The ability to accept all forms of payment is crucial to the financial health of your veterinary clinic. But did you know that the cost to accept a credit or debit card for your services varies not only by card type, but also by the business you’re in? In this article, we break down some of the key factors in determining the cost of accepting credit cards, and what to look out for when working with a merchant services provider.
What sort of company you are
Each industry (and business type) is classified by a “Merchant Category Code”, each of which is subject to different fee amounts that are affected by factors such as risk and business size.
Merchant Category Codes: Designed by the credit card brands, this is their system for classifying merchants by the goods or services they provide. Each four-digit Merchant Category Code (MCC) determines the interchange fee, specific benefits awarded to customers who shop in specific categories and card transaction rules.
For example, a veterinary clinic is assigned a merchant category code of 0742 for “Veterinary Services.”
The risk posed by a particular business type determines the interchange fee. If a business type is particularly vulnerable to refunds and chargebacks. An example of a “high risk” store is custom furniture, whose interchange fee is generally high. In addition, large businesses like supermarket chains can have a much lower rate as they have the “clout” to negotiate with card brands. This same benefit is rarely handed down to small to medium-sized businesses like veterinary practices.
The type of cards used in the transaction
It’s a tale of risk and reward. There are over 1500 credit and debit cards in circulation in the U.S alone. Because of this, there are many different charge amounts on your credit card processing statement. Here’s the general rule: Debit cards pose much less risk to a transaction than credit cards and are therefore cheaper to process. The reason is simple. Funds that are approved are debited directly from the customer’s bank account straight away, unlike credit cards.
When your pet parent pays for Fido’s dental cleaning with their rewards credit card, however, things get more expensive. Branded credit cards fund customer rewards (like air miles and retail points) through the interchange fee. These awarding banks pass on the cost to you, the merchant, resulting in a higher interchange fee.
The transaction method
As a general rule, having the card and card owner present when they pay results in a lower rate. This is simply a case of verifying that the card used belongs to the customer. Different verification methods, like signature or PIN, carry nominally different rates. Telephone orders, e-commerce and mail orders have a higher likelihood of fraud, and therefore carry a higher interchange rate. How do your pet parents interact with your practice team? Do you prefer contactless payment (text to pay or online payment), or do you take payments via a terminal in your clinic or at the curbside? Whether you’re at a brick-and-mortar clinic, or out on the road, make sure to find a solution that works for you.
DID YOU KNOW? Gravity Payments integrates with leading Practice Management Tools and online pharmacy solutions. Learn more about our (always growing) list of partnerships here.
Your average transaction size
The wholesale fees charged by the card issuing bank and card brands contain a combination of a percentage and a fixed per-transaction fee. Generally-speaking, a lower average transaction size (like a routine check-up or heartworm test at $40 to $50) will result in a higher effective fee rate. Practices who specialize in complex or emergency care (like $4000 cancer care) will result in a much lower effective rate.
To counteract the impact of credit card processing fees on routine appointments consider setting a minimum card payment amount. Another option is to pass on a card usage fee to your customers (a slightly riskier tactic). As a merchant, this is down to your discretion.
DID YOU KNOW? Gravity Payments specializes in getting the best rates and solutions for small businesses. but also 24/7 multilingual support, which is usually reserved for large clients.
The breakdown of services you offer impacts your effective rate credit card processing fees. If you manage a clinic with lower overall transaction sizes, explore fixed transaction fees for more predictable monthly payments. Make sure you get all the available options from your merchant services provider.
Want to learn if you’re getting the best merchant services for your practice? Connect with Gravity Payments’ Veterinary Specialists for a free consultation here, or by calling 206-388-5910, for an obligation-free consultation.