.
Our client thought she was paying approximately 3% to accept credit card payments and had always considered it a normal cost of doing business. However, when we reviewed her processing statements, we found the actual cost was higher than she realized.
The difference came from additional charges not reflected in the rate she thought she was paying.
The Advertised Rate Doesn’t Always Tell the Whole Story
Depending on the processing agreement, businesses may pay a percentage of each transaction, a fixed fee per transaction, and additional charges for certain card types. Monthly account fees, payment gateway charges, and other expenses can also increase the overall cost.
For dental practices, where patients often use credit cards for expensive procedures, even a small difference in processing fees can add up.
Consider a practice processing $100,000 in credit card payments each month.
At 3%, the monthly processing expense would be $3,000. At an effective rate of 3.8%, it would be $3,800.
That’s an additional $9,600 annually, assuming the same monthly payment volume.
We wanted to confirm exactly what our client was paying, including charges not immediately obvious from the advertised rate.
Why Bookkeeping Makes a Difference
Payment processors don’t always deposit the full amount collected from patients. Some deduct fees before transferring the funds, while others charge them separately.
If these transactions aren’t properly recorded and reconciled, it becomes difficult to understand how much the practice collects and what it pays to process those payments.
Through specialized bookkeeping, we can accurately account for gross collections, refunds, processing fees, and bank deposits. This also lets us track changes over time and spot when processing costs rise beyond what the payment volume would suggest.
In our client’s case, reviewing the statements helped us identify the difference between the rate she expected and what the practice was actually paying.
Could the Practice Get a Better Deal?
Once we understood the costs, we could evaluate whether her existing processing arrangement was competitive.
That involved examining the fee structure and comparing alternatives based on the practice’s transaction volume and payment patterns.
A processor advertising a lower percentage isn’t necessarily less expensive once you factor in fixed charges, monthly fees, and other conditions. We also needed to account for compatibility with the practice’s existing systems and the convenience of patients and staff.
Through our Fractional CFO services, we could compare potential savings with the costs of switching providers.
The goal was to determine whether changing arrangements would produce meaningful savings without creating unnecessary operational complications.
What Other Expenses Have You Stopped Questioning?
Credit card processing fees are easy to overlook because business owners know they’re unavoidable. But accepting that an expense is necessary doesn’t mean accepting whatever it costs.
The same goes for software subscriptions, banking fees, service contracts, and other recurring expenses that can go years without review.
At ProfitWise, our specialized bookkeeping and monthly financial reviews help business owners understand where their money goes and spot expenses that deserve closer attention. When we identify opportunities for improvement, our Fractional CFO services can help evaluate the financial impact of making changes.
For our dental practice client, the review revealed that her processing costs were higher than she believed. With that information, we could assess whether a different arrangement might reduce expenses and improve the practice’s bottom line.
