10 Considerations to Help You Optimize Payment Acceptance Processes

Let’s start off by putting the shoe on the other foot.

YOU need to make a payment…..

….you could pay cash – nah, that’s not convenientQuestion marks

….you could write a check – nah that takes too long

….you could send an e-check – nah you don’t get any points for that

….you could use your CREDIT CARD – But Oh NO! They don’t take credit cards

Or better yet – WHAT??? They’re going to charge me EXTRA for using my credit card?

Yes, I know from personal experience you get all that. But from the business side of things of being a merchant, you know that credit cards can get expensive and put a dent in your profitability.

Despite the progress made in recent years, education still lags behind other industries in adoption of electronic payments. Although cost is a major driving factor, your approach to payment acceptance should be balanced.

When considering how to balance your payment acceptance strategy ask yourself the following questions:

1. Who is the payer?

Consider what limitations may apply to your paying constituency.

2. Number of International payments?

What is the size of this payment population and have you minimized both the ease and convenience to both your institution and international payers by offering options beyond international wires, such as China Union Pay, BC Card or JCB Cards?

3. Through what channels are they paying?

Electronic payments of all types are faster than manual channels and new technologies continue to offer enhanced fraud protection.

4. What are the payments for?

Be sure to process payments under the correct Merchant Category Code. This category code can have a significant impact on credit card cost as well as whether convenience fees can be assessed.

5. What is the range of payment amounts?

Know your “average ticket” amount. Credit card processing costs typically vary with the payment amount; therefore, understanding your average, minimum, and maximum payment amounts will give you greater insight into your cost drivers.

6. How many payments?

Receiving a few hundred checks - very manageable most likely. Receiving thousands and thousands intensified by peak cycles can become a pain point in your process.

7. Is collectability a concern?

Consider the additional collectability concerns with the workload and delay of bounces for Checks, EFTs and ACH.

8. Do I want the payer to buy more?

In the retail space, studies have shown that the cost of credit card acceptance is more than made up for in additional sales. So let me rephrase the question. Do we want the payer to pay the full amount as quickly as possible? I am sure you can connect those dots.

9. Can I dictate payment method?

This requires careful consideration based on payment category and the payer constituency. For example, alumni can have significant influence on payment methods based on their payment preferences.

10. What is the value of customer convenience?

The real question here is: At what cost and what benefits to the institution does customer convenience bring in the form of increased sales, reduced delinquency and increased advocacy?

To learn more about formulating a strategic approach to payment acceptance, download our free eBook which provides a guide to helping your institution optimize your payment acceptance processes.

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Craig Lockwood, President, TMS

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