Running a dental practice is expensive enough already, from rising supply costs to staffing challenges and insurance reimbursement pressures. So when excessive credit card processing fees start eating into margins, it’s natural to think that perhaps you need a better processor.
Emily Edwards.
The process seems logical: Get a few quotes, compare rates, and pick the lowest one. Unfortunately, that approach almost never delivers the real savings you’re hoping for.
Here’s why shopping for a new processor to reduce fees is a bad idea and what actually works when your goal is to pay less.
Why practices start shopping around
Most dental offices review their credit card processing statement and see that processing costs add up to 2% to 4% of every dollar collected. With an ever-increasing volume of card transactions flowing through each month, even small changes in rates can make a big difference.
Processors know this, and that’s why the “let’s get competitive bids” mindset is so common. It feels like the right business move: Pit vendors against each other, and let competition drive down costs.
But in merchant processing, the competition is rarely transparent, and the “race to the bottom” often hides traps.
Why shopping doesn’t work
Credit card processors are experts at making pricing look attractive without actually reducing your true cost. Here’s how they do it:
They mask fees under different pricing models. Whether it’s flat rate, tiered rate, or interchange plus, each model can be manipulated to appear cheaper while quietly padding processor margins elsewhere.
They highlight misleading “discounted” rates. Many quotes will showcase only a small portion of transactions that qualify for a low rate, while the majority are charged at higher rates that you never see upfront.
They bury markups and junk fees. Statement fees, “PCI compliance” charges, batch fees, and other line items add up, and they vary from one processor to another in ways that make apples-to-apples comparisons nearly impossible.
At the end of the day, switching processors often means swapping one opaque pricing structure for another. The new vendor’s rates may look different, but the net cost rarely improves by much, if at all.
What really lowers processing costs
The key to real savings isn’t finding a new processor -- it’s understanding how your current pricing works and fixing the inefficiencies that inflate your interchange costs and markup. First steps you can take to lower your fees include:
Optimize your interchange rates. Most of your costs come from interchange: the nonnegotiable fees set by Visa, Mastercard, American Express, and Discover. However, you can control how your transactions are processed by ensuring that your merchant account and payment system are configured properly. For example, passing complete and compliant data can qualify transactions for lower interchange levels.
Audit your processor’s markups and junk fees. Processors have their own fees on top of interchange. With proper analysis, you can identify inflated markups or “bogus” fees and negotiate their removal.
Document and leverage your findings. When you can clearly demonstrate where your processor is marking things up unfairly, you gain leverage to demand fairer pricing without the pain of switching systems.
In other words, optimization beats replacement.
Why switching processors can be a nightmare
Even if a new processor promises lower rates, the transition process itself can be a major disruption, especially in a busy dental office where every minute of downtime affects patients and collections.
Here’s what many practices experience when they switch processors:
Integration headaches. Your practice management software (Dentrix, Eaglesoft, Open Dental, etc.) may require special setup, credentialing, or even new hardware to connect with the new processor.
Staff retraining. Every system has a different interface, transaction flow, and reporting dashboard. That means front-office staff need time and training to adjust. Mistakes during the transition can cause real frustration.
Downtime and cash flow interruptions. If the switch isn’t perfectly timed, deposits can get delayed or batched incorrectly, disrupting cash flow and accounting.
Hardware and terminal replacements. Many processors require proprietary terminals or point-of-sale devices. Replacing them adds cost and setup time.
Loss of transaction history. Statements and data from your old processor typically aren’t migrated, creating headaches for accounting and year-end reconciliation.
Support gaps. It’s not uncommon for practices to be caught between the new processor, gateway provider, and practice software vendor, each pointing fingers when issues arise.
In short, changing processors isn’t like flipping a switch. It’s a complex, often painful process that can easily outweigh any theoretical savings … especially when the same savings could be achieved by optimizing your existing setup.
When changing processors makes sense
There are valid reasons to move to a new processor that have little to do with chasing lower rates. Consider switching if you're contending with these issues:
Customer service is consistently poor or unresponsive.
Your current system doesn’t integrate well with your dental practice management software.
You’re adding new technology like online payments or recurring billing and need features your current processor can’t support.
Those are business-driven decisions. But if pricing is your only concern, optimization is the smarter first move.
Steps to take if you want to reduce processing fees
- Get a full statement analysis. Identify your true effective rate and which transactions are being charged at higher tiers.
- Review your pricing model. Know whether you’re on flat rate, tiered, or interchange plus and what that really means for your cost structure.
- Look for nonstandard or duplicate fees. Many processors quietly add unnecessary charges that can be negotiated away.
- Optimize your interchange qualification. Make sure your merchant setup passes all required data to qualify for the lowest possible interchange categories.
- Renegotiate based on evidence. Armed with accurate insights, you can often secure better pricing from your current processor. No switch required.
The bottom line
For dental practices, shopping for a new credit card processor often feels like the quickest route to savings. But in reality, it’s usually just a lateral move that takes time, disrupts operations, and rarely reduces your true costs.
Real savings come from understanding the system, not switching vendors. By auditing your current setup, optimizing your interchange, and eliminating unfair markups, your practice can achieve meaningful, sustainable savings. No new processor required.
If you need help with analyzing your merchant account, identifying junk fees, optimizing rates, or guidance on what to look for when shopping for a new processor, third-party consultants like Verisave can provide merchant account expertise for your practice.
Emily Edwards is the director of strategic growth at Verisave, a cost reduction firm that specializes in payment optimization. Her work focuses on client education and strategic industry partnerships, particularly in the dental sector.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
