Demystifying Electronic Payment

Gateway: Many of you already process credit card payments through a terminal or point of sale system at your child care center. To accomplish this you had to set up a merchant account which processes your credit card transactions, deducts transaction fees and other charges, and then deposits the remaining balance into your bank account. When it comes to processing credit cards and other transactions such as ACH on the web, or through an app, you will need one additional party known as a gateway. Many merchant account providers are affiliated with a gateway, or in some cases are gateways themselves. In either case fees for these services may or may not show up on your bill as many merchant account providers build the fees into their transaction fees and other charges. Gateway fees can range between $15 and $50 a month for access to a gateway if you are processing credit cards online. Remember that having a merchant account does not automatically mean that you have a gateway or can process payments online as these services must be set up explicitly.

Choosing your providers: With that said, we can now dive into deciding which options work best for your organization. There are numerous providers when it comes to online payments for your organization beginning with off-the-shelf providers such as PayPal and Square. While off-the-shelf providers are enormously popular, easy to set up, and offer freebies they also represent the high side of individual transaction rates. Other child care systems also provide these type of services usually by reselling them packaged with their existing products and charges. These services can be a good option for in-home childcare businesses, or child care centers that are just getting started and have a small number of transactions each month. Most banks and credit unions can provide you with individual transaction rates that often significantly reduce costs to your organization overtime. Additionally, substantial savings can be had by going with a value-added-merchant service providers like our partners at First American. These partners offer “rate matching” and a host of other services in addition to the ability to process ACH transactions. This is an important consideration as most off-the-shelf services do not work with ACH, which is increasingly popular among child care customers.

At the end of the day you want to choose a service provider that will be transparent with costs, provide the greatest range of services, and meet the financial needs of both your customers and your organization. A great first step is to check with your current bank or credit union which will provide a good option, or at least a benchmark for vetting other value-added partners like ours. Please let us know if you have any questions about electronic payments for child care centers, or any other child care management tips you would like for us to provide in the future!