accepting credit cards for tuition without incurring fees
TRANSCRIPT
ACCEPTING CREDIT CARDS
FOR TUITION
WITHOUT INCURRING FEES
Three Learning Objectives
1. Understand the utility to the school and to
parents of accepting credit cards for tuition.
2. Understand the three key approaches to
accepting tuition by credit card without
adding a budget item.
3. Learn what other schools are doing and
experiencing when accepting tuition by credit
card.
Why? What is the
potential gain of
accepting tuition by
credit card?
Faster, more clear payments
Reduced parental stress
Fast & Easy
Accurate
Direct
Online payments are a
means to that end.
Epayment vs. Paper Check
Rich Data
Payments deposited 24 hours
Accurate information
Digital entry
Manually Enter Data
payments deposited in 1 week
Missing information
Hard to read
Financial Stress
Need an intro slide - how will
you open presentation?
Reduce Financial Embarrassment &Stress on Parents
NAIS asked
362 families that applied for financial aid
how they were planning to
pay for tuition
School Aid, 62%
Family Paycheck,
59%Credit
Cards,
11%
Home Equity
Loan, 12%
Personal Savings,
35%
Grandparent
Gifts, 10%
Liquidating Assets,
9%
Alimony/Child
Support, 7%
source: www.nais.org
Some use credit cards to
bridge a gap, avoid
embarrassment.
For parents with good credit
0% Intro APR on Balance Transfers
and Purchases for 15 months
0% APR for 18 months and no late payment
fees ever
5% cash back at Amazon.com or
Zappos.com
Earn 40,000 bonus miles when you spend $3,000 on
purchases in the first 90 days -enough to redeem for a $400
travel statement credit
Earn unlimited 1.5% cash back on every
purchase, every day
Earn unlimited 2% cash back on every
purchase, every day
Credit card
payment
options can
empower
parents.
What methods can be
used to avoid costs
when accepting credit
cards for tuition?
Three Methods
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History and Timeline of “Passing on the Fee” Rules
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History and Timeline of “Passing on the Fee” Rules
2003 20152008 2013 2014
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History and Timeline of “Passing on the Fee” Rules
-----Discount for Cash----
Convenience/Service Fee
Programs
Special
carved-out
programs
Convenience
Fee
Service
Fee
THIRD
PARTY
Cardholder Statement
Jane Smith 1234 Happy StreetPleasantville, MD 12345
Date: 2/14/14
BANKUSA
Wonderful Day School Tuition $20,000.00
DiamondMind Direct Conv Fee $375.12
Wonderful Day School Book Store $37.50
YXZ Grocery Store $26.29
UncleBob’s Pharmacy $12.75
Gasoline Station $58.34
Greatest Convenience Store $14.28
• MasterCard & Visa Special Programs
• Has always been permitted by Discover and
American Express
• Charge % on both credit cards & debit cards
• Two transactions preferable.
• Limit to Tuition, board and related fees
• 3rd party can collect for schools
• Schools only*
* And other select non-commercial sectors such as Government, Utilities and Higher Education
Convenience/Service Fee Overview
Check with Legal Council
California
Colorado
Connecticut
Florida
Kansas
Maine
Massachusetts
New York
Texas
Oklahoma
Surcharge Fee Program
Imposed on Visa
and Mastercard
through the
Settlement.
All payments – all
industries – no limits
THIRD
PARTY
Cardholder Statement
Jane Smith 1234 Happy StreetPleasantville, MD 12345
Date: 2/14/14
BANKUSA
Wonderful Day School Tuition $20,375.12
Wonderful Day School Camp $456.28
Wonderful Day School Book Store $37.50
YXZ Grocery Store $26.29
UncleBob’s Pharmacy $12.75
Gasoline Station $58.34
Greatest Convenience Store $14.28
Disclosure of Surcharge
Disclosures must be provided at the point of entry
(online for example) and point of sale
Itemization of the final surcharge amount must be
identified separately on the transaction receipt.
Example of Disclosure
We impose a surcharge of ________%
on the transaction amount on Visa and
MasterCard credit card products, which is not
greater than our cost of acceptance.
We do not surcharge debit cards.
States Prohibiting Surcharging
California
Colorado
Connecticut
Florida
Kansas
Maine
Massachusetts
New York
Texas
Oklahoma
Surcharge Fee Program Summary
• Percentage fee on all credit cards
• No % may be charged on debit
• No restrictions on type of payment
• 3rd party cannot collect for schools
• Must be done in one single transaction
• The % fee is capped at 4%
• 30 day notification of intent to surcharge
Discount for Cash
TUITION 2014/2015
Tuition amounts for the 2014/2015 academic year are as follows:
Lower $20,000Middle $26,300Upper $28,600
Credit card payments are accepted through the WDS’s online tuition portal. The system will calculate the non-discounted total payable when using credit cards. The non-discounted levels are 2.75% higher than the discount for cash amount.
http://www.wonderfuldayschool.com/tuition
Please note these amounts are discounted for cash.
STUDENT BILL
Student Name:Account #:
Jane Smith123456
Date:Pay by:
2/14/142/30/14
If paying by: Amount Due: Notes:
Cash, Check or ACH $20,000** This is the discount for cash tuition amount
due if paying by cash, check, or ACH.
Credit Card $20,550**** This is the non-discounted tuition amount due
if paying by credit card.
STUDENT BILL
Jane Smith 1234 Happy StreetPleasantville, MD 12345
Date: 2/14/14
$20,000* Tuition for Mary Jones for 2014/15
Invoice States Payment Due in The Discount For Cash Amount.
TUITION PAYMENT PORTAL
The Wonderful Day School offers a discount for payment by cash or check.
If you’re paying by cash or check, the tuition amounts for the academic year 2013/2014 are:
Lower School $20,000
Middle School $26,300
Upper School $28,600
You can make payment by eCheck or ACH at the Discount for Cash level by choosing “ACH” as the payment option on the following screens.
If you’d like to make payment by credit card, you may do so by choosing “Credit Card” as your payment option on the following screens. The system will calculate the non-discounted amount which will be higher than the discounted amount by 2.75%.
Pay Invoice
http://www.wonderfuldayschool.com/tuition
Most states that appear to
prohibit or restrict surcharging
explicitly permit a discount for
cash approach.
Convenience/Service Fees
Surcharge Fees
Discount for Cash
If You Want to:Convenience/Service
Fee Surcharge Discount for Cash
Make credit card acceptance cost-neutral Yes Yes Yes
Accept all credit card brands Yes Yes Yes
All types of purchases? Limited(tuition, board and related fees only)
Yes Yes
Accept debit and prepaid cards Yes No Yes
Third party eligible to collect Yes No No
Know the requirements to implement
• Limited to tuition, board and
related fees
• 45 day notice to VISA & MC
• 30 day notice to VISA & MC
• 4% max charge
• Single transaction
Properly label invoices and published pricing
Operate in one of the 10 states* Check with your legal counsel Check with your legal counsel Check with your legal counsel
What
are my
peers
doing?
42%
51%
53%41%
Sampled DM clients
by region.
School that are accepting tuition by region
How are schools handling the fees?
Surcharge Fee
39%
Service/
Convenience Fee,
54%
Discount for
Cash
7%
Out of 200
Diamond Mind
Tuition Portal Users
Sampled 150 Diamond Mind TuitionPay clients
Average Number of
Monthly Tuition Transactions Per School
Credit Card
10
ACH
25
Sampled 300 Diamond Mind TuitionPay clients
Average Tuition Transaction Per School
Credit Card
$1,131
ACH
$3,437
Who’s accepting credit cards for tuition by student size
17%
33%
22%
13%
16%
<250
250-500
500-750
750-1000
1000+
Out of 300 Diamond
Mind K-12 clients
Card Types Used Across Campus
Debit,
5%
Standard Credit,
63%
Rewards, 32%
What
about
eCheck
only?
4% ACCEPT TUITION
PAYMENTS BY eCheck ONLY
source: www.electronicpayments.org
ACH Payment: $.50
Paper Check: $1.50
AVERAGE COST TO PROCESS...
Will people
perceive
something is
missing?
Question and Answers
www.diamondmindinc.com
www.diamondmindinc.com/webinars
www.diamondmindinc.com/blog
http://usa.visa.com/merchants/merchant-support/merchant-
surcharging.jsp
Resources