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Choosing the Best Payment Processing Software for Your Childcare Business

Payment processing software can simplify billing at your childcare center. Learn what features and details to look for when choosing payment processing software.

Choosing the Best Payment Processing Software for Your Childcare Business

Choosing the Best Payment Processing Software for Your Childcare Business

Collecting payments for your childcare center or preschool can be a time-consuming task. To keep your operations running smoothly, you need dependable, convenient, intuitive payment processing software to do the job.

In this article, we'll discuss payment processing software, how it works, how much it costs, and how to choose the right one for your childcare business.

What is payment processing software?

Payment processing software is key in setting up a stress-free billing process for your childcare business. It helps streamline invoicing and facilitates electronic payment processing. It also integrates with payment gateways, accounting software, and more to process and record payments efficiently and securely. While cash payments may seem like the most straightforward choice, most people opt for credit and debit cards or other digital payment options. Payment processing software lets you send out invoices and accept and process payments via various payment methods. 

By incorporating payment processing software into your administrative processes, you can minimize late or non-payments and increase timely payments from families. For example, accepting payments in person, over the phone, and online improves customer service and convenience, enhances cash flow, accelerates payment collection, and increases accounting accuracy.

Credit and debit cards offer families more convenience and can be easily tracked in your bookkeeping and accounting software. Online payments are also a great option because they provide multiple ways to transfer money, including e-transfers, credit and debit cards, payment services such as PayPal, and more. Families can make payments from anywhere at any time, whether during child pick-up or drop-off, at home, or on the go.

woman with young girl wearing a backpack at daycare drop off


Expanding your payment options outside of cash allows you to manage transactions within a single platform, such as brightwheel’s billing feature, simplifying and automating billing and payments. Families can easily and securely pay online, and you can track those payments in one central location. 

As a childcare provider, your payment management software needs to be reliable with a transparent payment process. Some popular payment processing software vendors include:

  • Stripe
  • Square
  • Chargebee
  • Vagaro
  • Venmo for Business
  • Hopscotch
  • Birdeye
  • HoneyBook
  • Melio

How does payment processing work?

A payment processor is a vendor that manages the logistics of the transaction process. It's the go-between for customers, businesses, and the bank. For example, whenever your childcare center accepts a card payment, payment processors work in the background to complete the transaction. Whether the payment is received in person, online, or over the phone, the information is submitted through a payment gateway, the payment processing portal that authorizes the payments. 

Once the card payment is sent to the payment processor, it initiates the transaction via the card network, such as Visa, for approval. From there, the network communicates with the payment processor on whether the request is approved. After that, you complete the transaction with the customer, and the payment processor informs the bank that the customer's card and issuing bank are sending the funds to your bank. Finally, you gain access to the funds immediately or within a few business days.

brightwheel billing

Cost of payment processing

The payment processor collects transaction fees from your total sales. This fee, called the merchant discount rate, generally ranges from 2% to 3% of the total purchase and consists of:

  • Interchange fees which are mostly the total fees incurred for a card transaction. The card networks set rates, and fees go to the issuing bank. For example, the interchange fee is set by Visa, while the issuing bank, Bank of America, receives the fees. Fees vary, depending on the type of card used, the industry you're in, and whether the payment was accepted in person or online.
  • Assessment fees are paid to the card network, such as Visa. The amount owed is a percentage of the month's gross sales and varies depending on whether your customer uses a credit or debit card.
  • Processor fees compensate the payment processor.

When creating documentation for your center's payment policies and outlining what payment methods you accept, due dates, payment plans, late fees, and more, you can also include details about any payment fees. For example, if you decide to pass processing fees along to the customer, you must make this clear in your policies so that your customers are aware of this information. 

How to choose a payment processing software

When it comes to selecting payment processing software, you have two types to choose from:

  • All-in-one services, like Stripe, are full-stack services that provide a payment processor, merchant account, and other basic features. They're easy to use and are directed at small to medium sized businesses.
  • Subscription management software, like Chargebee and Recurly, include a payment processor and other features and are designed for B2B software as a service (SaaS) businesses.

An all-in-one payment processing solution is a good option for childcare businesses because everything you need is in one place without any outside fees. There are many things to consider when shopping for payment processing software. One thing is the pricing structure; choose one that makes sense for your business. The three common types of pricing include interchange-plus, flat-rate, and tiered. 

  • Interchange-plus consists of the interchange rate plus a defined markup.
  • Flat-rate consists of a single rate for all transactions accepted a certain way.
  • Tiered is a combination of flat-rate and interchange-plus.

Also, remember that rates may vary depending on industry type, subscription level, and sales volume. Some payment processors are specifically designed for a certain payment method. Therefore, when searching for software, consider how and where you'll accept payments, such as online or in-person, keyed, invoiced, or mobile entry. For example, Stripe is designed primarily for e-commerce, while Square has many hardware options for in-person transactions.

Lastly, when looking for payment processing software to suit your childcare center, know how you'd like to get paid. You can receive your payments via a merchant account, a merchant account provided by a merchant acquirer, or a merchant account with a payment service provider. 

With a merchant account, the money goes from your customer's bank into the merchant account, where you can access the funds. However, you don't have direct ownership over the merchant account with a payment service provider account because the provider maintains it. They collect the payment on your behalf, and then funds are routed to a subsidiary account you maintain with the payment service provider.

While the vendors we’ve mentioned above, like Stripe and Chargebee, are widely accepted across different industries, they don’t offer childcare-specific functionalities like family communication, subsidy management, attendance tracking, or lesson planning features. An all-in-one childcare app, like brightwheel, integrates automatic billing and payments with real-time communication and classroom management to simplify your administrative tasks and enable you to operate a high-quality program. 

Simplify childcare payments

Implementing payment processing software for your childcare business can alleviate the frustrations and time-consuming challenges of billing and accepting and tracking payments from your families. A payment processing software can provide convenience to your families, increase efficiency, and ensure payments are received on time, allowing you to maintain the financial health of your business.

Brightwheel is the complete solution for early education providers, enabling you to streamline your center’s operations and build a stand-out reputation. Brightwheel connects the most critical aspects of running your center—including sign in and out, parent communications, tuition billing, and licensing and compliance—in one easy-to-use tool, along with providing best-in-class customer support and coaching. Brightwheel is trusted by thousands of early education centers and millions of parents. Learn more at

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