Ready, set, swipe

Your future's in the cards-credit and debit cards.

In addition, plastic increasingly supports health reimbursement accounts (HRAs) as well as flexible spending accounts set up through employers. So with more cards hitting the checkout counter these days, it behooves you to know how to best process them. We'll go through the ABCs of accepting credit and debit cards, and the XYZs of how to handle them in the complicated HSA era.

Businesses that accept cards rely on various financial firms-often banks-to connect to credit card companies and process payments through what's called a merchant account. A few days after the swipe, these same middlemen forward the money to you. Whoever sets up a merchant account for MasterCard and Visa can handle Discover and American Express, too.

Credit card processing comes at a price, and you obviously don't want to overpay. The cost is typically expressed as a discount rate that runs between 1.5 and 3 percent of swiped transactions, and as much as a percentage point higher when the card number is keyed in for a phone, mail, or online transaction. The higher your total dollar volume and the higher your average transaction, the better chance you have, generally speaking, of getting a lower rate. Discover and American Express rates lie at the high end of the spectrum.

In addition to a basic discount rate, merchant-account providers usually quote a flat transaction cost of 10 cents or more. That add-on can make a big difference in your total cost. Let's say your basic discount rate is 2 percent and the transaction fee is 30 cents. For a $20 copay, you'd owe a total of 70 cents, which translates into an effective rate of 3.5 percent.

Pricing for debit cards is more complex. The usual discount rates and transaction fees apply to debit cards from MasterCard and Visa if you choose to run them through the terminal like a credit card and the patient signs a receipt. However, if you process a debit card by having the patient enter his pin number, the discount rate doesn't apply. Instead, you're charged just a flat transaction fee that's generally lower than credit card pricing.

Keep your wallet open. Merchant-account providers can throw in a jillion extra charges, such as a monthly statement fee of $5 to $20, a monthly maintenance fee of another $10 or so, maybe an annual fee of $75. All this, however, is open to negotiation.

To avoid getting nickeled and dimed, shop around, and consider some deals available through organized medicine. The AMA, for example, refers members to First National Merchant Solutions, a subsidiary of First National Bank of Omaha, for credit card processing. First National offers AMA members basic discount rates as low as 1.63 percent for MasterCard and Visa plus a nickel per transaction.

Practices that belong to the Medical Group Management Association can take advantage of rates negotiated with BA Merchant Services, a subsidiary of Bank of America. Its base rate for MasterCard and Visa begins at 1.8 percent, plus 10 cents per transaction.