Every day, millions of people pay for items online. Utility bills, mortgage payments, cell phones – almost everything you CAN make a payment for, you can pay for using a web service.
As a matter of fact, those few times I get a bill that I’m unable to pay for online, it’s really a nuisance to me. Taking out a checkbook, finding an envelope and a stamp and mailing in a payment seems like such a cumbersome task after the efficiency of click-point-and-pay options that I have come to expect. Also, the quicker it is for me to make the payment, the more likely I will do it as soon as I can see the bill and the less likely that billis going to sit on my desk for a week or two until I can find the time to send it out.
In today’s environment, electronic payments are the new normal. They are easy to use, fast, efficient, and in most cases less risky. These attributes combined with rapidly increasing consumer preference have made electronic payments ubiquitous across all businesses and services.
This is no exception in education. More consumer interactions are migrating toward an online environment where the payment is almost universally done in an electronic form. Whether it’s applying to school, ordering books, registering for an event, or paying tuition, that payment is increasingly happening online via a computer or mobile device.
As schools large and small embrace electronic payments they are faced with the confusing task of controlling costs, streamlining processes, achieving compliance and delighting customers.
There are many factors for schools to consider and things are not always as clear as they should be, resulting in a less than optimal solution for both your school and campus community.
- How do you protect yourself from unanticipated processing costs, both direct and indirect?
- How do you efficiently manage payments across multiple channels and vendors?
- How do you assure you control your risk exposure and PCI compliance obligations?
- How do you improve your collections, campus commerce and enrollment management activity by making sure your students and families can pay in a convenient and timely manner?
Payment processing costs vary widely and are often difficult to understand. Information is hard to obtain and actual costs can be difficult to predict. Rates are often quoted in “as low as” propositions with scarce details about qualification. Additionally, reserve requirements, holdbacks, surcharges, minimum fees, administrative fees, statement fees, compliance fees and other unexpected expenses can all have a significant impact on your budget.
Some tips to help you manage your processing costs:
- Calculate your average cost of payment acceptance by taking total payment processing costs divided by the number of payments processed. This can help take away much of the “noise”.
- Ask your provider for an interchange analysis. Ask questions so that you fully understand what is driving variations in cost. Some costs vary by things that are less in your control, such as the card type the customer presents or the channel in which it is provided, while others can vary by how you set up, or the manner in which you submit transactions. This process will help make sure you are qualifying for the best rates.
- Take risk into account. For example, if you are asking your provider to insulate you from future increases in network fees which are out of their control, they are going to demand to be compensated for that risk. In order to have price certainty, it may be worth it to you to understand that certainty comes with a cost.
It’s easy to find yourself in a position of multiple payment solutions happening across campus. Electronic checks might be running through bank uploads you have to coordinate. Card services might be placed with a separate vendor (or two or three) who promised to save you a couple bucks a month. Different card terminals and mobile readers can often begin to appear in departmental offices and events. Each of these requires additional time, effort and expense to manage and reconcile. Choosing a single provider can minimize your vendor management costs and give you greater pricing leverage. As Andrew Carnegie once said, “The wise man puts all his eggs in one basket and watches the basket.
Every merchant needs to be on top of PCI compliance and the safeguards it defines. No vendor can completely assume that responsibility on your behalf. However, by outsourcing the payment process to a certified partner you can offload the more intense and expensive elements and reduce your risk exposure in a meaningful way.
The true measurement of a payment acceptance solution ultimately lies in how effectively you are generating sales and collecting receivables. You might have the most efficient process or lowest transaction costs possible but if it can’t be used where, when and how it’s needed, you will fail to meet your goals. If your customers cannot engage you in a timely manner, and if you cannot or will not accept the payment methods they prefer, you risk losing the opportunity. To most effectively collect on your student accounts and enrich your campus commerce offerings, you require a multi-channel approach that can support your customer’s diverse expectations. Looking only at the cost of credit cards, for example, misses an entire half of the equation. Sure, credit cards can be expensive; however, they provide consumers with convenience and merchants with payment certainty and consumers will often buy more, give more, or pay more timely if given the option to use them. Those factors may not be enough to justify the cost, but they are worth considering.
At TMS, we process billions of dollars in payments annually. If you would like a free, no obligation review of your current cost of payment acceptance and payment processes, click here and we would be happy to provide a comprehensive review.