Buy now, pay later might sound like the makings of a scam – but the truth is that offering customers the ability to access a tax preparer’s services without the need for an upfront cost brings more value to a tax business than it does harm. Refund Transfer, also known as RT, is a product taxpayers can use to pay for their tax preparation services out of their tax refunds.
Besides the obvious value that clients receive from a refund transfer bank product, this business practice builds brand reputation and allows for a broader marketing approach and larger audience.
Before implementing a refund transfer bank product service, it’s important to understand how they work, how to best package the service for specific target markets, and the many benefits they bring to the tax professional and their clients.
How does the Refund Tranfer work?
Simple Process: Refund transfer bank products is a straightforward process; when a client is to receive a refund, they can choose to pay for the tax preparation services out of their refund instead of paying them upfront. This payment method is usually only available to the customers receiving a refund on their tax refund.
Before the tax professional receives their tax prep fee or the taxpayer receives their refund, the money must pass through a refund transfer bank, such as (Refund-advantage, SBTPG, Republic Bank, or Refundo). These institutions are known as refund transfer banks. They will divide the refund, deduct fees, and distribute the proper amount to the tax preparer and their clients.
While the client needs to be aware of a fee associated with each refund transfer, the pure convenience of paying for the tax service with a portion of the refund carries a higher value than the relatively small fee associated with refund transfers. This makes refund transfer bank products a desirable payment method.
6 reasons you should offer a Refund Transfer program?
- Allowing your clients access to professional tax preparation with no money out of pocket.
- Improve the speed of receiving tax refunds for customers that don’t have a traditional bank account.
- allow your office to expand. Earn revenue, and compete with national chains.
- Customers without a bank account can take advantage of electronic filing with the IRS.
- Electronic filing helps speed up the time it takes to receive refund proceeds. Compared to a check mailed by the IRS to the customer, which could take 6-8 weeks from the time of filing.
- Safety, fewer worries about checks lost in the mail or stolen out of mailboxes.
In conclusion, Tax refund transfer bank products bring an array of benefits to tax professionals and their clients by increasing brand reputation, generating referrals, and ensuring payment – ultimately benefiting both sides.