With the influx of credit card transactions at childcare and early education centers, the introduction of credit card processing fees is a lot to navigate for many providers and educators. While it’s a great convenience for parents and guardians to be able to use a credit card, it can be complex for many administrators to understand how credit card processing works and the fees that they can incur.
In this article, we will explain the different types of credit card processing fees that may be charged, why they are charged, regulations, and what childcare and early education centers can do about them.
What are credit card convenience fees?
A convenience fee is a fee charged by a business when a customer uses a credit card. This is considered a convenience due to ease, rather than using cash, check, or ACH, and is applied on top of the goods or services that are being purchased. These fees can range from 2-3% percent.
Why are convenience fees charged?
Convenience fees are charged for the credit card processing service. The fee is charged by the credit card processor for the services rendered, in this case, the cost of processing the transaction.
Why should I accept credit card payments at my daycare center?
Accepting credit cards at your childcare or early education center can be a convenience to parents. This can offer you a competitive edge over your competition as trends for millennial parents move towards credit card transactions. Additionally, by processing credit card transactions, you can even offer your parents contactless payments. Kangarootime customers are able to offer families contactless and mobile payments through our Parent App.
What are the rules around charging convenience fees?
Major credit cards have rules surrounding credit card convenience fees to protect consumers. This is important to understand in case your parents or guardians have questions about convenience fees (if you decide to pass fees on to them—scroll to the next section for more on that topic).
- Visa allows convenience fees, but the fee must be clearly disclosed to the consumer and should be for the convenience of using an alternative channel, like online. The fee must be a fixed amount, whether that is a flat fee or a fixed percentage of the transaction.
- Mastercard allows convenience fees if the fee is imposed on all similar transactions, regardless of the form of payment used.
- American Express also allows convenience fees, but the fee must be clearly disclosed to the customer and they must have the opportunity to cancel the transaction if they wish. The convenience fee charges must also be consistent with fees charged on other transactions as to not discriminate against customers who want to use credit cards.
- Discover does not have a policy about convenience fees, but they do require that all credit cards be treated the same, so if credit card fees are charged on one credit card that is accepted, they must also be imposed on Discover transactions.
What childcare and early education centers can do about credit card fees.
Credit card fees will apply any time a transaction is processed.
Childcare and early education centers have two options:
- Pay the fee for their parents and guardians
- Pass the fee along to parents and guardians
There are benefits to both of these options.
If you pay the fee for your parents and guardians when a credit card transaction is processed, this keeps your tuition low for families. Keep in mind that credit card transaction fees can be costly; you may want to budget for transaction fees to ensure that you are not losing money by processing credit card transactions. Consider baking the cost into your tuition pricing so you accommodate for the transaction fees.
Conversely, you can pass along the credit card transaction fees to your parents. While this will be an additional expense on top of their tuition, this can influence their behavior. If they know they will be charged a fee for credit card transactions, they may decide to pay by ACH instead to save money. If a parent or guardian is using a credit card that offers rewards, they may not mind the additional fee since the benefit of rewards points outweighs the nominal fee.
Kangarootime is the leading all-in-one childcare management software for daycares and preschools. With billing and invoicing capabilities, parent communication and staff management tools, and classroom automation, Kangarootime helps childcare centers grow and scale. To learn more about optimizing your center with Kangarootime, visit kangarootime.com.