You may have heard of "processing fees," but what are they and how do they affect you as a music studio owner?
In order to move money from one person (i.e. your Student or their Primary Contact) to another (i.e. you), a third-party company oversees the transaction. This third-party is a "payment processor," a company that specializes in transferring money digitally. When you pay for something using a credit card (in a store or online) or an online payment system, a very small amount of the payment is taken by the payment processing company to cover the work they do to transfer the funds. This is the processing fee.
In the case of Duet, all of our digital payment processing is managed by Stripe. Stripe is the global leader in payment processing. This means that every time a parent pays you digitally (i.e. clicks the "Pay Now" button on their statement and pays through any one of the offered platforms), Stripe manages the transfer of the money from the parent to you.
Stripe also handles all of the private information - yours and your Studio Families'. Duet does not have any personal information on file (such as credit card or bank account numbers).
As compensation for managing the transfer of money, Stripe takes a small cut of the payment. This varies depending on the type of digital payment it is processing.
For credit cards (and ApplePay and GooglePay): Stripe takes 2.9% plus $0.30 per successful charge to domestic credit cards. So if you charge a Studio Family $100, Stripe will take $2.90 + $0.30 in processing fees. This means that $3.20 will go to Stripe, instead of to you. You will receive $96.80 in your bank account. There are no additional charges if the Studio Family chooses to use the Link, the accelerated checkout solution.
Note there are additional fees for international transactions: 1.5% is added for international cards and 1% is also added if currency conversion is required.
For ACH: ACH payments on Stripe cost 0.80%, capped at $5. So, a $100 payment incurs a $0.80 fee; any payments above $625 cost $5 maximum. So if you charge a Studio Family $100, Stripe will take $0.80 in processing fees. This means that $0.80 will go to Stripe, instead of to you. You will receive $99.20 in your bank account.
From the teacher's point of you, it is obviously advantageous to collect payment via ACH because the processing fees are lower. However, paying by ACH does require Studio Families to link their bank account information the first time they receive a statement from you, which they may prefer not to do.
At Duet Partner, we encourage teachers to pass these fees on to your Studio Families so you are not losing income by making it easier for them to pay. Many Studio Families will appreciate the exceptional convenience that comes with digital payments, and they will be willing to pay a premium for that ease. As a teacher, consider raising your rates by 3% to cover the processing fees. Alternatively, you could create a separate transaction where you charge families for the processing fees at the beginning of every month or every year.
If you have further questions about processing fees, write to the Duet Teacher Success Team at support@duetpartner.com.
