If you are planning to accept online card payments from your customers, here’s a look at the options that are currently available for childcare providers. And the best part is, not all these systems require you to have a website.
What do you need to do to collect online payments?
The options that are currently available for childcare businesses (after school clubs, pre-schools, creches and activity centres) to collect online card payments are:
- Payment Gateways
- Payment Service Providers (PSPs)
- Integrated Childcare Software
1. Providing an online payment gateway
A payment gateway is a service that authorizes the card payments for your businesses. It lets your customers submit their credit/debit card details through your website and securely passes this information to their bank.
The payment gateway tells you if the funds have been approved by the cardholder's bank, and submits your charges for settlement. The amount is then deducted from your customer’s account and transferred to your merchant account (we’ll come to that later) and from there to your bank account immediately or within 3-5 working days (depending on the service provider). Some of the leading providers are Braintree, SagePay and Payment Express.
Setting up a payment gateway
Before you start collecting your payments online, you will need to set up a merchant bank account - in most cases. A merchant account is where the payments from your customers are held before they are deposited in your account. The set up can typically take 3-4 weeks and can be a tedious and time-consuming process if you are a small business.
Some of the pre-requisites for setting up a merchant account are:
- A detailed business plan and summary of the services you provide
- Account statements and a PNL (Profit and Loss) projection for a minimum of the next six months
- A minimum value transaction of at least £10,000 a month
- A bond of at least £10,000 (depending on the risk posed by your sector)
The typical costs of setting up a payment gateway would include £600-£900 in set-up costs, £50-£100 in monthly fees, plus a transaction fee of 2-4% per transaction.
2) Using a Payment Service Provider (PSP)
These services are easier, quicker and cheaper and accessible for businesses of all sizes. They do not usually charge you anything for set up, and wouldn't need a merchant account or even your own website.
The payment service provider takes on the dual role of a merchant account and payment gateway and helps you collect and manage your payments. Each payment you collect from your customer comes to you after it passes through your payment service provider. Getting started is easy, as all you need to do is provide the details of your business bank account, email id, and answer a few questions about your business. Some of the full-service payment providers are Stripe, Braintree and PayPal.
If you are already using an invoicing or accounting software for your business, make sure it integrates with your existing solution, as it can help you save time on repetitive admin and data-entry.
3) Using an Integrated Childcare Software
Integrated childcare software like Cheqdin offers a full online payment solution- much like PSPs. But they come combined with other centre management feature such as online bookings, invoicing, payment reconciliation and parent communication. As with PSPs, you can get started immediately if you have a business account and email id.
The costs generally include an annual/monthly subscription fee for the software, plus a transaction fee of 1.5-3% per transaction. The rates usually work out more economical than PSPs as the software package offers a wide range of features that cover almost all the administrative requirements of a childcare centre. Plus, you can use the system even if you do not have your own website.
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