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

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,

Home Equity

Loan, 12%

Personal Savings,

Grandparent

Gifts, 10%

Liquidating Assets,

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

2003 20152008 2013 2014

History and Timeline of “Passing on the Fee” Rules

2003 20152008 2013 2014

-----Discount for Cash----

Convenience/Service Fee

Programs

Special

carved-out

programs

Convenience

Service

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

Massachusetts

New York

Oklahoma

Surcharge Fee Program

Imposed on Visa

and Mastercard

through the

Settlement.

All payments – all

industries – no limits

Cardholder Statement

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

Massachusetts

New York

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

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

are my

doing?

53%41%

Sampled DM clients

by region.

School that are accepting tuition by region

How are schools handling the fees?

Surcharge Fee

Service/

Convenience Fee,

Discount for

Out of 200

Diamond Mind

Tuition Portal Users

Sampled 150 Diamond Mind TuitionPay clients

Average Number of

Monthly Tuition Transactions Per School

Credit Card

Sampled 300 Diamond Mind TuitionPay clients

Average Tuition Transaction Per School

Credit Card

$1,131

$3,437

Who’s accepting credit cards for tuition by student size

250-500

500-750

750-1000

Out of 300 Diamond

Mind K-12 clients

Card Types Used Across Campus

Debit,

Standard Credit,

Rewards, 32%

eCheck

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