A lot of groups want to accept credit card donations or fundraising auction payments online, but don’t know how to do it. There are three main ways to accept payments online: use PayPal, use a nonprofit credit card processing service, or get your own merchant account.
PayPal is by far the easiest way to handle credit card processing for donations and auction payments. Why? Because they are a division of eBay, the world’s largest auction company.
With PayPal, you register for an account using an email address that will serve as the access point for your account. You verify the email address by clicking a link in an email sent by PayPal and your account is operational.
Most groups will want to set up a Business Account with PayPal so they can wire their funds from PayPal to their checking account. PayPal requires you to verify your bank account information by making a small deposit to your account and having you confirm the amount deposited.
Within PayPal, you select Merchant Services and then Donations, then enter some basic information that enable you to track your donations. Then, you select one of four donation buttons to use on your website. That’s all it takes!
Accepting online payments for fundraising auction items is just as simple. All you need to do is email your winning bidder a PayPal payment link for their purchase. They don’t need to have a PayPal account, just a Visa, MasterCard, or other valid credit card.
Nonprofit Credit Card Processing
For handling larger volumes of credit card transactions on a regular basis, you’ll want to step up to a more robust platform. The good news is that there are several companies who provide credit card processing for nonprofits at very reasonable rates.
Network For Good is one organization that I highly recommend. They handle everything for a low monthly fee of $29.95 and 3% of total donations.
You can customize your donation pages to match your website and have tax-deductible receipts emailed automatically. In addition, they also handle recurring donations.
Other solutions blend in with donor management software such as DonorPerfect so you can track donations and follow up in the future with each donor’s history on file.
Merchant Account Credit Card Service
Let me start off by saying that there is no such thing as a free merchant account. There are always costs involved and anyone claiming to provide a free merchant account is only shifting those costs into other fees and higher processing charges.
Your best bet is usually your own bank. Larger banks offer merchant accounts at competitive rates and they are already familiar with your organization. Still, there is an awful lot of paperwork involved in setting up merchant account credit card services, so be prepared to spend a couple of hours filling out the forms.
You should also know that banks and credit card companies charge much higher transaction fees for so-called internet merchant accounts. That’s because there is a higher incidence in fraudulent purchases in online transactions.
It won’t make any difference to them that your transactions are mostly nonprofit donations. You’re still tarred with the same broad brush of high risk, even though you’re accepting credit card donations!
You can shop around and compare rate structures and upfront costs, but it’s a buyer beware situation. Your final rates aren’t set until the underwriting department of the merchant account provider assesses your risk level.
In addition, a board member or top executive may have to provide a personal guarantee to cover potential chargebacks after payment has already been released to your bank account.
One main advantage of having your own merchant account is the ability to process credit card payments onsite at a charity event. That greatly simplifies running a large silent auction or live auction fundraiser.
Accept Credit Card Donations Summary
It makes sense to accept donations on your website. PayPal makes it simple for even the smallest of groups to accept credit cards online.
Network For Good and similar organizations provide a transitional platform that allows growing nonprofit groups to present a more professional donation system, including tax receipts and recurring payments.
Having your own merchant account service is the final step for the largest organizations. Installation may be more complex than you think because your payment processing needs to be integrated with all your other systems.
Whichever one you choose, keep the donor’s needs paramount and you’ll be pleased with the increased flow of donations.