Not All Veterinary Client Payment Solutions Are the Same

Apr 27, 2021 at 6:23 pm

There are many new payment options that are being marketed to veterinary practices that claim to help more pet owners afford costly care. The companies are marketing their monthly installment payment plans by claiming they help pet owners who struggle with finances, and that if your practice offers these plans, your clients will no longer have to worry about veterinary costs.

Get all the details when a new payment plan option comes along and it’s marketed as the answer to all your client payment problems.

Some of these new payment options are based on a version of the “buy now pay later” (BNPL) business model, which has become quite popular over the past few years. While it seems straightforward and simple—your client is able to spread a large cost over time and your clinic gets paid up front—there is more to it than that, and it’s important to know the details.

How the “buy now pay later” service works for your clients

While this BNPL service is marketed as an installment payment solution for even low-income veterinary clients, it most likely won’t help this demographic. That’s because it only works for clients who already have a line of credit through Visa or MasterCard. In addition, they must have enough available credit to cover the entire procedure cost upfront, or they will not be eligible for this option.

For example, let’s say you have a client whose pet’s dental treatment costs $500. To use the BNPL payment option, your client must already have a major credit card, and they must have at least $500 of available credit on that card. If they don’t meet this criteria, they won’t be able to take advantage of this payment option.

If they do meet this criteria, they seemingly have the option to split that $500 up into smaller payments over time. However, a “hold” is placed on their credit card for the entire $500.

In practical terms, your client has actually spent the $500, because that amount of credit is no longer available to them.

Each time your client makes a monthly payment using this service, the hold decreases by the amount of their payment. Let’s assume the client wants to pay $100 per month for 5 months. After they’ve made their first $100 payment, the $500 hold becomes a $400 hold. After the next $100 payment, the hold is reduced to $300… You get the picture.

Although the credit hold may be disclosed when clients sign up for this BNPL service, many consumers don’t read or fully comprehend such details. They have the impression that they’re breaking a large cost down into smaller payments, without realizing that, in terms of their available credit, they’ve actually already paid the full amount because of the credit hold.

If your client doesn’t clearly understand this, they may be in for quite a surprise when they attempt to use that card in a subsequent transaction elsewhere. If they’ve maxed out their credit line due to the credit hold, they won’t be able to purchase anything else. This causes a lot of ill-will among your clients and reflects negatively on your practice. More than a few unhappy consumers have discovered this the hard way and were so distressed that they lodged formal complaints about it with the Better Business Bureau.

credit cards

When a payment plan isn’t really a payment plan

In actuality, this BNPL “payment plan” isn’t really an installment payment plan at all. It’s simply a cash flow management tool for pet owners who already have a major credit card, an excellent credit score, and plenty of available credit. For these pet owners, this option might be helpful and convenient, since they can use an existing card, they’re not subject to a credit check, they won’t be charged with additional interest, and they will still be able to make other purchases with their credit card because a credit hold isn’t problematic for people who have a high credit limit.

But these aren’t the pet owners who typically need help paying for care, or who really need to spread payments over time.

And let’s be honest: These aren’t the pet owners whose stories keep you awake at night, who break your heart because you really want to help them, who are the reason you regularly look for payment alternatives that more clients qualify for.

Pet owners who truly need a veterinary payment plan often have little or no access to credit.

If they even have a major credit card, it may be maxed out, or they’re close to their credit limit. If that weren’t the case, they would pay the practice in full at the time of checkout, and they wouldn’t need a payment plan in the first place.

How the BNPL payment option can affect your practice

In addition to understanding the impact that this BNPL option will have on your clients, make sure you know how much it will cost your practice to offer this solution. Even though you’ll get paid upfront for the cost of services rendered to your client, you will pay an additional fee above and beyond the normal merchant fees. This additional fee can range from 5 to 10%. When credit card fees are “layered,” it can become quite costly for your practice.

And here’s what’s really important to your practice: If a client is approved for this type of “payment plan,” consider whether it is truly cost effective for your hospital to pay those additional processing fees, just to offer this option as a convenience to those clients who have enough available credit to pay in full. Remember, the credit hold is basically equivalent to your client paying in full anyway. So, why do you need to offer another payment option that is going to cost your practice money?

There’s no “one size fits all” payment solution

No client payment option is perfect. Offer a variety of financial solutions, because different clients have different needs.

A good rule of thumb is to expect complete transparency. Ask any financial solutions provider you’re vetting to explicitly disclose exactly how much their services will cost your practice, and exactly how the service works for your clients. If clients have a negative experience with a third-party payment or financing business, it could damage their relationship with your veterinary hospital.

While there may be a legitimate place for a BNPL payment option in your practice, it might not deliver everything you hope for. Dig in, ask questions, and read the fine print so you know precisely how any new service will affect your practice and your clients. If it seems too good to be true, it probably is.


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Tony Ferraro is president of Total Financial Services, Inc., a global company that provides professional accounts receivable management, recurring billing, subscription billing, and data processing across numerous industries under the umbrellas of Electronic Billing & Customer Support and Since 1986, Tony's company has helped numerous industries achieve higher revenue by implementing a successful, professionally managed A/R system. Tony has been working with the veterinary industry since 2014. Tony is passionate about educating, guiding, and motivating business owners and professionals to achieve more success by helping them find more efficient ways to accomplish tasks. In his spare time, Tony keeps busy with his schnauzer, Finch, his otterhound, Scout, and his partner's Clydesdale, Chase.

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