Accepting credit card dues payments > HOA Forum

Unanswered

Active Topics

Forums

Forums > Homeowner Association > HOA Discussions

Subject: Accepting credit card dues payments

Prev Next

You are not authorized to post a reply.

Author

Messages

EricS7
(Georgia)

Posts:6

07/10/2008 5:09 PM
I'm an officer on my HOA board and we are considering accepting credit card payments of dues. We annually have about a third of our homeowners pay late and a few who are over a year past due. If any you have experimented with accepting credit card payments, has it been beneficial? Have dues payments been received more timely as a result? Have you charged a convenience fee to cover the discount percentage and/or monthly merchant account fees? Do you use a card swipe terminal or online processing? Have you experienced any problems? Thanks, Eric in Georgia

MicheleD
(Kentucky)

Posts:1574

07/10/2008 5:57 PM
We don't accept credit card payments. We just aren't set up for that and I frankly don't see a reason for it. We'd have to increase the dues to accommodate the "fees" and wouldn't you know that somebody would only use AmEx another only Discover. . . We DO, however, accept the credit CHECKS that almost EVERY credit card company sends to their credit card customers. If you don't have any, just contact your credit card company's customer service and they'd likely send you some. Of course, you'd pay the "cash" rate, but I'd rather the fees be on your end than ours. . .

EricS7
(Georgia)

Posts:6

07/10/2008 6:11 PM
A fellow board member thought that homeowners may be willing to pay with a credit card when they are short on cash. Also, he felt the prospect of earning points or miles may entice homeowners to pay on time.

DonnaS
(Tennessee)

Posts:2509

07/10/2008 6:28 PM
Eric, Have you checked into the charge that the association will have from the card company? It is not cheap and the fact that you will not have a large volumn of users, it probably will cost as much as not collecting dues from a few. I had a smaller business and the Master Card and Visa charges were way out of line for what we used. Besides that, you are not in the business of helping people earn points on their cards. Many companys are tightening their rewards programs and soon, points will be a thing of the past so that aspect is notgoing to be a reward to the association members.

EricS7
(Georgia)

Posts:6

07/10/2008 7:12 PM
Donna, I thought along the same lines as you, but our VP thought it was a good idea. Our bank wanted an initial $400 setup fee including a swipe terminal and a monthly fee only when the merchant account is being used. I've also seen internet-only companies offering a flat monthly fee of $20 or so regardless of how much the service is used.

MicheleD
(Kentucky)

Posts:1574

07/10/2008 8:19 PM
Again, your organization does NOT have to finance in any way, shape or form someone else's CREDIT, just to help them pay on time. As I said, virtually all credit card companies have credit CHECKS they can supply credit card members for them to use when their credit cards can't be used. You get your money via a convenient and easy-to-use (and better yet CASH) credit card CHECK, and the homeowner can use his or her credit to pay their assessments, just as you would have them do by using a credit card to begin with. Before you go down that road of incurring fees to collect assessments, why not educate your homeowners how to use the resources already available to them that won't cost you a dime. Besides, I'd be more than majorly ticked off if my board invested in taking CREDIT CARDS to collect assessments when it isn't necessary OR prudent.

GlenL
(Ohio)

Posts:1301

07/10/2008 8:59 PM
Frankly it sounds like more trouble and expense than it's worth. I personally think it would be a tough sell to the homeowners as a group if they knew all of the costs the Association will have to absorb to make it feasible. Using the low number of $20.00 a month times 12 months is $240.00 for something someone might use. If there are no charges in a month do you still have to pay? And if you pass the processing costs on to the user and only one person per month uses it do you honestly think they're going to pony up an additional $20.00 for the "privilege" of using a credit card? Who is going to process the charge for the HOA someone from the Management Company, a BOD member or an anonymous web site? Is there any liability to the HOA if someone's credit card is falsely accessed? What about if the card company refuses the charge or the homeowner after paying by cc then disputes the charge?

EricS7
(Georgia)

Posts:6

07/11/2008 2:58 AM
So far it sounds like a unanimous vote that accepting credit cards is a bad idea. However my fellow board member was championing the idea and it got quite heated. Accepting the CC company convenience checks is a good option; thanks Michael. The HOA gets its money and the homeowner incurs the 3% or 4% fee. I'll offer that up as a compromise during the next meeting.

BruceF1
(Connecticut)

Posts:499

07/11/2008 5:21 AM
Eric, I wouldn't mess with credit cards. When I owned a business we accepted credit cards because it was more or less expected. For some people it is a convenience, We had to pay a monthly maintenance fee and a percentatge of each credit card transaction to the bank handling our credit card account. You usually can't charge that fee back to the individual because most credit card agreements and some states prohibit that (because it discourages credit card sales). Some states have laws requiring the the amount charged for goods or services be the same for credit cards as it is for cash, so you can't charge the fee back. Interestingly, some states do allow a discount for cash. But, in the case of HOAs there a catch-22 because in many states the fees have to be the same for everybody, so that rules out either discounts or add-on fees. One thing you might consider, though, is offering direct debit (electronic transfer or EBT). That's a set-up whereby the fee is automatically transferred from the homeowner's bank account to your bank account on the same day each month. I have heard of that being done for HOAs before. You probably set it up through your bank. Then, you supply the homeowners with a form that they fill out and give to their own bank. I don't have any experience with that, so I don't know anything about whether there are any fees or not, but you may want to check that out as an alternative.

BradP
(Kansas)

Posts:1742

07/11/2008 6:23 AM
Eric: How many homes fall under the HOA umbrella...to me that will dictate whether this is worth pursuing or not. How much are your assessments? Being someone of a younger generation I see some validity to this. People my age or younger don't carry cash, and use credit cards for everything. While that age group is 30 or younger you will start to see them infiltrate the homeowner club in more volume as the years go on. Would I pay with a credit card...if it was the same cost as paying in cash I would...however, if there was 3 or 4% convenience fee added I would not. The questions your HOA needs to look at is volume...cost to the association...whether you think it is wise to pass on the cost in terms of a handling or convenience fee.

EricS7
(Georgia)

Posts:6

07/11/2008 9:01 AM
Thanks everyone for the good advice. Our HOA is relatively small (about 65 single-family homes) with dues of only $315.00 annually. I don't think the benefit of getting payments more timely, if it occurs, would be worth the up front and/or monthly costs the HOA will incur. Especially if the costs can not be passed on to the homeowner through a convenience fee.

KirkW1
(Texas)

Posts:915

07/11/2008 9:26 AM
There is something else that you may want to consider in this mix. Do you have a lockbox? Or is someone manually processing checks? If someone is manually processing checks, then you have some time overhead for doing so. Even with the lockbox, someone has to manually work to enter the amounts paid into your accounting system. You could setup with PayPal or one of its competitors such that you have almost no work to enter the payments into your bookkeeping system. I am guessing that you are self managed. If so, then you may not have saved money, but you saved someone a lot of work. And ignoring the burden on your volunteers is less then wonderful in my book. If you have a management contract, then the place to talk about this is with the management company. I don't know the details, but I am pretty sure we can pay our HOA assessments via credit card because the management company takes care of it.

You are not authorized to post a reply.

Forums > Homeowner Association > HOA Discussions > Accepting credit card dues payments

ActiveForums 3.6