Payment Processing 101

In order to use online fundraising to encourage donations, you must have an efficient payment processing system. Factors to consider include:

Giving should be easy - if it’s not, you may lose precious donations. When deciding on a payment processing method, it’s important to ask:

-Does it provide a way to securely donate funds?
-Can donors can use all major credit and direct debit cards to easily transfer funds?
-Do donors have access to 24/7 customer care support?
-Does the payment processor require donors to set up an account?
-Is the system easy to use?

Payment types
Many donors want to give via credit card because it’s easy and they’ll have a record of the donation for tax purposes. However, charities should know they may receive between 2 and 3 percent less of the donation because of transaction fees.

Charitable organizations often prefer automated clearing house (ACH) payments because they feature reduced transaction fees compared to those associated with credit cards.

Receiving payment
Nonprofits can receive payment several ways, including through merchant accounts and third-party services. Most charities prefer merchant accounts because there is less time between donation and receiving funds.

Processing fees
Flat rate fees are always the same, while interchange plus charges can fluctuate. Charities must also consider whether they want to receive gross deposits to reduce transfer fees or net deposits so they are paid with every donation.

Look for systems that ensure card data transferability to prevent vendor lock-ins and allow you to change systems and processors if necessary.

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