Does your clinic need a Credit Card machine?

A doctor’s clinic, unlike hospitals or nursing homes, has been a cash-centric establishment for a long time. Whether it is convenience or the dominant tradition that got passed on from generation to generation, the trend has always been to pay cash across the table or at the reception after the consultation.

About a decade ago, there were at best 2 forms of non-cash payment modes that one could opt for, to pay a doctor for the consultation. There was either a cheque or a bank transfer. Cheques meant the Doctor would have to send someone to deposit the next day, and the slightest error would create a dilemma for the Doctor, of tracing the patient again. Bank transfers were not as seamless as they are now with IMPS and NEFT that carry no extra charges and get credited within a reasonable time. The lack of smartphones and therefore lack of banking apps did not help the cause either.

The dependence of doctors on cash was so skewed, that there have been instances of doctors being hesitant to use EHR software, lest the daily cash transactions get recorded.

The first change to this system came about with the Demonetization announcement on 8th November 2016. Cash was tough to come by, and many patients requested digital means. Fortunately, or rather together came UPI. What seemed like another arduous and over-complicated government exercise soon transformed into the smoothest digital payment method we have come to use in recent times. Tech giants and unicorn start-ups such as Google Pay, PayTM, PhonePe, MobiKwik made the process smoother, intuitive, and even more lucrative with their clean UI/UX and cashbacks.

TechnoMedix had covered all the details about UPI back then as we helped many doctors create their UPI Ids and receive money directly in their bank accounts. BHIM UPI and these apps made it possible irrespective of their bank accounts.

The Doctors who had initiated their foray into receiving digital payments in 2017-2018, found themselves at an advantage during the COVID-19 pandemic in 2020.

WFH or Work-From-Home, a concept unheard of in the medical community, was the need of the hour. With initial reports of the corona virus spreading through surfaces, doctors were extra cautious handling currency notes, even with the nitrile gloves donned. Video consultation led to an increase in digital payments where UPI was the best, safest, instantaneous, and preferred mode of payment.

As the 2nd wave of the pandemic subsided, the curfew restrictions and lockdowns eased up. Some offices started opening, and all clinics were back to their usual working hours. This time we have heard from many of our Doctor clients, that there is a marked increase in the number of patients asking for Credit Card Payment as an option.

There are many reasons for this.

Salaried individuals prefer to pay digitally.
ATMs are a chore to go to, especially with WFH and social distancing norms.
Cash reserves have depleted for many who have been badly affected by the lockdowns.
Credit Card companies offer a variety of payment options, including EMIs.
The basic concept of a Credit Card makes the burden of payment shift by a few days for patients.
Some Credit Card companies such as American Express, Visa, and Diner’s Club, along with banks such as HDFC, ICICI, and SBI offer great Reward Points on their credit cards.

Doctors study many subjects during the long, uphill graduation and post-graduation phase of their life. Financial literacy, unfortunately, does not figure as a subject through any of those years. With the increasing volume of queries about How to receive Credit Card Payments from Doctors, TechnoMedix has put out this basic guide.

In a typical Credit Card payment transaction

The Doctor has a machine or PoS (Point of Sale) device. The company refers to the Doctor and the establishment (clinic/hospital/nursing home) as a ‘Merchant’
This device is linked to the Doctor’s name and Bank Account
This device is provided by a company
- Either Bank provided a device supplied by companies such as Pinelabs, Ingenico etc.
- Independent Financial Companies such as mSwipe and PayTM have the necessary platform and infrastructure.
The patient pays using a Credit Card. This Credit Card is linked to the patient’s bank account, Credit History (CIBIL score), and financial statement. A Credit Card payment network, in India, is provided by one of these 5 companies
- RuPay (Government of India framework)
- VISA
- MasterCard
- American Express (At the time of writing this article, RBI has banned them from issuing new cards)
- Diner’s Black (At the time of writing this article, RBI has banned them from issuing new cards)
These cards may be issued by the banks but the money is processed through the network of the aforementioned companies. Banks with the highest credit card users are:
- HDFC Bank
- ICICI Bank
- SBI (State Bank of India)
- Citibank
- Standard Chartered Bank
- Axis Bank
- RBL Bank
- Kotak Mahindra Bank
Payment can be made by
- Swiping the card by the side of the PoS (old method)
- Dipping the card, with the side where the chip is present, into the PoS machine. (more secure method)
- Waving, or Tapping the card on the PoS machine (like NFC, represented by a ‘wave’ like symbol on the card).
- Manually entering the card number, expiry month and year, CVV number, and verifying with OTP.

OTP is not needed in the first 3 methods.

Doctors should note, if someone is MAKING a PAYMENT to YOU – they do NOT need an OTP or PIN or Security Code FROM YOU.

How does this payment cycle work?

The patient is charged the amount on their card.
Money comes through the card company into the Doctor’s bank account, usually, after T+2 days. Which means two working days after the date of the transaction.
To facilitate this transaction, the card company charges an MDR. Oddly, called Merchant ‘Discount’ Rate. This is the fee the Doctor will pay to the company for using their service.
MDR differs from the type of card and card issuer. Check the table below.

For example: if the patient paid ₹ 1,000 to the Doctor on Tuesday evening, Friday afternoon the Doctor will receive

1000-MDR (assume 1.5% + GST)

= 1000 – (15+18% GST)

= 1000 – 17.7

= ₹ 982.3

If after reading this, the decision is confirmed that you need a PoS Machine for the clinic, read the next post to decide WHICH PoS to opt for!

For any specific queries, get in touch with us or add a comment below.

Click here to know Which PoS to Opt for Clinic.

Doctor’s can also integrate a Payment Gateway in their own Website. This saves the cost of investing in a PoS Machine. A good Payment Gateway can accept all Debit Cards, Credit Cards, UPI transactions as well as Wallets such as Amazon Pay, PhonePe, PayTM, MobiKwik and Airtel Money.

Why would patients prefer a Credit Card over UPI?

(Based on real-life discussion with a senior colleague)

Here are some points that work in favour of the Credit Card system.
These points are subjective. The outlook differs from physician to area of practice of the doctor and the clientele.

UPI is best for doctor as it delivers instant payment. But for many patients it is instant debit. While people/patients like to use Credit Cards. Because it gives a rotation period. Example going to a dermatologist or dietician around 27th of the month – and paying ₹ 5,000 via UPI might be difficult, especially for a salaried individual. The same person might be happy to pay via Credit Card. Salary will come on 1st and CC bill paid somewhere end of next month. 30 to 45 day cycle.
UPI – fraud. The chances of fraud with UPI is higher and riskier. The hit is almost instant. Reversal is major issue. Credit Card fraud gets big buffer of 2 days usually to block the transaction along with company issued insurance buffer. Chances of losing money significantly lesser when using Credit Cards, which is why people prefer that.
Same goes for ‘erroneous’ transactions
Receipts. UPI take a screenshot. Or open app and check if payment has gone through. For Credit Card payments one can get a receipt, that can be saved for tax filing or accounts purposes.
Convenience. Generally UPI is a 2-3 step affair. Smart phone – unlock – open app (e.g. Gpay) – again unlock – then scan QR code or search for number – then again PIN before payment.
Credit Card – whip out from wallet – and at best need to remember just ONE 4 digit PIN.
So many people prefer that.

Why should Doctors take the hit of MDR and lose money?

(Another subjective opinion, depends on the perspective of the Doctor. If there was a query of whether they should or should not opt for this facility, this article may help resolve it – either ways. It is not meant for all doctors.)

Either one can look at it as a ‘business’ expense. A cost of customer acquisition or retention. Even Google listing ranks places who accept Credit Cards higher.
OR
Not compulsory for the doctor to take the hit. Pass it on. Like many doctors did during COVID for masks and gloves. Salons and restaurants started charging extra ‘hygiene charges’.
Put up a notice – with the same MDR table printed
(refer Instagram post).
Then if the patient wants they can make payment by Credit Card but 1.5% extra. Most people don’t mind.
For years I have seen big merchants and stores charge a FLAT 2% on card payments. The reason they charge 2% and not 1.5% can be explained in this calculation.

For ₹ 1000: MDR + GST is ₹ 17.7

If you levy flat 2% – payment amount = ₹ 1020.
1.5% MDR on ₹ 1020 will be 15.3 + GST = ₹ 18.05.
Net to the doctor’s pocket: ₹ 1,001.95.

₹ 1.95 goes towards initial investment.
After 1000 transactions device cost recovered. (provided no other maintenance charges are paid in the interim period)

So depending on which locality your clinic is in, what type of clientele you have predominantly – this can be a useful tool.

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