Professional Services Payment System
There are numerous business types that have heretofore elected to forego acceptance of credit and debit cards. Typically, these business owners singularly attribute their decision not to accept cards to one factor: the cost of acceptance. Generally, these business types share several common characteristics:
- Their average payment exceeds $500.00; thus the cost per transaction is significant
- Their client/customer base is accustomed to having to pay by other methods
- Market forces (competition) have not forced them to acceptance
By way of example, let’s assume a flat bankcard (Visa, MasterCard and Discover) discount rate of 2.75% for key-entered transactions and examine the merchant’s transactional cost:
Professional Services Firms
Professional Services firms such as accountants, attorneys, insurance and real estate brokers, property management firms, physical, nutritional and mental health therapists all have higher transaction amounts and many of these do not accept cards or, if they do, only agree to do so as a last resort; refraining from advertising the fact that card payment is an option.
Why, for instance, would a property management firm (lessor) offer to accept credit and debit cards from their tenant (lessee), whether commercial or residential, when these lessees are accustomed to paying rents by check? Clearly, in this example, the merchant has motivating tools such as contractual late payment fees and, ultimately, eviction notices to aid in the collection of delinquent rents. Why should the lessor volunteer to absorb an unnecessary expense in order to make the payment process ‘easier’ or ‘more convenient’ for the lessee? Frankly; they wouldn’t. However; if they would benefit from acceptance in meaningful ways and were able to sufficiently mitigate the cost of acceptance, then the value proposition becomes worthy of further consideration.
What are the benefits to the lessor in this example? Websites are workhorses. They’re on the job 24/7/365. Payments made through a well-designed user interface, tailored to model the merchant’s business profile, detail the specifics of exactly what’s being paid, including the unit number. Further; that payment data can generally be imported and easily posted to accounting software; saving bookkeepers valuable time and eliminating data-entry errors. Then there is the obvious benefit: tenants often have the need to leverage credit in order to pay on time. This saves them on late fees, establishes a solid credit history and they reap the added benefit of the rewards points associated with their card. In turn, this improves the lessor’s cash flow and reduces their collection efforts.
The lessee is willing to pay a fee to make payment by card, at their convenience, from anywhere at any time through the use of any web-enabled devise, including their smartphone. Now here’s the best part; the lessee who does not have this need will naturally gravitate to the status quo and pay by check in order to avoid the fee. The merchant gains the benefits and uses the convenience fee to regulate usage. Everybody wins! The same principle applies to other professional service merchants. CPAs aren’t likely to experience a major shift in payment method as a result of accepting card payments through their website. Clients who would benefit by paying with their card gladly absorb the convenience fee and those with adequate cash resources continue to pay by check. The same applies to attorneys and other professionals who invoice their clients by mail. For this reason, Cashbox has built an invoicing function into PSPS.
Configure the payment through our back office system and simply click the “Send As Invoice” button and the recipient completes payment by card through the alternate payment channel; your website.
Convenience Fee Dos & Do Nots
Why is that important? Let’s examine the rules pertaining to Convenience Fees. Per the card association (Visa, MasterCard, Discover and American Express) regulations, merchants may elect to pass through to the cardholder a flat, fixed fee for the use of an alternative payment channel through which the cardholder chooses to make payment. This convenience fee represents the path to significantly mitigating the cost of acceptance. To comply with regulations, the merchant’s website becomes the alternative payment channel. The convenience fee must uniformly apply to all payment methods accepted through the website and cannot be applied to scheduled recurring transactions. Since Visa Regulations prohibit assessment of percentage-based convenience fees, in order to accept all bankcard brands, the convenience fee must be a fixed, flat dollar amount, be clearly disclosed and be added to the total transaction amount prior to authorization by the cardholder. This presents challenges when payment amounts vary over a considerable range. However it is possible to zero in on the cost of the average payment. Do you want the fee to cover all of the cost or perhaps you prefer to split the cost with the cardholder? Each merchant determines their own convenience fee based on their business goals. Cashbox offers this simple online calculator to assist in determining the appropriate convenience fee for your organization. Plug in your average payment and the percent you want to pass through to the cardholder and it delievers the resultant convenience fee.
Simple Implementation and Easy to Use
Cashbox developed the Professional Service Payment System (PSPS) to meet the specific needs of a wide range business profiles. We make it incredibly easy to implement; just add a “Make Payment” button to your website and we do all the rest. Through a structured interview process, we configure your individual payment site with the appropriate products, fees and content. We add your logo and modify the terms and conditions to your specifications. These are just the early benefits of our free, unlimited support program. Further, Cashbox guarantees to meet or beat your current bankcard pricing, if you currently accept Visa, MasterCard and/or Discover. Just answer a few questions and provide us your last two month’s bankcard billing statements. We’ll present a comparative analysis at the same time we take you for an online tour of PSPS that has been custom tailored for your firm. Take a test drive and discover precisely what our system can do for your organization. Learn how PSPS cuts cost while enhancing operations and improving cash flow. Achieve more; pay less. It’s a winning combination! Invest a half hour and we’ll make a believer out of you, we promise!