As a daycare owner, how do you typically accept payments from parents? If your daycare is like most childcare facilities, chances are you currently take cash or check payments. A typical strategy of many daycare centers is to collect a pile of post-dated checks at the beginning of the school year. Doing this requires you to run to the bank every month and deposit a bunch of checks (while hoping that parents still have money in their account). There is an easier way to get paid – and get paid on time. We’re talking about ACH for daycares.

What is ACH?

ACH payment processing for small business

ACH payments involve transferring money directly from one bank account to another. These payments are made over the ACH network, which stands for the Automated Clearing House. This network is managed by operators who send electronic payments in several batches throughout the business day, right from one bank to another.

These type of payments are not the same as credit card payments, which involve middlemen like Visa, Mastercard, Discover, or American Express. They’re not the same as checks either, which also have a middleman (usually a federal reserve bank).

Instead, ACH payments are sent electronically and usually take 3-5 days to settle. That’s a little bit longer than the 2-3 days it takes a credit card transaction to settle, but ACH payments have a lot more benefits over credit cards – and over cash and check as well!.

There are two types of ACH payments: credits and debits. Debits involve taking funds from a customer’s account, such as collecting a tuition payment. Credits involve depositing funds into an account, such as a direct deposit paycheck.

Why do you need ACH?

ACH payments will create a better payment experience for your parents. It’s already enough of a hassle for parents to bag up lunch and drop the kids off, let alone having to remember to bring a check along too. With ACH payments, parents can place tuition payments on autopilot, instead of turning the house upside down for a check before morning drop-off.

Collecting a pile of post-dated checks can also be inconvenient for parents. First off, they have to spend time filling out however many checks you need. They may also dislike having paper checks floating around with their account and routing number. Collecting ACH payment info to be stored in a secure encrypted place creates a better payment experience.

Another great benefit of automated child care payments is that you will get your money on time. There’s no worrying about late checks from parents or envelopes of cash stuffed into a child’s backpack that then get lost. With ACH payments, tuition payments are debited from the parent’s bank account and credited into your merchant account.

Another great perk of ACH for daycares is that you will also end up saving lots of money, especially if you currently take credit card payments. Credit card companies charge fees for the privilege of taking plastic, and these fees run anywhere between 2% up to 4%. For example, if you charge a parent $1,000 per month for childcare, $40 of that will be paid to card issuers. That’s $400 per year for a ten-month school year! Wouldn’t you rather pay just $0.29 per ACH transaction?

You may be saying to yourself that the discount afforded by ACH payments isn’t relevant if you accept cash, but cash has its own drawbacks. By accepting cash, you are relying heavily on a parent to remember the cash on time. Not to mention that cash is also easier to lose.

Can ACH payments save you money if you take checks? Of course. Many banks charge fees for cashing and/or processing checks. The ACH network can also save you some money on the back end as well. If you are using paper checks to compensate your employees, you’re likely paying anywhere between $4 and $20 per check.

How to accept ACH at your daycare

The first step to accepting ACH payments at your daycare is to make an ACH agreement part of your onboarding process for new parents. This is as easy to do as putting an ACH authorization form into the tuition agreement.

This part of the agreement can spell out the date on which the ACH payment will be debited from the parent’s account, how many months that will occur, and the amount to be debited each month. You will also need to collect written authorization from the parents, such as a signature.

When you present the payment structure like this, there won’t be any opportunity for parents to pay you with cash, check, or card. Pre-authorized, automatic daycare payments are just part of the procedure. Most parents will happily go along with this plan since it saves them the hassle of having to bring you a check, or a pile of checks, or remember to make a credit card payment every month.

As far as setting up ACH payments goes, you will need to collect information from the parents such as a bank account number and routing number. If you choose to use a third-party payment processor (TPPP) they have ways of requesting and storing this sensitive information. A payment processor can collect the banking information for you, store it in a secure encrypted place, screen for fraud, and set up automated recurring payments. The only thing you need to do is direct your parents to the payment portal of your website, where they can find the ACH authorization form – in most cases, also provided by your TPPP

If you are using accounting software like Quickbooks or invoice management software like Xero, these types of software can be integrated with a TPPP, helping you get everything totally automated.


Over 2,000 small businesses are using Rotessa to accept ACH payments, and some of those small businesses are daycares and child care facilities. These institutions have eliminated the hassle of having to chase down checks or bring a post-dated check to the bank every month. They’re not paying exorbitant credit card fees either. Instead, they are collecting automated payments every month, on time, using the ACH network. In the meantime, they are able to focus more on the daily operation of running a childcare facility and enjoy saving more of the tuition they receive.

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