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Your parents expect to be able to pay their children’s tuition online using their preferred credit and debit cards, or by transferring their bank funds through an Automated Clearing House (ACH). As a business officer, you need to make these options available while minimizing the cost and hassles to your office. To achieve the right balance for your school, it helps to think about the two issues separately.
First, how do you reduce the work you need to do with invoices, collecting payments, and following up with lagging payments? Second, how do you minimize the cost of processing an ePayment?
For the latter, looking into cost-neutral opportunities will allow your school to accept many forms of payments, and reduce the amount of fees to be absorbed by school.
A cost-neutral opportunity is something that provides added value to both you and parents, while preventing your school from having to absorb the related costs.
For tuition, board, and related payments, there are a few specific cost-neutral opportunities: checkout and surcharge fee programs, discount for cash program, and convenience and service fee programs. There are three potential options for cost-neutral electronic payment processing:
Convenience and Service fees are charged to the payer to reimburse the merchant for the costs they incur, because they allow their customers to use credit or debit cards instead of just cash, checks or ACH.
These fees can generally only be used when the payer makes an online or other non face-to-face purchase, and cannot be used for payments other than on tuition, board, or related fees. Another challenge with convenience and service fees is that one credit card brand, VISA, regulates the use of them differently than the other brands.
As of January 2014, Visa has expanded their Education Payment Program to include K-12 schools, but there are still some differences. Similar to convenience fees, schools are more likely to choose this option because they want to simplify their reconciliation process by outsourcing fee collection. This program now allows all major credit and debit cards, including Visa to be used for tuition, board, and related fees.
Surcharge fees are charged to the payer that reimburses the merchant, in this case a school, for the costs they incur because they allow the payer to use a credit or debit card.
A merchant might choose to use a surcharge fee rather than a convenience fee because there are limitations on convenience fees that do not apply to surcharge fees. Surcharge fees do; however, come with their own limitations and rules that are discussed in following chapters. There are three main reasons a school might use a surcharge fee:
Discount for cash is a method for a school to accept credit card payments, and still recover some or all of its processing costs without charging convenience or surcharge fees.
With this option, the school offers parents two tuition prices: one for paying with credit or debit cards, and one for paying with a check or an electronic funds transfer (ACH). This is a particularly important option for schools that are not allowed to charge surcharge or convenience fees, such as schools in the 10 states where surcharge fees are prohibited: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Implementing a recurring billing program at your school saves your business office time by reducing paperwork and automating a tedious process. Recurring billing also keeps your parents happy by offering them the options they expect to see when making ePayments.
There are no unique rules that regulate recurring billing, so your only concern should be about implementing technology that is flexible, responsive, reliable, and the best fit for your school. To learn more about tuition processing and how your school can benefit from implementing an ePayment solution, download our free guide today.