By David Gould, Staff Editor
By definition a “professional” gets paid to perform a particular service. Proponent Group is all about professionals who teach golf, and we’ve sought to address countless aspects of that role—yet we’ve skipped over the getting-paid part. That’s because until recently it was too straightforward a topic to bother exploring.
Not any longer. Digital payment via mobile apps and websites has swept through the entire economy, including the corner of it where golfers remit payment for instruction. A once-pedestrian function is suddenly awash in options and fast-moving trends. In this blog post you’ll get a rundown of what many Proponent members have already experienced in the world of non-traditional payment, along with thoughts and ideas about where the payment-related pitfalls and opportunities lie, going forward.
Eight different members, representing different business models, produced insights and points of view on the subject. We started with the question: Is receiving payment a part of your job that can be difficult or problematic? In response, five members gave a simple ‘no’ answer. One said ‘at times,’ one said ‘yes,’ and one—Brad Pluth of Minnesota—said burdensome credit card and bank fees were a constant irritant to him. “This is an important topic,” Pluth concluded.
We agree—in part because even the members who said ‘no’ upfront to the question of payment causing hassles did cite some challenges and points of confusion. James Kyle, a member from greater Tampa, Florida, went several years using a credit card processor but dropped that service “because it was too expensive.” Half of Kyle’s student’s hand him an old-fashioned paper check, for the rest he transacts using Venmo, PayPal and Stripe. “I’ve had my LLC with PayPal for a few years now, so reporting is easy,” says Kyle. “Venmo, which is owned by PayPal, just became able to add itself to my LLC.”
Venmo as an add-on to a PayPal account that’s clearly supporting a commercial enterprise could function acceptably, but there’s no denying that the platform has an amateurish profile. Functional only as a mobile app, Venmo is designed to handle non-commercial transactions among friends and family. It famously includes a social-media component apparently aimed at bringing entertainment and fun to the settling of debts.
Laura Patrick, a Proponent member east of Minneapolis, was instructed by her accountant “not to accept payment from students through Venmo until I’ve upgraded my account to Venmo for Business,” says Patrick. Indeed, there is a merchant version of the Millennial-pleasing platform in development.
In the meantime, the accountant’s advice is sound, something Venmo’s own Help Center page strenuously confirms: “Venmo may NOT otherwise be used to receive business, commercial or merchant transactions, meaning you CANNOT use Venmo to accept payment from (or send payment to) another user for a good or service, unless explicitly authorized by Venmo.” The word “otherwise” in this warning is a reference to Venmo Debit Cards, which are little-used, along with two other rare exceptions.
Regarding these platforms built for smartphones and non-commercial movement of dollars, fees can often—or even mostly—be avoided. The classic example is PayPal’s spinoff brand, Venmo. PayPal itself is a highly profitable bank-like entity that certainly does exact fees for transactions and uses computer tools to spot commercial-looking transactions within its network. It’s worth noting that many PayPal transactions are tied to a traditional bank checking account, or a credit card.
As for the “public feed” or “social feed” that trails along behind Venmo transactions, serious media outlets covering consumer technology have been warning against it for some time. An article in the Wall Street Journal website Marketwatch said it plainly: “ If you haven’t made your Venmo transactions private yet, do it now.” One of BuzzFeed’s consumer-tech writers went further, saying she could think of “….zero good explanations for this blatant disregard of user privacy, which benefits no one, is creepy, and can be used for nefarious or humiliating purposes.”
Platforms built for smartphones and the non-commercial movement of dollars, fees can often—or even mostly—be avoided. Venmo is the classic example. It’s parent brand, PayPal, is a highly profitable bank-like entity that indeed does exact fees and uses computer tools to spot commercial-looking transactions within its network. Many industry watchers believe Venmo’s value to PayPal is as a feeder to its big brother. Interestingly, many PayPal transactions are tied to a traditional bank checking account, or even a credit card. This affects whether fees will hit the collector (a typical golf instructor) or not.
Benefits and drawbacks in this niche can be in the eye of the beholder. James Kyle dropped his credit card processor to avoid what seemed like significant fees, preferring to make heavy use of PayPal. Meanwhile his fellow member Janean Murphy, based in Houston, makes constant use of Zelle and Venmo but says, “I stay away from PayPal because of their fees.”
We asked the Proponent Group partner in credit card processing, Niles Crum of Card Connect Partners, to shed some light on these goings-on.
“Credit cards, as a form of payment, hit the person who collects the payment with fees,” says Crum. “Those fees can be absorbed as a business expense—which to my view is easy if they’re modest—or they can be kicked back to the consumer, if that’s what the vendor thinks is fair and still works for the seller-buyer relationship.”
Niles dug into his recent records of Proponent coaches who use his processing services and came up with the following dollars-and-cents information. “Assuming a standard lesson rate of $100, my Proponent clients who experienced low ‘swipe fees’ came in at 2.31 percent, while those in the mid range showed fees of 2.60 and those at the high end showed fees of 3.01 percent. So, they would be netting out lesson fees of $97.69, $97.40 and $96.99, respectively.”
For what you get in return, Crum would suggest, those are small shavings off the full dollar amount of a hypothetical $100 lesson. “You get your money the next day, there’s no check that can bounce, there’s no letter from the IRS about your reported cash not being equal to what their formula suggests it should be.” Further, there’s no mishap waiting around the corner with a payment platform that isn’t supposed to be part of official American commerce. It’s an accident waiting to happen, in his view.
David La Pour, set up as an independent contractor after years in a member-only club environment, said yes to our question about whether arranging payment can be awkward. “Sometimes it is,” he affirms. “I think it’s best when handled by a third party, the way a doctor’s office visit usually is.”
The title of this blog post played with the notion of technological progress creating a sudden spectrum of options, each of which seems capable of adding efficiencies. One oft-heard comment from members we interviewed was: “I try to make it easy for my clients to pay me.” With so many coaches expressing this thought, it seems apparent that they value the many options in part because they make life easier for the golfer, not necessarily the instructor. Sitting up at night transferring dollar amounts from one’s PayPal or Venmo or Square account to the real place you want money to reside, i.e., your business checking account or personal checking account, is a task that could easily get old.
Bill Abrams, a Proponent member who spends the warm season running his own academy in Illinois, indeed suggests that all the array of solutions “can be problematic.” That makes sense, given that Abrams has students paying him in cash, by check, with credit cards, as well as via PayPal, Venmo, Zelle and Chase Quick Pay. “While accepting payment has become much easier with electronic methods,” says Bill, “it still can be somewhat time-consuming, requiring a good amount of attention during my admin time.”
At points in time when change sweeps into a facet of business operations, bringing waves of rival concepts and new competitors, things tend to build to a crescendo then pivot to consolidation. The payments function, for golf instructors, could well be headed for that sort of streamlining. Proponent Group will continue to monitor how the growing number of payment options are affecting our members.