[Note: The Online Billing option is required to receive payments.]
To accept electronic payments, your organization has 4 options:
- Credit cards through payment gateway
- eCheck through payment gateway
- ACH (Automated Clearing House) - bank account to bank account transfers (this option is similar to eCheck)
Credit cards may be used with eCheck or ACH. The PayPal option is exclusive. These options vary both in the user experience (the PayPal interface is less intuitive) and the fees.
The credit card, eCheck, and ACH options allow a user to store credit card and/or bank accounts in the system. Debit cards are currently not supported, but this option is unnecessary with eCheck or ACH. The user is then able to make payments by choosing the payment option and making a single click to make the payment. If your organization chooses to accept credit cards, you will need two different providers, a Merchant Account provider and a Gateway provider in addition to your bank (although some banks will provide the merchant account). If your organization chooses only to accept eCheck, you will only need a Gateway account provider. ACH is setup directly with your bank and does not require a merchant account or a gateway account.
Merchant account. This provider actually processes the transactions from various card methods (terminals, internet gateways, etc) to your checking account. Some of the largest are FirstData, Chase Paymentech, Wells Fargo. If you already accept credit cards then you already have a merchant account. Some banks (like Wells Fargo) can set it up with your account. These merchant account providers are the ones that charge a varying percentage of the transaction plus a fee based on volume, etc, so it is important to get the details. If you don't have a merchant account, you can apply for a merchant account at the same time as the gateway account from the link in section b (below).
Gateway account. There are hundreds of providers, but we do favor Authorize.net since they are established and reasonably priced and we do business with them already. Sage Payments and PayFlow Pro are 2 other gateways that we currently support. We may be able to support others for an additional setup fee, but you should first check with us before signing up so that we can check for compatibility. Because we are an authorized integrator / reseller for Authorize.net, we can help you with the setup for this gateway if you go to Authorize.net gateway setup. Note that the gateway provider will also charge a monthly fee and a small transaction fee.
ACH account. We currently are set up to handle ACH payments through Wells Fargo and Fifth Third. Let us know if you would like to use a different bank. This payment option looks like an eCheck to the user, but it has lower fees due to batch submission. This is set up directly with the bank.
PayPal handles the functions of both the Merchant and the Gateway accounts. This option takes the user to the PayPal website for processing transactions and then sends them back to Schedule Master after the transaction is completed. From the PayPal site, a user can make payments from credit cards, debit cards, or a PayPal account. The PayPal option requires the user to go through multiple steps to complete the payment.
What kinds of fees are involved?
[Note: these are fees paid to financial and other third party providers]
- Credit card (through the payment gateway): Typical merchant fees start at around 2.9% for credit card transactions and can be lower depending upon the total transaction amounts. Typical fees from the gateway provider might be $99 for setup, $20/month, $0.10/transaction and $0.25/daily batch. The fee schedule from Authorize.net can be see in the following article. Authorize.net pricing
- eCheck (through the payment gateway): Although there is no merchant provider necessary to process eChecks, the gateway provider charges a fee starting at 0.75% plus $0.70 per transaction. In addition, expect to pay a onetime $99 setup fee (included in credit card setup if using credit cards) and a monthly fee of $10. Expect ~ 7 day cycle for eCheck payment to post to your account.
- ACH (Automated Clearing House): Though fees vary by bank, you might expect roughly $5 per batch and $0.25/transaction. Batches can be processed daily or held for multiple days to reduce the batch fees.
- PayPal transaction fees are also volume based and range from 2.9% to 1.9% plus $0.30. The percentage varies based on profit/nonprofit status as well as the monthly sales volume. Specifics can be found in the PayPal user agreement under section (8) Fees. PayPal user agreement
Which option is best?
It depends upon what you are looking for, and the decision is not final. It is possible to start with PayPal and later migrate to a payment gateway. Here are some of the decision factors...
- Quickest, easiest setup - PayPal is very quick and easy to set up. A merchant account for use with a payment gateway may take weeks to set up. An ACH account is probably most involved to set up.
- Best user interface - Credit card provides the most intuitive and integrated experience due to being able to store your account information, make a payment with a single click, and get immediate feedback on acceptance or decline of the payment. The next most intuitive is eCheck or ACH, which uses the same interface. PayPal can be a little confusing at first since the payment does not show up on the statement until after it is approved by PayPal, which is usually within a minute or two later. A user must refresh their statement to see the PayPal transaction.
- Management control - Credit card through a payment gateway allows management to initiate payments on behalf of a user. PayPal should only be initiated by the user himself. I recommend ACH and eCheck also only be initiated by the user, but the bank may allow this by management.
- Lowest cost - The lowest cost option depends on your payment volume. eCheck or PayPal may be a low cost option for low transaction volume. ACH is probably lower cost if your eCheck payment volume exceeds $5000/month. Confirm the numbers with your bank.
- Simplest accounting - Credit cards are the only method that have an integrated process for handling a decline making them the easiest for accounting to handle. Failed eChecks and ACH transactions require manual intervention to record the bounce.
- Automated charges - Though invoicing can be automated for dues using any of the options, payment of dues or the outstanding balance can only be automated if using credit card, eCheck, or ACH.