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PointeMom

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Can anyone shed some light on why certain types of payments must be used for what? Our SO says that competition fees must be paid by cash or check only. I get it. But if my account has say a $600 credit in it from me just making payments online with my debit card, she will not allow that to be used for comp fees. Even though the money has left my bank account and is officially real approved processed money in my dance account - sitting there for days or weeks. Thanks.
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momcrew

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There is a fee associated with credit card payments. My guess is they don't want to eat the credit card fee for competition fees since they essentially go into the account and then right back out again. Our studio is the same way. 
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jackilvsmath

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Exactly what momcrew said. Our studio charges a 4% fee for credit/debit payments for conventions and competitions. Because they take money and then have to pay it back out. They don’t want to pay the fee from the credit/debit company for money they aren’t keeping.
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tappinmom

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Our second studio took extra payments on account all through the year so when comp fees or costumes came due I always had a balance and they would just debit from that for the payment.  The payments were always made using my debit card and it was never an issue.
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123Dance

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The studio is charged a fee from the credit/debit card company.  Our studio won't take credit/debit for entry fees because they are just collecting that money to pay to the competition for us.  If they allowed credit/debit payments, then they would actually be charged fees on money they aren't keeping, so it would cost them money for my child to compete!

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5678StarMom

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I find all of this interesting, because my sister works as a manager at a large bank and they and other banks charge a similar fee for cash handling. I've brought up these added fees to her because I was wondering and she doesn't get it since they have a cash handling fee that's similar. We don't think they are entirely legal either.
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my2miracles

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I totally get the credit care fee but the OP is saying they already processed her credit card and there is $600 on her account in their system waiting to be used for something.  That in my life is a substantial amount of money and I would be demanding it be applied. I think that credit should be applied and then she should pay the remaining balance with cash or check.  It sounds to me like the studio might be cash strapped and I'd be concerned that they already used that $600 on something else.
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PointeMom

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Reply with quote  #8 
Wow. That never even entered my mind. Interesting thought. And yes when I had extra money I would always pay money online to my account just to have it in there. They never gave me any issues about using it for comps until last year. Weird indeed.
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Angel2228

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I'm not sure if your system works different, but when I give money to the studio, whether it's credit card or debit card, I pay using the same hand held machine and they deposit that money into the studios one account. (I could e transfer or pay cash as well) Either way, they deposit into their studios bank account. They pay for the admission or costumes with their credit card, and then they pay the bill or write a cheque from that account. There's a service fee they pay the have their device and take transactions, just as the companies they are making the payment have to pay. So they don't pay the fee twice.
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my2miracles

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Reply with quote  #10 
Quote:
Originally Posted by Angel2228
I'm not sure if your system works different, but when I give money to the studio, whether it's credit card or debit card, I pay using the same hand held machine and they deposit that money into the studios one account. (I could e transfer or pay cash as well) Either way, they deposit into their studios bank account. They pay for the admission or costumes with their credit card, and then they pay the bill or write a cheque from that account. There's a service fee they pay the have their device and take transactions, just as the companies they are making the payment have to pay. So they don't pay the fee twice.


What everyone is talking about is when a business takes credit cards as a payment source, the business has to pay a fee to the credit card company to process the payment.  So you pay $200 to the studio using a credit card and the studio pays $0.70 to the credit card company.  This is standard across all businesses in the US.  Not sure what other countries do.

When the studio pays the competition with a credit card, the competition pays the credit card processing fee.
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123Dance

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Quote:
Originally Posted by my2miracles
I totally get the credit care fee but the OP is saying they already processed her credit card and there is $600 on her account in their system waiting to be used for something.  That in my life is a substantial amount of money and I would be demanding it be applied. I think that credit should be applied and then she should pay the remaining balance with cash or check.  It sounds to me like the studio might be cash strapped and I'd be concerned that they already used that $600 on something else.


No, I don't think that's the case at all.  She put the money on her account using a credit or debit card, which means a 4% fee (approximately) for the studio.  So, of that $600, the studio only receives approximately $576.  So, if she owes $600 in comp fees, and the studio has only collected $576 (net, after the credit card fee) but has to pay the competition $600, then they're losing money!  

We have always had rules about method of payment, depending on what the money was for.  If it was a service provided by the studio (choreo, classes, etc), then we could pay using any method of our choosing, but if it was money they were collecting to pass off to someone else (costumes, comp fees, exam fees, etc.), then it had to be cash.  Otherwise the studio would be paying out of pocket because of the fees deducted by the credit card company.

 
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PointeMom

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Ok. Now it makes sense. Thank you for this explanation. I never got this answer from any one when I asked the studio.
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5678StarMom

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Reply with quote  #13 
123Dance, that's a great way to explain it. I wonder why our studio allows CC payments for competition when it doesn't make much financial sense.
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123Dance

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Quote:
Originally Posted by 5678StarMom
123Dance, that's a great way to explain it. I wonder why our studio allows CC payments for competition when it doesn't make much financial sense.


It is possible that your studio marks up comp fees.  Some studios add a bit to each entry cost to cover these types of fees (plus the endless hours it takes to input the information for each competition).
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BalletMom62567

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Reply with quote  #15 
Our studio is the same, but we pay the fee if we use a credit card to pay tuition. They don't absorb the fee. So, I don't think the fee can be the reason. I have wondered about it too.
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5678StarMom

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Quote:
Originally Posted by 123Dance


It is possible that your studio marks up comp fees.  Some studios add a bit to each entry cost to cover these types of fees (plus the endless hours it takes to input the information for each competition).


Actually our studio doesn't mark up fees at all. A mom I know who has connections with other studio owners and finds out the exact cost every year just to be crazy. It's quite surprising how low they keep costs. The SO is quite vocal about how she doesn't make any money and how she hates entering numbers and how much time it takes which is a bit annoying. I think they *should* add a modest and transparent mark up per number because the teachers end up bunking with parents on the floor at hotels instead of the studio getting them rooms and parents end up buying teachers food (we live about 2 hours from the nearest comps that come our way). They do pocket early registration discounts and use for studio improvements and basic bills in the month of July when the studio is closed, but that's more than fair IMO.

We get competition choreography (which can include 1-7 numbers depending on who's cast), 1 hour a week of competition class including leaps/turns/conditioning, rehearsal approx. 2 hours a week depending on what you are cast in, plus teachers present at every competition for their dances and SO at the competition the entire time for $40/month on top of technique classes. I only pay $135 total for DD8 to have 3 technique classes (ballet, tap and jazz) and competition team a month.

Now all the ballet stuff that DD15 does....wayyyyyy more expensive!
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my2miracles

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Reply with quote  #17 
Quote:
Originally Posted by 123Dance


No, I don't think that's the case at all.  She put the money on her account using a credit or debit card, which means a 4% fee (approximately) for the studio.  So, of that $600, the studio only receives approximately $576.  So, if she owes $600 in comp fees, and the studio has only collected $576 (net, after the credit card fee) but has to pay the competition $600, then they're losing money!  

We have always had rules about method of payment, depending on what the money was for.  If it was a service provided by the studio (choreo, classes, etc), then we could pay using any method of our choosing, but if it was money they were collecting to pass off to someone else (costumes, comp fees, exam fees, etc.), then it had to be cash.  Otherwise the studio would be paying out of pocket because of the fees deducted by the credit card company.

 


Ok 1st no processing fee is 4% but for the sake of this argument let's say it is.  The company has ALREADY paid that fee so she should at least be able to use the $576 of her money they are already holding.
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123Dance

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Reply with quote  #18 
Quote:
Originally Posted by my2miracles


Ok 1st no processing fee is 4% but for the sake of this argument let's say it is.  The company has ALREADY paid that fee so she should at least be able to use the $576 of her money they are already holding.


The 4% was the amount we were charged by the credit cards many years ago when I was head cashier and had to fill out the paperwork to send off to Visa and M/C. I was told we didn’t accept Amex because their rates were higher. I’m assuming the rate hasn’t gotten lower over the years, but it may have.

I do agree that she should be allowed to use the balance of her money after the processing fee, BUT there used to be a rule that those fees couldn’t be passed along to customers. Not sure if that’s the still the case, but if so, it would explain why they can’t deduct the fee amount and allow her to use the balance.

I will admit that my retail experience is over 20 years old, so these rules and fees may have changed, but based on my experience, I have always assumed this is why my studio had rules about methods of payment.
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melissa745

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Reply with quote  #19 
Quote:
Originally Posted by BalletMom62567
Our studio is the same, but we pay the fee if we use a credit card to pay tuition. They don't absorb the fee. So, I don't think the fee can be the reason. I have wondered about it too.


Technically, this is against the credit card policy. If visa or MasterCard find out your studio is doing this, they won’t let her accept cards anymore. Your SO should be more careful about this.
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gandalf

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Reply with quote  #20 
Quote:
Originally Posted by melissa745
Technically, this is against the credit card policy. If visa or MasterCard find out your studio is doing this, they won’t let her accept cards anymore. Your SO should be more careful about this.


So then the studio just has to do what 1000's of other businesses already do: The price is $103, There is a $3 discount for using cash.  Problem solved
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2dornot2d

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Reply with quote  #21 
Quote:
Originally Posted by melissa745
Technically, this is against the credit card policy. If visa or MasterCard find out your studio is doing this, they won’t let her accept cards anymore. Your SO should be more careful about this.


For the property tax payment and license registration, my city hall accepts MasterCard and Visa. Property tax in TX is about 2% so it's a lot of money. There's a sign on the window that says there will be a 3% fee added to the total if we pay with a credit card. If a government agency is doing it, it might be legally ok now? Or maybe the rules are different for merchant and government...
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momcrew

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Reply with quote  #22 
Quote:
Originally Posted by 2dornot2d


For the property tax payment and license registration, my city hall accepts MasterCard and Visa. Property tax in TX is about 2% so it's a lot of money. There's a sign on the window that says there will be a 3% fee added to the total if we pay with a credit card. If a government agency is doing it, it might be legally ok now? Or maybe the rules are different for merchant and government...


Gas stations do it too. Some businesses will absorb the fee as a cost of doing business, others pass it along to the customer. 
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peachygreen98

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Reply with quote  #23 

Quote:
Originally Posted by momcrew


Gas stations do it too. Some businesses will absorb the fee as a cost of doing business, others pass it along to the customer. 

All businesses pass it along to the customer, some are just more upfront with how they do it.  Ultimately it would be a loss to not pass that along.  So it is passed along in a fee or they just charge you 1-2% more across the board to absorb it cash, check or charge.  

If they don't "charge" you the CC fees it comes under their overhead fee (building, water, electric, office supplies, cleaning service, and CC processing fees are probably included in that overhead).  

One way or another you are paying the CC fees.  

Our studio doesn't accept cash or check for payments.  Everything is charged to the studio account with a CC.

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momcrew

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Reply with quote  #24 
Quote:
Originally Posted by peachygreen98

 

All businesses pass it along to the customer, some are just more upfront with how they do it.  Ultimately it would be a loss to not pass that along.  So it is passed along in a fee or they just charge you 1-2% more across the board to absorb it cash, check or charge.  

If they don't "charge" you the CC fees it comes under their overhead fee (building, water, electric, office supplies, cleaning service, and CC processing fees are probably included in that overhead).  

One way or another you are paying the CC fees.  

Our studio doesn't accept cash or check for payments.  Everything is charged to the studio account with a CC.



The last company I worked for did not pass along any sort of credit card fees. It was the cost of doing business and as with any expense, brought down our taxable income. 
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peachygreen98

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Reply with quote  #25 
Quote:
Originally Posted by momcrew


The last company I worked for did not pass along any sort of credit card fees. It was the cost of doing business and as with any expense, brought down our taxable income. 

Yes it is the cost of doing business but it is considered when setting fees.  Yes you put it as an expense on your taxes.  But it is part of the overhead the same as paying for the building, electricity, music use fees, computers.  No you don't break those charges down to the client but it is included in the fees you charge.  If it costs $10000 a month to run a studio + the cost of instructors, that is what you set your rates by.  There is a break even # of students required at a certain rate to cover those overhead costs.  No they don't pass it down where you see it just like you don't see the costs to print flyers, operate the studio website, buy office supplies.  But if you don't include those costs in your overhead costs that you have to cover every month to breakeven then you aren't going to make a profit and likely won't be able to keep your doors open for long.  
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