The Martial Art School Owner’s Guide To Doing Your Own Billing

Posted by Mike Massie on August 4, 2010

How To Easily Accept Credit Cards and Electronic Payments

Many martial arts school owners would like to accept electronic payments so they can do their own martial arts billing at their school, but either don’t know how or think they have to hire a billing company to do it.

You can do a better job collecting your own tuition than a billing company, for a fraction of the cost, using the services listed in this article.

In fact, you DON’T need a billing company to accept electronic payments at your school… and you can even do your own monthly billing very easily (and save money on billing too) by using one or a combination of the following services.

There are several ways to do this… some methods are more “DIY” and require you to perform a few steps to set things up yourself. Others are more “hands off” and require a minimum of technical knowledge to set up.

I have listed various in-house billing solutions below from the “easiest” to the most technical, along with links to their sign-up pages.

Method #1: Getting a Merchant Credit Card Account for Electronic Billing In-House

Description: This method involves billing your clients directly through the credit card companies by using your own merchant credit card processing account and some sort of online payment gateway system. Online payment gateways work like a credit card processing machine, except that you enter the client’s information by hand through a secure online system. Typically, they allow you to process payments in a multitude of ways.

Ease of set-up: Relatively easy as the merchant credit card company will set you up and walk you through it.

Expense: Can be much lower than other methods listed below if you have good credit and ask for a “card present” account (that means you only run credit cards when the customer is in front of you with their credit card or debit card in hand).

Types of payments you can accept: Credit cards, debit cards, electronic checks (bill checking accounts).

Automated recurring billing available: Yes. What many school owners don’t realize is that, when you sign up with a martial arts billing company, they simply run your accounts through their own merchant account and then charge you a percentage on top of the discount rate they are getting from Visa, Mastercard, AMEX, Discover, and their own bank. Doing this yourself allows you to cut out the middle man and save a ton of money over the long haul.

Set-up fees: None.

Rate: As low as 1.26% and .05 cents a transaction for electronic checks. Definitely the lowest on the list overall.

Speed of Payment: Fast. Money is transferred to your checking account in 48-72 hours.

Drawbacks: If your credit rating is extremely poor, you may not be accepted, or you might have to pay a slightly higher rate. This is rare though, so don’t be afraid to apply.

Best for: Established business owners and those with a decent credit history who want the absolute best rates.

Link to Apply: Click here to apply

Method #2: Using Your Own Merchant Account In Conjunction With A Web-Based Billing Application

Description: This method involves using an online billing application in conjunction with a merchant credit card processing account or a third-party service like PayPal to manage, track, and process your payments.

Ease of set-up: Typically it’s fairly easy to set up your account. The whole concept of using web-based billing applications is to make it easier to setup, process, and track your billing accounts. With contemporary services like Freshbooks, user interfaces are much more intuitive and feature-rich than solutions provided by most payment processing companies.

Expense: Typically these services offer free trial accounts that allow you to test their service with a small number of clients (3 or less). You can then upgrade your account based on the number of client accounts you need to bill each month using the software. Rates start as low as $10 a month up to $80 a month for an unlimited number of client billing accounts. (Note: Some services may charge an additional fee for automatic recurring billing capabilities.)

Types of payments you can accept: Credit cards, debit cards, electronic checks (bill checking accounts), depending on your payment processor.

Automated recurring billing available: Yes. The most popular applications are actually designed to make it easy to schedule and process recurring billing payments for your clients. You can also bill your clients via email invoicing.

Set-up fees: None, just a monthly subscription fee.

Rate: Whatever your payment processor charges.

Speed of Payment: Depends on the payment processor.

Drawbacks: A monthly fee on top of your processing fees. However, for the ease of use and advanced bookkeeping and tracking advantages, it is worth it to be organized and to automate your billing and bookkeeping tasks each month.

Best for: Business owners who want convenience and don’t mind paying a little extra for it.

Links to Providers: Freshbooks – Invoicera

Method #3: Using A Third-Party Merchant Services Provider

Description: This method involves using a third party provider, such as PayPal or 2-Checkout, to process your payments.

Ease of set-up: Typically requires a bit more technical know-how, as you will need to navigate their account administration panel and set up various payment methods according to your needs and preferences. In addition, you may have to know some HTML and have basic web design skills, as you’ll need to place the code for payment buttons on your websites. (Note: PayPal now has a recurring billing function you can sign up for which allows you to enter and process your client’s payments online, but it requires a monthly fee for access.)

Expense: Higher than if you get your own merchant credit card account, with processing fees averaging about 3.5%. However, if you want to get up to speed quickly, or if you have spotty credit or don’t have a business bank account set up, this may be the best option for new instructors.

Types of payments you can accept: Credit cards, debit cards, electronic checks (bill checking accounts).

Automated recurring billing available: Yes. (Note: Automated recurring billing comes standard with a 2Checkout account, but with PayPal you have to apply for it).

Set-up fees: Between $15 and $50, depending on the service and plan you choose.

Rate: As low as 2.2% with a .30 cent per transaction fee for PayPal. 2Checkout charges 5.5% with a .45 cents per transaction fee.

Speed of Payment: Fast with PayPal – with the exception of e-checks, your money is transferred to your PayPal account immediately, and you can withdraw it by transferring it to your checking account which typically takes 48-72 hours. 2Checkout transfers money to their vendors weekly via electronic deposit of funds.

Drawbacks: Higher processing rates, and you’ll need someone with a little technical know-how to set it up. Also, 2Checkout requires that you have a website setup with all your purchase information online before you apply.

Best for: Someone who wants to get up and running fast with no hoops to jump through to qualify; the technically inclined; those with less than sterling credit; and, new instructors who are just starting out.

Links to Enroll: PayPal – 2Checkout

-  Have questions or comments about doing your own martial arts billing? Post them below!

Money-Saving Tip: How To Save On Your Credit Card and ACH Processing

Posted by Mike Massie on May 13, 2009

Every time you do this, you might be losing money.

Most martial arts school owners (and most small business owners, for that matter) are blissfully unaware of what a raw deal they’re getting on their credit card processing and ACH processing rates.

The fact is, the average school owner loses thousands of dollars each year, simply by paying excessively high rates on their credit, debit, and check transactions.

So, in keeping with my recent commitment to give you actionable ideas each week, I am going to use this blog post to explain:

1. How school owners end up overpaying for their payment processing,
2. And what you can do to save money on your merchant credit card processing.

Credit Card Processing, ACH/EFT Service Providers, And How You’re Getting Hosed

Nearly every business uses credit card processing in some shape or form. Most retail businesses have to have a credit card processing machine, because the majority of high-ticket transactions are paid for with credit or debit cards.

If you’re a school owner, I’m sure that you have a merchant credit card processing terminal sitting in your pro shop or office, and that it gets quite a bit of use. And, every time you swipe or key in a card, you’re probably throwing money down the drain (I’ll explain why in a minute).

But, the money you’re losing is not just on credit card transactions… you’re very likely throwing money away every time you process any electronic payment transaction – and that’s because it’s very likely you’re paying rates that are excessively high.

This includes the rates you pay for:

• Swiping credit card transactions in your facility, either for tuition payments, retail sales, or paid-in-full accounts (sometimes called “POS” or “point-of-sale” transactions) -
• Swiping debit card transactions (you may think this is the same, but it’s different – I’ll explain why in a minute) -
• “Keying in” credit or debit transactions, either in your own credit card processing terminal, or into a “virtual” terminal online -
• Processing ACH or electronic check transactions (“ACH” stands for “automated clearing house”, and is the system used to transfer funds between bank accounts in the United States) -
• Any of the above transactions processed on an automatic recurring basis, A.K.A., your monthly tuition billing!

Now, if you’ve been reading my stuff for any length of time, you’ve come to know that I think people who use martial arts billing companies are suckers. Having said that, if you want to pay 7-10% of your gross profits for someone to punch a few keys on a keyboard, be my guest.

But if you’ve been paying attention, you’ve likely done the smart thing and started automating your credit card billing in-house (which is the same thing the billing companies do – with today’s technology, it isn’t that complicated). Bravo! Pat yourself on the back.

However, what you may not realize is that most merchant credit card processing accounts are set up wrong… and most credit card processing sales people overcharge merchants as much as possible on their rates.

Here’s why:

• Banks are the ones who actually process the payments. But in most cases, you don’t buy your merchant credit card processing services from the banks…
• Instead, you buy them from a third party that represents the bank. And, they make money on anything they can charge you over and above what the bank charges them to process your account.
• Ethical companies try to get you the lowest rate possible - So if you lucked out and found one, you’re one of the lucky few…
• But some of these third party organizations are fond of over-charging naive, unsuspecting merchants like you – which ends up costing you a bundle. (Sound familiar? It’s what the martial arts billing companies have been doing to you guys for years – but their rates are considered unethical by even the worst of the folks selling credit card and ACH processing for the banks…)
• How do they get away with it? Because the average business owner doesn’t understand how the whole system works, and half the time you can’t make hide nor hair of your processing statement anyway. Fees for this method of processing, different fees for that method of processing, and if you process on the third Monday of May under a full moon at 3 A.M. you pay “x, y, and z” administrative fees… it’s enough to make your head spin.
• And, quite frankly even the most well-meaning of merchant services sales people often don’t know the best ways of setting up an account for different types of merchants. All too often, they treat every business the same, even though the rates on different types of processing vary considerably (swiped, keyed, recurring, and so on).

So, How Do You Fix It?

Well, first off you should know that you can switch processing companies any time you want. It’s a bit confusing, so it helps if you have someone to walk you through it, especially when it comes to reprogramming your equipment.

Second, you need to get someone who knows the system to audit your merchant credit card statements and see where you’re losing money.

My Recommendation…

I have a contact at a company I work with who knows the “ins and outs” of the business. She specializes in lowering merchant credit card processing costs for small businesses.

At my request, she’ll audit your statement at no charge, and if possible get you a lower rate.

Don’t have a merchant account yet?

It’s not that big of a deal to get one – all you have to do is apply. My contact can also help you get set up to accept credit cards, debit cards, and ACH/EFT payments, at the lowest possible rate.

In addition, she can even set your school up so you can easily bill your students automatically each month via credit card, debit card, checking, or savings account.

Interested? Fill out and submit the following contact request form, and I’ll set up an appointment to have her call you directly within a day or two.

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