Beginnner's Guide to Tuition Processing


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Beginnner's Guide to Tuition Processing

  1. 1. A Publication of Diamond Mind Tuition Payment Processing A Beginner’s Guide Understanding Payment Processing for Independent Schools
  2. 2. TABLE OF CONTENTS 1.  Electronic Options for Accepting Tuition Payments 2.  Surcharge Fees vs Convenience Fees 3.  How the New Settlement Rules and Visa Education Program Impact Your School 4.  Applying Surcharge Fees: Notification Requirements and Limitations 5.  Applying Surcharge Fees: Disclosure and Processing Requirements 6.  The 10 States that Prohibit Surcharge Fees 7.  Discount for Cash: A cost-neutral option for accepting tuition payments 8.  Recurring billing for tuition payments: Another way to reduce costs 9.  Should You Hire a tuition management company?
  3. 3. Tuition Payment Processing: A Beginners Guide Tui$on  payments  are  a  love-­‐hate  rela$onship  for  the  administra$ve  staff  at  most   independent  schools.    As  your  largest  regular  receipt,  these  payments  are  an   important  part  of  the  fuel  that  keeps  your  school  running.       Due  to  the  significance  that  tui$on  plays  at  your  school,  offering  numerous   op$ons  for  payment  acceptance  is  important.  In  general,  collec$ng  tui$on   payments  comes  with  a  few  challenges  such  as  ease  of  use,  mee$ng  parent  needs,   and  covering  your  costs.  You  need  to  provide  easy,  common  op$ons  for  your  busy   parents  while  mee$ng  their  needs,  and  you  also  need  to  simultaneous  minimize   the  cost  of  collec$ng  payments  or  $me  spent  in  the  reconcilia$on  process.     For  most  schools  this  means  you  need  to  carefully  consider  the  costs  and   availability  of  each  op$on.  You  also  need  to  issue  payment  reminders,  follow-­‐up   with  lagging  payments,  and  be  sure  that  your  system  complies  with  the  latest   state  and  federal  rules  for  processing  ePayments.  Simply  put,  you  need  to  develop   the  right  tools  that  help  you  minimize  costs  while  reducing  hassles.     This  guide  is  designed  to  help  you  develop  the  tools  you  need  to  successfully   implement  ePayments  at  your  school,  and  by  the  end  you  will  be  able  to  answer   three  ques$ons  that  every  independent  school  business  officer  needs  to  consider:     1.  What  are  the  different  op$ons  your  school  has  for  collec$ng  tui$on   payments  electronically  and  what  are  the  pros  and  cons  of  these  different   op$ons?   2.  What  does  your  school  need  to  do  to  comply  with  the  new  rules  allowing   surcharge  fees  for  credit  card  payments?   3.  Should  your  school  hire  a  tui$on  management  company  to  help  you  manage   these  different  op$ons?   Please  note  that  nothing  in  this  guide  cons0tutes  as  legal  advice.  It  is  cri0cal  to  check  with  your  legal  counsel  to   ensure  compliance  with  all  applicable  state  and  federal  laws  when  processing  electronic  payments.    
  4. 4. CHAPTER ONE ePayment Options for Accepting Tuition Payments
  5. 5. Your  parents  expect  to  be  able  to  pay  their  children’s   tui$on  online  using  their  preferred  credit  and  debit  cards,   or  by  transferring  their  bank  funds  through  an  Automated   Clearing  House  (ACH).       As  a  business  officer,  you  need  to  make  these  op$ons   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,   collec$ng  payments,  and  following  up  with  lagging   payments?  Second,  how  do  you  minimize  the  cost  of   processing  an  ePayment?    For  the  laUer,  looking  into  cost-­‐ neutral  opportuni$es  will  allow  your  school  to  accept   many  forms  of  payments,  and  reduce  the  amount  of  fees   to  be  absorbed  by  school.   The basics
  6. 6. A  cost-­‐neutral  opportunity  is  something  that  provides   added  value  to  both  you  and  parents,  while  preven$ng   your  school  from  having  to  absorb  the  related  costs.   For  tui$on,  board,  and  related  payments,  there  are  a   few  specific  cost-­‐neutral  opportuni$es:  checkout  and   surcharge  fee  programs,  discount  for  cash  program,   and  convenience  and  service  fee  programs.     There  are  three  poten$al  op$ons  for  cost-­‐neutral   electronic  payment  processing:     •  Convenience  and  Service  fees   •  Surcharge  fee   •  Discount  for  cash   Cost-Neutral ePayments
  7. 7. Convenience  and  Service  fees  are  charged  to  the  payer  to   reimburse  the  merchant  for  the  costs  they  incur,  because   they  allow  their  customers  to  use  credit  or  debit  cards   instead  of  just  cash,  checks  or  ACH.  These  fees  can   generally  only  be  used  when  the  payer  makes  an  online  or   other  non  face-­‐to-­‐face  purchase,  and  cannot  be  used  for   payments  other  than  on  tui$on,  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  Educa$on  Payment  Program  to  include   K-­‐12  schools,  but  there  are  s$ll  some  differences.  Similar  to   convenience  fees,  schools  are  more  likely  to  choose  this   op$on  because  they  want  to  simplify  their  reconcilia$on   process  by  outsourcing  fee  collec$on.  This  program  now   allows  all  major  credit  and  debit  cards,  including  Visa  to  be   used  for  tui$on,  board,  and  related  fees.   Convenience and Service Fees
  8. 8. 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  limita$ons  on   convenience  fees  that  do  not  apply  to  surcharge  fees.   Surcharge  fees  do;  however,  come  with  their  own   limita$ons  and  rules  that  are  discussed  in  following   chapters.  There  are  three  main  reasons  a  school  might  use   a  surcharge  fee:       •  If  you  want  to  accept  VISA  card  transac$ons   •  If  you  want  to  add  a  fee  on  every  credit  card  transac$on,   not  just  online   •  If  you  want  to  add  a  fee  on  purchases  for  items  other   than  tui$on   Surcharge Fees
  9. 9. Discount  for  cash  is  a  method  for  a  school  to  accept  credit   card  payments,  and  s$ll  recover  some  or  all  of  its   processing  costs  without  charging  convenience  or   surcharge  fees.       With  this  op$on,  the  school  offers  parents  two  tui$on   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  par$cularly  important  op$on  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,  Connec$cut,  Florida,   Kansas,  Maine,  MassachuseUs,  New  York,  Oklahoma  and   Texas.   Discount for Cash
  10. 10. Implemen$ng  a  recurring  billing  program  at  your  school   saves  your  business  office  $me  by  reducing  paperwork  and   automa$ng  a  tedious  process.       Recurring  billing  also  keeps  your  parents  happy  by  offering   them  the  op$ons  they  expect  to  see  when  making   ePayments.       There  are  no  unique  rules  that  regulate  recurring  billing,  so   your  only  concern  should  be  about  implemen$ng   technology  that  is  flexible,  responsive,  reliable,  and  the  best   fit  for  your  school.       Recurring Billing
  11. 11. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  There are several options and methods for applying fees •  Fees are designed to help you recuperate or share the cost •  Cost-Neutral opportunities are a win-win for you and parents •  Recurring billing is easy to use, and an expected option from parents Chapter 1 Wrap up
  12. 12. CHAPTER TWO Surcharge Fees vs Convenience Fees
  13. 13. When  it  comes  to  ePayments,  a  popular  topic  business   officers  ofen  debate  is  about  the  different  op$ons  they  can   implement  to  ensure  their  school  won’t  have  to  absorb   fees.  Though  surcharge  and  convenience  fees  are  not  all   too  dissimilar,  there  are  various  pros  and  cons  between  the   two  op$ons  and  how  your  parents  will  perceive  them.     Surcharge  fees  are  making  big  come  back.  As  of  January  27,   2013,  merchants  can  now  use  surcharge  fees  that  were   previously  prohibited  by  the  major  credit  card  companies.   This  change  came  about  as  a  result  of  the  2012  seUlement   of  a  class  ac$on  lawsuit  against  VISA  and  MasterCard   regarding.  The  seUlement  leaves  the  rules  about   convenience  fees  intact,  but  gives  merchants   new  and  significant  la$tude  to  charge  surcharge  fees.     Surcharge & Convenience Fees
  14. 14. Understanding the Difference A  surcharge  fee  is   a  fee  charged  to   the  payer  that   reimburses  the   merchant  for  the   costs  they  incur   because  they   allow  the  payer  to   use  a  credit  card.       A  convenience  fee  is   a  fee  charged  to  the   payer  that   reimburses  the   merchant  for  the   costs  they  incur   because  they  allow   their  customers  to   use  a  payment   channel  that  is   different  than  the   normal  payment   channel.     VS  
  15. 15. As  an  example,  if  your  tui$on-­‐paying  parents  normally  walk  into  the   finance  office  and  hand  the  bursar  or  financial  administrator  a  credit   card  to  pay  tui$on,  the  convenience  comes  from  the  ability  to  pay   online  instead.  In  this  instance,  you  can  charge  the  parents  a   convenience  fee  for  offering  that  op$on.     The  most  important  thing  to  understand  about  these  fees  is  that  they   differ  in  five  significant  ways,  which  will  be  covered  in  the  following   chapters:     •  Whether  the  merchant  can  choose  to  set  the  fees  as  either  a   percentage  of  the  total  transac$on  and  or  a  flat  fee   •  Whether  the  fees  can  be  implemented  on  all  types  of  cards   including  debit  and  prepaid   •  How  the  merchant  must  inform  the  customer  about  the  fees   •  How  and  when  the  merchant  informs  the  credit  card  company   that  they  will  be  charging  these  fees   •  Whether  the  fees  can  be  used  in  the  ten  states  that  currently   prohibit  surcharge  fees:  California,  Colorado,  Connec$cut,  Florida,   Kansas,  Maine,  MassachuseUs,  New  York,  Oklahoma  and  Texas?   Understanding the Difference
  16. 16. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  Each fee type has a set of unique requirements •  There are 10 states that prohibit the use of fees, but there are other options •  Being transparent and clear about fees reduces issues with parents Chapter 2 Wrap up
  17. 17. CHAPTER THREE Settlement Rules and Your School
  18. 18. Now  that  you  understand  the  differences  between   convenience  and  surcharge  fees,  what  does  this  mean  for   your  school?  The  simplest  answer  is  that  you  can  now   consider  adding  a  surcharge  when  your  customers  pay  with   credit  cards.    If  you  have  been  charging  convenience  fees   un$l  now  or  have  forgone  charging  any  fees  at  all,  you  now   have  the  op$on  of  charging  your  customers  a  surcharge  fee   instead.       The  main  reason  a  merchant  might  want  to  implement  a   surcharge  fee  is  to  make  the  collec$on  of  payments  via   credit  cards  cost-­‐neutral.  By  charging  some  or  all  of  the  cost   of  processing  a  credit  card  transac$on  back  to  the   customer,  the  merchant  recovers  that  cost.  There  are  also   limita$ons  on  convenience  fees  that  do  not  apply  to   surcharge  fees.  However,  keep  in  mind  that  surcharge  fees   come  with  their  own  limita$ons  and  rules.     Getting into Surcharge Fees
  19. 19. A  merchant  must  also  comply  with  the  following  five   requirements  to  use  a  surcharge  fee:     •  No$fy  the  card  company  and  your  acquirer  at  least  30   days  before  beginning  to  use  the  surcharge   •  Limit  surcharging  to  credit  cards  only  (no  surcharges  on   debit  or  prepaid  cards),  limit  the  amount  to  4%  of  the   total  transac$on  or  the  actual  costs  of  processing  credit   card  transac$ons,  whichever  is  less,  and  limit  applica$on   of  the  fee  to  either  the  brand  or  product  level   •  Disclose  the  surcharge  amount,  that  it  is  a  merchant   surcharge  and  clearly  alert  customers  to  the  prac$ce  at   the  point  of  sale  and  on  every  receipt   •  Include  the  surcharge  with  the  purchase  as  a  single   transac$on   •  Check  with  your  legal  counsel  if  you  do  business  in  one   of  the  10  states  that  currently  prohibits  surcharges:   California,  Colorado,  Connec$cut,  Florida,  Kansas,   Maine,  MassachuseUs,  New  York,  Oklahoma  and  Texas.   Surcharge Fee Requirements
  20. 20. There  are  two  main  reasons  you  might  want  to  consider   using  a  surcharge  fee:    using  a  fee  on  every  credit  card   transac$on,  and  if  you  want  to  add  a  fee  for  items  other   than  tui$on.       Adding  a  Surcharge  Fee  to  Every  Credit  Card  Transac8on   Because  convenience  fees  can  only  be  used  on  alterna$ve   payment  channels,  some  credit  card  charges  cannot  add  a   fee.  For  example,  if  a  parent  walked  into  your  bursar’s   office  and  paid  tui$on  with  a  credit  card,  you  could  not  use   a  convenience  fee  for  that  transac$on  because  it  is  not   considered  an  alterna$ve  payment  channel.  The  surcharge   fee,  however,  is  specifically  allowed  for  all  credit  card   transac$ons,  even  those  that  are  conducted  face-­‐to-­‐face.     Adding  a  Surcharge  Fee  to  Items  Other  Than  Tui8on   The  rules  that  govern  convenience  fees  restrict  their  use  in   the  school  environment  to  purchases  for  tui$on  or  other   directly  related  educa$onal  purposes.  Surcharge  fees  have   no  such  restric$ons,  so  you  could  use  these  fees  for   uniform  purchases,  food  purchases,  dona$ons,  and  gifs.     Considering Surcharge Fees
  21. 21. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  Fees can be added to more than Tuition •  Each major credit card has a set of unique rules •  Legislation often dictates how ePayment fees can be used Chapter 3 Wrap up
  22. 22. CHAPTER FOUR Applying Surcharge Fees
  23. 23. Surcharge Fee Requirements If  you  have  decided  to  use  a  surcharge  fee  for  credit  card   purchases  in  any  department  of  your  campus,  there  are   several  requirements  with  which  you  must  comply.  In  this   chapter,  we  will  discuss  two  of  the  five  requirements:   no$fica$on  to  the  card  companies  and  your  acquirer,  and   the  applica$on  of  applicable  limita$ons.       No8fica8ons  and  Limita8ons   You  must  provide  no$fica$on  to  both  VISA,  MasterCard,   and  to  your  acquirer  if  you  intend  to  apply  a  surcharge  fee   for  purchases  with  these  cards.  The  no$fica$on  must  be   provided  30  days  before  you  begin  to  apply  a  surcharge.   You  should  have  the  merchant  ID  you  plan  to  use  handy   when  comple$ng  the  form,  and  must  complete  one  form   for  each  merchant  ID  on  which  you  plan  to  use  a   surcharge.  
  24. 24. Surcharge Fee Limitations There  are  three  limita$ons  merchants  must  observe  when   using  a  surcharge  fee:  processing  cost  caps,  brand  or  product   level  surcharges,  and  only  applying  them  to  credit  cards.     Processing  Costs  Cap     While  the  merchant  does  have  some  discre$on  to  determine   the  amount  of  the  surcharge,  it  cannot  exceed  the  lesser  of   four  percent  of  the  total  transac$on;  or  the  actual  cost  of   processing  credit  card  transac$ons.       Brand  Or  Product  Level,  Not  Both       Merchants  have  the  op$on  to  add  a  surcharge  at  the  brand   level  to  all  credit  card  transac$ons  or  to  par$cular  types  of   Visa  and  Mastercard  credit  card  transac$ons  at  the  product   level  (e.g.,  Visa  Tradi$onal,  Visa  Tradi$onal  Rewards,  Visa   Signature),  but  not  both.     Credit  Cards  Only       Under  the  rules  of  the  seUlement  agreement,  surcharge  fees   cannot  be  used  on  purchases  made  with  debit  or  prepaid   cards.  Even  if  a  debit  card  user  chooses  credit  at  a  point  of   sale  terminal,  the  transac$on  made  with  a  debit  card  cannot   have  a  surcharge  fee  applied.      
  25. 25. Implementing Fees Providing  no$fica$on  to  the  credit  cards  and  your  acquirer  is   fairly  straighkorward,  and  applying  the  cap  requires  a  simple   modifica$on  of  your  checkout  process.  However,   determining  whether  a  card  that  you  can’t  see  is  a  debit  or  a   credit  card  is  not  as  simple.       To  iden$fy  and  block  payments  with  debit  cards,  your   payment  processor  must  be  able  to  perform  a  Bank   Iden$fica$on  Number  (BIN)  look  up.  It  is  important  that  you   check  with  each  sofware  provider  you  use  to  process   payments  to  ensure  that  they  can  provide  this  service  if  you   want  to  use  a  surcharge  fee.     If  it  turns  out  that  your  vendor  is  unable  to  dis$nguish  and   treat  debit  and  credit  cards  differently,  Diamond  Mind  has  a   product  that  can  do  this  for  you  and  is  compa$ble  with  any   gateway  you  are  using.  Our  Card  Validator  allows  you  to   instantly  determine  whether  the  proffered  card  is  a  credit   card  and  reject  the  card  if  it  is  not.  Our  Card  Validator  is  fully   PCI  compliant  and  is  regularly  updated  with  all  of  the  most   recent  card  iden$fica$on  data.      
  26. 26. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  Understand the different notifications and limitations of fees •  Surcharge fees can only be added to credit, not debit cards Chapter 4 Wrap up
  27. 27. CHAPTER FIVE Applying Surcharge Fees
  28. 28. Applying a Surcharge Fee When  it  comes  to  applying  a  surcharge  fee,   communica$on  is  an  important  aspect.  For  any  item   that  would  have  a  surcharge  fee  added,  a  merchant   needs  to  disclose  the  fee.  Also  of  note,  there  are   specific  processing  requirements  that  regulate  the   what,  where,  and  how  in  regards  to  disclosures.     A  U.S.  merchant  who  uses  a  surcharge  fee  must  provide   clear  disclosure  to  the  merchant’s  customers  at  three   points:  the  point  of  store  entry,  the  point  of  interac$on   or  sale,  and  on  the  transac$on  receipt.     It  starts  with  the  point  of  store  entry  or  in  an  online   environment,  the  first  page.  A  merchant  must  list  that  a   surcharge  will  be  added,  but  will  not  be  greater  than  its   applicable  merchant  discount  rate  for  credit  card   transac$ons.  The  surcharge  must  also  be  listed  at  the   point  of  interac$on  or  sale  with  the  customer.  Finally,  a   surcharge  must  also  be  listed  on  the  transac$on  receipt   provided  by  the  merchant.  The  exact  dollar  amount  of   the  actual  surcharge  must  be  listed  on  the  receipt.  
  29. 29. Disclosure | Interaction The  point  of  entry  disclosure  must  include  a  statement   that  the  surcharge  the  merchant  imposes  is  not  greater   than  the  merchant’s  discount  rate  for  credit  card   transac$ons.  This  includes  the  amount  of  any   surcharges  that  the  merchant  imposes,  and  a   statement  that  the  merchant  is  imposing  the  surcharge.     The  point  of  interac$on  or  sale  disclosure  must  no$fy   the  customer  of  the  merchant’s  surcharging  prac$ces   (including  the  amount  of  any  surcharges  that  the   merchant  imposes  and  a  statement  that  the  surcharge   is  being  imposed  by  the  merchant),  in  a  manner  that   does  not  disparage  the  brand,  network,  issuing  bank,  or   the  payment  card  product  being  used.     Merchants  are  free  to  develop  their  own  signage  that   meets  surcharging  requirements,  and  are  permiUed  to   combine  brand  messages  if  more  than  one  credit  card   brand  is  surcharged.    
  30. 30. Surcharge Fee Examples Mastercard  Surcharge  Example   MasterCard  offers  the  following  examples  of  compliant   surcharge  disclosure  :     We  impose  a  surcharge  on  credit  cards  that  is  not   greater  than  our  cost  of  acceptance   We  impose  a  surcharge  of  __  %  on  the  total  transac$on   amount  on  MasterCard  credit  card  products,  which  is   not  greater  than  our  cost  of  acceptance   We  do  not  surcharge  Debit  MasterCard  cards     On  each  transac$on  receipt  the  merchant  must  disclose   that  it  is  a  merchant  surcharge,  and  provide  the  dollar   amount  of  the  surcharge.  The  rules  also  require  that   the  surcharge  fee  be  processed  with  the  purchase  as  a   single  transac$on.    
  31. 31. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  Surcharge fees prevent your school from absorbing costs •  There are specific rules and regulations for using Surcharge Fees •  Disclosure and Communication are important aspects when using fees Chapter 5 Wrap up
  32. 32. CHAPTER SIX States that Prohibit Surcharge Fees
  33. 33. States that Prohibit Fees If  your  school  has  opera$ons  in  any  of  the  following  10   states,  you  must  check  with  your  legal  counsel  to   determine  what  types  of  fees  you  can  use  on  credit  and   debit  card  charges:       1.  California     2.  Colorado   3.  Connec$cut   4.  Florida   5.  Kansas   6.  Maine   7.  MassachuseUs   8.  New  York   9.  Oklahoma     10. Texas  
  34. 34. States that Prohibit Fees
  35. 35. Understanding Regulation The  10  states  that  do  not  strictly  allow  the   implementa$on  of  surcharges  come  as  a  result  of  a   class  ac$on  lawsuit  seUlement.  However,  in  2013  there   were  44  bills  across  23  states  that  focused  specifically   on  credit  and  debit  card  surcharges.  Due  to  the   changing  environment  of  surcharges,  it’s  important  to   remain  vigilant  for  any  changes  in  your  state.     Fee  regula$on  varies  by  state,  but  the  interpreta$ons   of  these  statutes  vary  from  lawyer  to  lawyer.  As  a  result   there  is  no  defini$ve  guide  to  what  fees  you  can  use.  It   should  be  noted  that  consumers  who  are  subjected  to   checkout  fees  in  states  where  they  are  protected  by  law   can  report  the  retailer  to  their  state  aUorney  general's   office.  Therefore  it  is  important  to  have  your  legal   counsel  advise  you  on  the  legality  of  implemen$ng  any   fees  if  you  are  in  one  of  these  10  states.    
  36. 36. Other Options Regardless  of  the  determina$on  about  the   applicability  of  surcharge  and  convenience  fees  for   your  school,  one  op$on  is  to  implement  a  discount   for  cash.  In  the  next  chapter  you  will  learn  how  to   create  a  discount  for  cash  program  so  that  you  can   accept  credit  cards  and  neutralize  processing  costs   even  in  states  that  prohibit  surcharge  fees.    
  37. 37. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  Currently only 10 states prohibit the addition of fees •  Regulations change often •  Discount for Cash prevents you from absorbing Fee costs Chapter 6 Wrap up
  38. 38. CHAPTER SEVEN Getting Started with Discount for Cash
  39. 39. Discount for Cash Merchants  use  convenience  fees  and  surcharges  to   make  the  collec$on  of  tui$on  payment  and  other   purchases  via  credit  card  cost-­‐neutral.  By  charging   some  or  all  of  the  cost  of  processing  a  credit  card   transac$on  back  to  the  customer  via  these  fees,  the   merchant  recovers  that  cost.       But  what  if  you  do  not  want  to  or  are  not  able  or   allowed  to  charge  these  fees?  Can  a  school  offer  credit   card  payments  and  s$ll  recover  some  or  all  of  its   processing  costs  without  charging  these  fees?  Yes.     A  school  can  offer  tui$on  payments  by  credit  card  in  a   cost-­‐neutral  way  through  a  discount  for  cash  program.   With  this  op$on,  the  school  offers  its  parents  two   tui$on  prices:    one  for  paying  with  credit  or  debit  cards   and  one  for  paying  with  a  check  or  an  electronic  funds   transfer.      
  40. 40. Breaking Even On  the  surface,  this  op$on  may  appear  to  lose  money   for  the  school,  but  discount  for  cash  is  transformed  into   a  cost-­‐neutral  op$on  by  simply  increasing  the  published   costs  of  tui$on  and  related  fees  and  then  discoun$ng   back  for  parents  who  pay  cash.       In  this  way,  the  increased  tui$on  offsets  the  merchant   service  fees  incurred  by  parents  paying  with  credit  and   debit  cards.  To  avoid  a  sudden  and  drama$c  increase,   some  schools  have  opted  to  increase  tui$on  by  a  small   amount  annually  un$l  the  price  of  the  cash  op$on   essen$ally  makes  up  for  the  merchant  service  fees.  
  41. 41. DFC in Fee Prohibited States Your  school  is  in  one  of  the  10  states  that  do  not  allow   fees     The  biggest  reason  you  should  consider  discount  for   cash  is  if  your  school  is  located  in  one  of  the  ten  states   where  surcharge  fees  are  prohibited,  namely  California,   Colorado,  Connec$cut,  Florida,  Kansas,  Maine,   MassachuseUs,  New  York,  Oklahoma  and  Texas.  Since   you  cannot  use  surcharge  fees  in  these  states  and   convenience  fees  may  be  problema$c  as  well,  the   discount  for  cash  op$on  is  the  best  way  you  can  offset   the  merchant  service  fees  you  pay  for  credit  card   charges.  
  42. 42. Cost-Neutral Opportunities You  do  not  want  to  deal  with  fee  compliance   Discount  for  cash  is  specifically  allowed  by  all  the  major   credit  cards  and  does  not  require  the  merchant  to  comply   with  any  federal  or  state  regula$ons  or  credit  card  rules.   That  means  there  are  no  limita$ons  on  the  type  of  card,  the   brand,  the  type  of  purchase  or  any  disclosures  or  special   no$ces  required.    So  you  may  want  to  consider  offering   discount  for  cash  if  you  do  not  want  to  be  bothered  with  all   of  the  requirements  that  come  along  with  using  surcharge  or   convenience  fees.     Your  parent  community  prefers  it   Diamond  Mind  recently  asked  a  group  of  school  business   officers  whether  they  thought  their  parent  clients  would   prefer  to  pay  a  convenience  fee  or  receive  a  discount  for   cash.    While  the  business  officers  were  split  on  what  they   thought  the  parents  would  prefer,  two  out  of  three  parents   asked  said  they  preferred  the  discount  for  cash.  With  the   discount,  parents  have  a  simpler  transac$on  and  feel  good   about  saving  money.  
  43. 43. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  Discount for Cash works in the 10 states that prohibit fees •  Great option to save money, yet offer addition payment methods •  Reduces the need for other fee types Chapter 7 Wrap up
  44. 44. CHAPTER EIGHT Recurring Billing for Tuition Payments
  45. 45. Understanding Recurring Bills It  is  important  that  your  business  office  keeps  up  with   the  trends  in  the  industry,  and  recurring  billing  op$ons   are  becoming  more  common.  One  method  that  school   business  officers  are  reducing  their  workload  is  through   the  implementa$on  of  recurring  tui$on  bills,  which   allow  parents  to  automa$cally  pay.     Reducing  the  payment  cycle  workload  is  another  way   school  business  officers  can  condense  the  overall  costs   incurred  in  accep$ng  tui$on  payments.  The  reality  is   that  parents  expect  to  see  payment  op$ons  at  their   child’s  independent  school  that  mirror  op$ons  available   elsewhere.     For  both  of  these  reasons,  implemen$ng  a  recurring   billing  program  is  a  good  idea  for  most  schools.  It  saves   the  business  office  hassles  by  reducing  paperwork  and   automa$ng  a  tedious  process.    
  46. 46. Easy Options = Happy Parents Recurring  billing  is  an  arrangement  where  a  consumer   preauthorizes  a  merchant  to  bill  the  consumer's  credit   card  account  at  predetermined  or  variable  intervals   (monthly,  semi-­‐annual  or  annually).  The  amount  can  be   the  same  each  $me  or  can  vary  depending  on  usage   such  as  u$li$es.     Parents  like  this  op$on  because  they  don’t  have  to   track  due  dates  or  risk  late  fees,  and  business  officers   like  it  because  they  don’t  have  to  track  down  lagging   payments  and  will  know  for  certain  when  payments  will   be  made.  There  are  no  unique  rules  that  regulate   recurring  billing,  so  your  only  considera$on  is  pupng   the  technology  in  place  that  is  best  for  your  school.    
  47. 47. Choosing the Right Program You  will  want  a  program  that  is:       Flexible:  Can  modify  the  payment  plan  to  be  whatever  your   school  wants  it  to  be.     Responsive:  Can  easily  be  suspended  or  reac$vated.     Up-­‐do-­‐date:  Can  incorporate  the  latest  rules  and  your   decision  on  surcharge  fees,  convenience  fees  or  discounts   for  cash.     Reliable:  If  you  are  going  to  outsource  this  task,  entrust  it  to   a  company  or  consultant  with  a  proven  track  record  in   payment  acceptance  and  the  independent  school   environment.       One  such  sugges$on  that  meets  each  of  these  requirements   and  more  is  Diamond  Mind’s  Tui$on  Portal  offering,  which  has   robust  recurring  billing  op$ons.  
  48. 48. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  Recurring Billing pre-authorizes a card •  Easily set and forget billing for parents •  Reduce workload and time spent collecting tuition Chapter 8 Wrap up
  49. 49. CHAPTER NINE Should you Hire a Tuition Management Company?
  50. 50. Tuition Management Companies By  now  you  should  have  a  good  sense  of  the  issues  to   consider  prior  to  implemen$ng  an  efficient  and  cost-­‐ effec$ve  tui$on  payment  system  at  your  school.       Fortunately  there  are  also  third-­‐party  solu$ons  that  allow   your  school  to  implement  cost-­‐neutral  op$ons,  manage   and  understand  the  latest  regula$ons,  and  almost  en$rely   take  over  the  heavy  lifing.       Tui$on  Management  Companies  (TMC)  are  common   alterna$ves  to  in  house  solu$ons.  In  some  instances,  a   TMC  may  be  a  good  fit  for  your  school.  In  other  instances,   you  can  avoid  the  extensive  costs,  and  simply  work  with   your  card  processor  and  office  staff  to  implement  the   sugges$ons  in  this  guide.  
  51. 51. Inside TCMs TMCs,  such  as  FACTS,  SMART  and  TADS  take  over  all  or  part  of  a   school’s  tui$on  collec$on,  thereby  relieving  the  school  from  some   of  the  administra$ve  burden.  Generally,  a  school  signs  on  with  the   TMC  to  handle  either  all  payments  coming  into  the  school,  or  just   the  most  administra$vely  burdensome  payments  such  as  60/40  or   the  10-­‐month  payment  plans.  In  this  process  the  TMC  sends  the   bill  to  the  parent,  and  the  parent  pays  the  TMC  directly.  Then  the   TMC  cuts  a  check  to  the  school  that  aggregates  all  the  payments   made,  minus  a  $40-­‐50  fee  per  family.       In  general,  the  smaller  the  size  of  your  school,  the  more  sense  it   makes  to  work  with  a  TMC.  In  addi$on,  because  personal  checks   and  payments  made  over  the  phone  require  more  hands-­‐on   processing,  if  a  significant  percent  of  your  parent  payments  are   made  in  either  of  these  ways,  a  TMC  might  be  a  good  choice.       On  the  other  hand,  if  your  parent  popula$on  largely  pays  online,  a   card  processing  company  like  Diamond  Mind  that  can  offer   recurring  billing,  discounts  for  cash  and  all  the  other  electronic   payment  op$ons  can  meet  your  needs.  Also,  if  your  tui$on   payments  are  mostly  of  the  easy-­‐to-­‐accept  kind  (100%  or  60/40)  a   TMC  may  not  bring  enough  value  to  be  worth  the  associated  costs.  
  52. 52. Choosing a TCM When  choosing  a  TMC,  there  are  various  things  to  look  for  to   ensure  your  school  gets  the  most  bang  for  your  buck.  One  of  the   most  important  aspects  is  to  ensure  that  it  is  user-­‐friendly.  When   choosing  a  system,  parents  will  be  frequently  interac$ng  with  it,   and  they  will  want  something  easy  to  navigate,  and  understand.       Unfortunately  you  may  not  find  Yelp  style  reviews  for  these  sort  of   companies,  so  ask  for  tes$monials  and  customer  case  studies  to   get  a  beUer  understanding  of  what  their  clients  think  about  the   solu$on.     In  addi$on  to  an  easy-­‐to-­‐use  system,  the  TCM  needs  to  be  on  top   of  the  latest  regula$ons  and  changes  to  your  state.  As  you  have   likely  no$ced  while  reading  through  this  guide,  the  ePayment   landscape  con$nues  to  change,  so  it’s  important  that  any  service   provider  follows  the  latest  legisla$ons.  Further,  in  some  cases  the   rule  changes  can  benefit  your  school,  so  it’s  ideal  to  work  with  a   thought  leader  who  can  take  advantage  of  any  new  opportuni$es.  
  53. 53. Questions to ask of TCMs Overall,  ensure  that  any  TMC  is  also  reliable,  efficient,  and   flexible.  Your  TMC  will  be  communica$ng  directly  with  parents   on  your  behalf,  so  you  need  to  ensure  that  their  tone  and   customer  service  ethic  is  consistent  with  the  image  you  seek  to   convey.       They  also  need  to  be  efficient,  as  you  are  looking  to  improve   cash  flow  and  reduce  the  $me  you  need  to  spend  on   collec$ons.       How  much  effort  does  the  TMC  make  when  a  payment  is  late   before  it  hands  the  case  back  to  your  office?  What  are  their   average  processing  $mes?  Finally,  can  the  TMC  work  with   families  going  through  financial  hardship?  Can  they  accept   different  types  of  payment  and  different  payment  plans?       Ensure  that  a  TMC  is  as  flexible  with  parents  as  your  school   would  be.  
  54. 54. Auc$on  Room,  Chris$e's  (1808):  Use  this  space  to  provide  credit  to   the  original  photo  or  graphic  creator   Section wrap-up •  TCMs are ideal for small schools with low internal resources •  Online or ePayments will reduce your need for a TCM •  Make sure the TCM you hire shares the same values, offers free support Chapter 9 Wrap up
  55. 55. Diamond Mind ePayment Solutions           Looking  for  a  mobile   card  reader?  Check  out   Diamond  Mind’s   various  solu$ons   hUp://$onmr   We  are  the  leading  expert  in   campus-­‐wide  payment   solu$ons  for  independent   schools.  We  stand  commiUed   and  ready  to  demonstrate  how   you  can  improve  business   opera$ons  through  the   effec$ve  use  of  credit  card   processing,  ACH,  Purchase   Cards,  and  stored  value  cards.   Many  of  your  peer  schools  across  the  na$on  have  turned  to   Diamond  Mind  to:   •  Speed  up  and  simplify  invoicing  and  collec$ons   •  Improve  school  revenue  and  cash  flow   •  Increase  annual  giving  through  automa$c  recurring   contribu$ons   •  Develop  a  cost-­‐effec$ve  online  payment  and  gif  giving   program   •  Save  on  credit  card  processing  costs   •  Implement  off-­‐line  auc$ons  and  charity  event  collec$ons   processes   •  Manage  school  spending  through  the  effec$ve  use  of   purchase  cards  
  56. 56. Speak to a Subject Matter Expert Diamond  Mind  would  like  to  show  you  how  any  school  can  start  saving   money  today.  Our  simple,  straight-­‐forward  proposal  process  will  result  in  a   detailed,  prac$cal  business  case  you  can  use  to  evaluate  your  op$ons.  Our   commitment  to  a  no-­‐sell  approach  means  there’s  never  any  pressure  from   us.   Call (888) 566-0945 ext 987