Payment Processor Fees

[Jim-LC]

Hello. My small company takes monthly amounts from customers relating to childrens activities. We have received several complaints regarding payment processor fees that we pass on (Stripe). We do not profit from this, and as such if we didn't need to charge them we would not.

The amounts can change each month dependent on number of activities their child receives, so this is not a fixed monthly amount. As a new business owner, surely there is a way to take payment automatically, without using GoCardless, Stripe, etc.

Despite researching online I think I am becoming a bit confused between standing orders, direct debits... and I hope there is a simple answer. We do not want parents to pay us via bank transfer as we have over 200 parents, so this is not feasible for our small team (me!) to chase and reconcile these payments, not to mention the cash implications of parents paying when they choose and building up arrears.

Any advice greatly appreciated, as we absolutely do not want to charge fees.

Best wishes,
James

 

[finleydesign]

I could be wrong but giving payment processing fees to customers is illegal, you can't charge for using a payment method. Its suppose to be a cost you incur, not pass on, no wonder you have complaints, you offer no other option for people to pay and then sting them for a charge which is not their problem

I think your asking for a way to take payment automatically for free! What company is going to process payments for free and/or why do you think you can do this without using a merchant service?

 

[pentel]

We have received several complaints regarding payment processor fees that we pass on (Stripe)

This is illegal to do.

You need to allow for these when setting your prices.

 

[Green_Seanie]

Hi Jim.

If you wanted to avoid cost of payment processing fees, you need to ask the customer to send a bank transfer. As far as I’m aware, this is the only way to receive money without incurring a fee.

As for charging clients extra for payment processing, I would advise against it. Inflate the original price to include other operating costs, but don’t have a separate additional fee. If you add on 2-3%, this should cover the cost.

 

[Jim-LC]

Hello. My small company takes monthly amounts from customers relating to childrens activities. We have received several complaints regarding payment processor fees that we pass on (Stripe). We do not profit from this, and as such if we didn't need to charge them we would not.

The amounts can change each month dependent on number of activities their child receives, so this is not a fixed monthly amount. As a new business owner, surely there is a way to take payment automatically, without using GoCardless, Stripe, etc.

Despite researching online I think I am becoming a bit confused between standing orders, direct debits... and I hope there is a simple answer. We do not want parents to pay us via bank transfer as we have over 200 parents, so this is not feasible for our small team (me!) to chase and reconcile these payments, not to mention the cash implications of parents paying when they choose and building up arrears.

Any advice greatly appreciated, as we absolutely do not want to charge fees.

Best wishes,
James

I could be wrong but giving payment processing fees to customers is illegal, you can't charge for using a payment method. Its suppose to be a cost you incur, not pass on, no wonder you have complaints, you offer no other option for people to pay and then sting them for a charge which is not their problem

I think your asking for a way to take payment automatically for free! What company is going to process payments for free and/or why do you think you can do this without using a merchant service?

Oh dear... thank you so much. I had no idea.

I have switched this off on our billing system and will be notifying and tomorrow will be refunding every parent backdated to when they commenced. Thankfully this was late summer 2023.

Thank you again.

 

[Jim-LC]

Hi Jim.

If you wanted to avoid cost of payment processing fees, you need to ask the customer to send a bank transfer. As far as I’m aware, this is the only way to receive money without incurring a fee.

As for charging clients extra for payment processing, I would advise against it. Inflate the original price to include other operating costs, but don’t have a separate additional fee. If you add on 2-3%, this should cover the cost.

Thank you very much for your kind reply. We will absorb as a cost of business and review pricing ahead of the new school year in September.

 

[Jim-LC]

This is illegal to do.

You need to allow for these when setting your prices.

Thank you for your response. We will be refunding each customer and removed this from our billing going forward.

 

[fisicx]

But….

You can increase the cost of the activities to cover your expenses.

Or as already suggested accept a bank transfer. I teach Tai Chi and all my students pay by bank transfer. No cost to anyone and it goes directly into my bank account.

 

[DontAsk]

You can also offer a discount for cash or other forms of immediate payment such as a bank transfer.

 

[Nighthawk Software]

What you were doing is not necessarily wrong, you just need to be careful on the wording.

As mentioned, you cannot pass on card transaction fees to the user - if they wish to spend £10, then you should charge them £10, not £10 + £2 card fee.

You can however add on service fees - so nothing stopping you from charging a £2 fee, you just need to include this in the original price - so £12. You can then break it down and show that the £12 consists of £10 plus a £2 service charge.

Second - I'm not sure exactly what you mean by "As a new business owner, surely there is a way to take payment automatically, without using GoCardless, Stripe, etc.".

There are two ways of gaining payments from a customer:
1) Getting the customer to send the money to you through direct debit. This involves them setting up either a one off or recourring payment in their bank account to transfer to yourself

2) Charging them through a payment gateway
This involves using either Stripe or GoCardless, and processing a payment towards them either as a one off, or recurring monthly payment.

There arent any other alternatives really I'm afraid.

One thing to note - typically services like GoCardless, Stripe etc tend to charge a certain percentage "+ 20p". They also often cap the charge - "x% + 20p, up to a maximum of £y". In all of these cases, it works out cheaper to take larger payments vs small payments.

If possible charge them yearly/quarterly intsead of charging per transaction - this can reduce the overheads significantly.

 

[antropy]

tomorrow will be refunding every parent backdated to when they commenced. Thankfully this was late summer 2023.

As a startup business I wouldn't be too hasty doing that.

Paul.

 

[antropy]

You need to allow for these when setting your prices.

Simply this ^

Paul.

 

[DontAsk]

1) Getting the customer to send the money to you through direct debit. This involves them setting up either a one off or recourring payment in their bank account to transfer to yourself

Only payees can setup direct debits, and there are costs involved. I suspect not applicable to this "small company".

 

[eteb3]

Why is it illegal to add charges for the payment method?

 

[fisicx]

Card surcharge ban means no more nasty surprises for shoppers

Hidden charges for paying with a debit or credit card will be banned from today (13 January).

www.gov.uk

 

[antropy]

Card surcharge ban means no more nasty surprises for shoppers

Hidden charges for paying with a debit or credit card will be banned from today (13 January).

www.gov.uk

Indeed, yet I believe the government do it themselves when paying your tax!

Paul.

 

[pentel]

Why is it illegal to add charges for the payment method?

To discourage the use of cash.

 

[AmazonGeek]

Despite researching online I think I am becoming a bit confused between standing orders, direct debits... and I hope there is a simple answer. We do not want parents to pay us via bank transfer as we have over 200 parents, so this is not feasible for our small team (me!) to chase and reconcile these payments, not to mention the cash implications of parents paying when they choose and building up arrears.

Any advice greatly appreciated, as we absolutely do not want to charge fees.

These days it is a lot easier to automate a lot of this. Most online banks like Starling and Tide integrate with your accounting software via an automated feed. Transactions will be imported in near real time and you can set up invoices to repeat and automatically be emailed to your customers. When they pay, it is quite easy to match the payments to the invoices. I use Xero for this and it is a piece of cake.