Credit cards are not going anywhere. In America alone, Visa and MasterCard clocked in $4.7 trillion of purchases in 2017. Accordingly, you can expect your millennial parents (and therefore, increasingly, most of your parents) to ask you whether you accept credit cards.
But to you, owner, principal, supervisor, administrator – or all of the above – credit cards may also trigger some concerns. For one, the cost – can your school or daycare afford it?
And beyond the fees, what does it take to accept credit cards? Do you need a terminal? Will it be cumbersome to operate it? And what about transaction reconciliation?
Here is what you should know.
Credit card fees may be expensive but…
It’s no breaking news that Visa, MasterCard, and other card brands charge hefty fees to businesses offering them (often in the 3-4% range).
However, saying no to credit cards based on fees alone may not be the solution. After all, payments by credit cards:
- Are very popular with parents (not least because of their points and loyalty programs).
- Never come back NSF (Non-Sufficient Funds).
- Settle quickly (the payments arrive quickly in your account).
- Mean families pay on time – if they need to make ends meet in a given month, they can use their credit cards to finance themselves instead of leaving your organization out of pocket for a few weeks.
So, should you give away 3-4% of your revenue for those benefits?
You’re the only one who can make that decision but there is a strong case for it.
First off, you may be able at the very least to offer a credit card option with a service fee, meaning that if a parent uses their card, they cover its cost.
Sure, parents don’t generally like such fee, but you will find that a significant portion of them will want to use their card regardless – and after all, if they do this on their own dime, why should you not let them?
In the long run, you should consider credit card fees to be a cost of doing business and build it once and for all in your tuition fee schedule. The argument for doing so is that people dislike add-on/extra fees.
Better then baking the credit card fees into an all-in pricing, just like virtually all other businesses do (for instance, you do not get charged more for using a credit card at the supermarket, prices are instead based on the worst-case assumption that you may use it).
Once you experience the use and convenience of getting paid with credit cards that never bounce back, it’s likely that neither you nor the parents will want to go back.
You don’t need a credit card terminal…
In this day and age, you should not have to operate a terminal manually. There are tools out there (including TUIO’s very own) that allow you to set up families on pre-authorized payment. In our case, parents add their own card details (for greater security and (your) time efficiency), which allows you to charge their card automatically every month, for instance.
Why do it online instead of the office? Because you need more convenience and time savings, not a line of parents waiting at your office’s door in order to give you their card to process .
In addition, if you use a well-designed software to obtain credit card payments, you won’t have to do any reconciliation of your transactions. Instead, payments will be linked to families’ invoices and the system will mark them as paid accordingly. You should also be able to obtain deposit reports to easily see what’s coming into your bank account.
Offering a credit card option can be a great way to simplify the collection of your payments and improve families’ satisfaction while saving you time. Sure, you may not be able to cover their cost in the 1st year and may charge a service fee to begin, but over time you are better off incorporating them into your prices, even gradually.
TUIO is the #1 billing & payments platform in the educational space. Principals, owners, administrators and daycare supervisors save hundreds of hours each year automating their administrative billing tasks on TUIO and providing families with a secured TUIO account where they can seamlessly provide pre-authorizations for payment of their upcoming school or daycare invoices. Credit cards can be offered with a service fee. If you would like to see for yourself what TUIO can do for your organization, schedule a demo and/or read some of our customers endorsement letters.