What is a Surcharge?
A surcharge, often called convenience fees, pass the cost of processing a credit card onto the person initiating the transaction or purchase. In your case, a tuition payment. The convenience fee offsets the cost of processing credit cards, netting the school 100% of the transaction, thus zero cost card processing.
Surcharges or Convenience Fees are extremely common in Higher Education:
A CreditCards.com survey found that 81% of institutions that accept cards charge a convenience fee when students make payments by card. What is equally common is for the convenience fee to be assessed as a single, flat-percentage rate, such as 2.75%, for all credit cards and debit cards. While this approach results in 0% transaction costs to the school, and therefore meets important economic interests, it also produces student affordability concerns. When a student absorbs an additional service fee, she effectively pays more for her education. Moreover, a flat rate service fee forces a student with a low-cost card to subsidize a student with a more costly rewards card. We’ve seen one leading university use language on its payment page to urge its students not to use debit cards because, if they do, they will pay the standard 2.75% service fee, despite most debit cards costing less than 1% to process. Whereas the flat-rate convenience fee creates trade-offs between the school’s economic interests on the one hand and their students’ satisfaction on the other, Intelligent Rate aligns both of these important interests.
Intelligent Rate reduces the institution’s transaction costs to 0% and reduces the fee when cardholders choose lower-cost forms of payment. The convenience fee can be less than 1%.
What is Intelligent Rate?
Intelligent Rate uses real-time card type analysis to adjust the amount of the convenience fee in proportion to what each transaction will actually cost.
How does Intelligent Rate work?
Different costs are associated with different card types. Intelligent Rate is a patent-pending solution that calculates the cost of the card the consumer chooses in real time, as the consumer types her card information within the payment page itself. Instead of charging a flat rate, Intelligent Rate automatically adjusts the amount of the convenience fee in proportion to what each transaction will actually cost. In other words, before the transaction is processed, Intelligent Rate determines the cost of a given card from its card number alone. The result is that consumers with low-cost cards, such as debit cards, absorb a lower fee. In addition, Intelligent Rate gives the consumer real-time information about savings, enabling her to reduce her convenience fee by choosing a lower-cost form of payment, such as a debit card.
Technology creates the fairest way to surcharge:
Intelligent Rate is the fairest way to surcharge or to collect a convenience fee and to save your institution thousands of dollars of processing fees annually.
Talk with Diamond Pay today in order to eliminate surcharges for your educational program!