Reading your merchant statement: interchange-plus vs flat-rate for medical practices

Ask a practice owner what they pay to accept credit cards and most will say "about three percent." Ask them to show where that number appears on the statement and the conversation slows down. Medical practice payment processing is one of the few recurring costs a clinic pays without ever seeing an itemized bill. Here's how to read one.

The three parts of every card fee

Interchange goes to the bank that issued the patient's card. It's set by Visa, Mastercard and the others, published, and identical for every processor. A debit card might cost 0.05 percent plus 21 cents; a premium rewards card might cost 2.5 percent or more. Nobody negotiates interchange.

Network fees go to the card brands themselves. They're small, fixed and also non-negotiable.

Processor markup is everything else. It's the only part of your bill that varies by provider, and it's the part pricing models are designed to obscure.

Flat-rate pricing

Flat-rate processors charge one percentage for every transaction, commonly 2.6 to 2.9 percent plus a per-transaction fee. It's simple, and simplicity has a price. When a patient pays with a debit card that costs the processor 0.3 percent, you still pay 2.9. The processor keeps the difference. For a clinic that sees a lot of debit and basic credit cards, that spread can be the majority of what you pay.

Interchange-plus pricing

With interchange-plus pricing, your statement shows interchange and network fees passed through at cost, and the processor's markup listed separately as a fixed percentage plus a fixed per-transaction amount, for example 0.20 percent plus 8 cents. You pay exactly what each card costs plus a markup you agreed to in writing. Volume above roughly $10,000 a month almost always comes out cheaper this way, and the statement is auditable.

What to look for on your current statement

• A line for interchange or "pass-through" fees. If there isn't one, you're on a blended or flat rate.
• Monthly fees: statement fee, PCI fee, gateway fee, batch fee. Add them up; they're often $30 to $80 a month on top of the percentage.
• Equipment lease. A $40-a-month terminal lease over 48 months is $1,920 for a device that costs $300.
• Early termination fee and contract term. Three-year auto-renewing contracts are common and avoidable.

Calculating your effective rate

Divide total fees for the month by total card volume. That single number, your effective rate, is the fairest way to compare providers. A practice on flat-rate often sits near 2.9 to 3.2 percent. The same practice on interchange-plus with a modest markup usually lands between 1.9 and 2.4 percent depending on card mix.

Why a supply company does processing

We added payment processing after clients kept forwarding us their statements and asking what the fees meant. The pricing is interchange-plus with the markup stated up front, deposits arrive the next business day, and there's no long-term contract. If you'd like a side-by-side against your current statement, upload one through the contact form or ask your rep.