Piano World Home Page Forums Our Most Popular Forums Piano Teachers Forum Collecting Tuition via Credit Card/Direct Deposit/Paypal??

I am wanting to revamp how I collect tuition in the new school year this September. In my own personal life I rarely write checks anymore. I'm thinking it might be easier for parents if they could pay me online, either through their bank or via Paypal (or other venue).

Any recommendations? What has worked the best for you?

Here in Switzerland checks are extinct. All my students pay me online and it works very well. I issue them an invoice and a payment slip (not sure how that works where you are) with an individual invoice number. I can then go and track the payment online really easily. If they don't want to pay me online they can also take it to a past office and do it there.

Obviously no one complains about it here because it's the way absolutely everything is paid, but I must say after mucking around with checks in Australia and the UK this system is so much better!

Paypal can be dangerous, since they are not a bank and can freeze your account at any time for any reason. Not that I have had any problems with them, but there are many stories on the Internet about them.

As far as I am concerned, there's no good way to do online payments in the US, at this time, for someone who is not taking online payments exclusively.

There are programs to take Visa and Mastercard in person. I think those are reasonable for a home / small business.

In the UK at least, there's no way to collect payments by credit card without somebody else taking a cut. That's true with PayPal and the like as well. Cheques may be a pain, but you get the full amount. I've never had a problem with PayPal other than that they take a cut, but they generally favour payers over payees, so the potential for problems is always there.

In the UK, a straight bank-to-bank transfer organized over the telephone, or done the payer's bank's on-line system, usually costs nothing and only takes a few days at most. But the facility seems to be rarely used.

I have three students who pay via their bank's check service. I get a check from their bank on the 1st of every month. They don't have to remember and it's always on time.

I have two other families who give me a stack of checks 6 months out and I cash one each month.

I've been apprehensive to do paypal, because of the 3% fee. Not sure if I should eat that or make the parents pay for it.

PayPal is pretty keen that business users swallow the fee, although they don't insist on it as part of their terms -- so long as the business makes it clear to the customer that the customer is paying the PayPal fee.

If you try to pass the fees on to your customers then I imagine many of them will not want to pay that way, particularly if they can just as easily hand over a cheque. And if you don't offer any alternative payment method they'll see it as a fee raise. Which, for them, of course it is.

Depending on where you live, the decision may have already been made for you. In some states, it is illegal to charge the customer a fee for using their credit card.

More info here (see "Truth and Lending Law, 1984).
http://fso.cpasitesolutions.com/premium/le/06_le_ic/fg/fg-merchants.html

If you are using Chase Bank, they have a very easy to set up bank to bank transfer name " Chase Quick Pay "

This is free, it is not an automatic deduction from parent's account, you have to send a "request" and they will respond then the money will transfer from their bank account to your bank account, free!

Only one party need to be a Chase Bank customer. There is a few step to set up initially for parent's part, but after that, it is as easy as pie, very very easy!

If you have an Android, iPhone, or iPad, check out www.squareup.com.

If you accept credit cards, the fees you pay are equal to or greater than what Paypal would charge for a credit card payment. I accept Paypal, and as soon as the money is available I withdraw it to my bank account. I do not keep funds in there. Most parents, however, pay cash or check.

I have never had an issue with Paypal, but I don't use it for high volume either.

I rarely write checks either, but I pay online via my bank. If there's a payee that doesn't take electronic payments, then the bank mails them a check. I've gotten these 3rd-party checks in the past without problem. So I think if people don't want to write a check, there are many ways around it.

I could easily charge that fee so long as I didn't call it a fee, and offered a "discount" for those paying by check, right?

Wow, thanks for that link.

As far as I can tell this blows every other options out of the water (I've been doing some research in the past few months).

I'm signing up right now

To me (and likely, your customers), that is just semantics. If you charge $55 per hour, but then suddenly say I've raised my rates 3% to $56.65 and coincidentally have also begun to accept credit cards at the exact same moment, it will appear obvious that the increase indeed represents the illegal (in some states) credit card charge. Those aware of the law (and take prejudice against the charge), may resent that fact, and in the extreme, take their business elsewhere. I would agree, this would seem extreme over $1.65, you never know how people will react, particularly when it comes to the "principle."

Here is one man's rant.
http://www.bustachange.com/charging-you-to-use-your-credit-card-is-illegal/

With that said, however, I believe you are correct that the semantics gets you around the law.
http://www.fdic.gov/regulations/laws/rules/6500-500.html#fdic6500167

"(a) With respect to credit card which may be used for extensions of credit in sales transactions in which the seller is a person other than the card issuer, the card issuer may not, by contract or otherwise, prohibit any such seller from offering a discount to a cardholder to induce the cardholder to pay by cash, check, or similar means rather than use a credit card."

In the context of your question, the choice here is a business issue (is it worth potentially losing a customer over a trivial amount), not a legal one (it appears).

Hope this helps.

Oddly, perhaps, in the UK the law changed not that long ago to make it _lawful_ for retailers to charge extra for credit card transactions. (Actually, the law makes it unlawful for credit card companies to insist that retailers who deal with them do not charge fees separately; but it amounts to the same thing for the customer.)

If you don't charge extra for credit card transactions, then anybody who isn't using a credit card is paying to support those who do. So these days many business do, quite legitimately, charge fees for credit card use, and many people prefer to find other ways to pay.

Having said that, I suspect that credit card usage in the US is far more ubiquitous than in the UK. We use credit cards a lot, but not as much as in the US (I think). So most likely our priorities are a bit different.

The Chase solution, right? I didn't see any holes in it either and am signing up.

All this is preparation for the fall for me. I don't think I'll make any drastic changes until then.

I believe in the US is it unlawful to charge extra for credit card transactions vs. cash or check (i.e., pass the fees along to the customer). However, you can charge more across the board to cover the fees. If you consider that not everyone will use credit cards or paypal for their payment, you wouldn't necessarily have to increase your rates to exactly the % charged to you. You may want to just consider this fee in when you increase your rates for the next year.

Sorry, meant to hit quick quote. The upsquare solution.

Since I have not raised my rates in 4 years, I was planning a tuition increase this Fall. I would just figure in the cost of the extra 2-3% that it would cost me to do credit card or Paypal.

Yes, I've heard from several sources that it is illegal to tell parents they would have to pay more if they want to use their credit card.

Edited....I guess the credit card companies have the right to impose whatever rules they see fit. It doesn't seem right, but we agree to those rules when we sign the agreement.

But again, I use my CC for everything I can and pay it off each month. Because I like to save money, it would sure cramp my style to have to write checks or pay *gasp* cash!

I guess it makes the most sense to charge a little extra for lessons to cover the few people who may use a credit card. If my student's parents are like most, they like things SIMPLE!

I think that was the Square system.