How many donors worldwide do you think prefer online payment processing for nonprofits with a credit or debit card? Did you guess more than half?
It’s true. According to the Global Trends in Giving Report, 54% of donors prefer paying online. As donor trends continue to shift towards online giving, nonprofit organizations really can’t afford not to give donors this option.
But how do you choose an online payment processor? What’s the benefit to your organization? Which platform should you use?
In this post, you’ll:
- Explore the benefits of online payment processing for nonprofits
- Learn which questions to ask as you choose a platform
- Compare different online payment processing platforms
How Online Payment Processing Works
An online payment processing platform works by communicating between a payer’s (your donor) and a merchant’s (your organization) financial institutions. You can use it to process donations and membership fees, and sell tickets or merchandise.
The process is simple:
- Once you’ve connected your web page to an online payment system, visitors will be able to enter their credit or debit card information to make a gift or payment.
- The transaction request, along with the credit card information, is securely transmitted to the payment gateway operated by your online payment processor. The information is encrypted so that no one – including you – can view the purchaser’s personal and financial information.
- The payment processor will then verify the purchaser’s credit card details and confirm whether the purchaser has sufficient funds to complete the transaction.
- If the purchaser’s credentials are valid and there are sufficient funds to complete the transaction, your payment service provider will initiate a transfer of funds from the purchaser’s bank account to the merchant account associated with your website, and notify your website that the transaction has been approved.
- If the transaction is declined for any reason – such as invalid credentials or insufficient funds – no funds will be transferred, but status information will still be sent to your website.
- Depending on how your website is set up, that information can be used to automatically update records on your site like your donor, membership management, or event registration database.
Benefits of Online Payments
Online payment processing for nonprofits can help streamline your payment activities, improve your cash flow, reduce tedious tasks, and improve your donor experience. It has serious benefits in efficiency, data collection, convenience, donor retention, and data security.
Traditionally, payment processing took significant time and labor. You had to collect the payment, record the information, then take the cash or checks to the bank. Checks and credit card payments took time to clear before the money was really in your organization’s account.
Online payment processing takes care of most of these tasks, freeing up time, and improving cash flow. Payments are processed immediately, recorded automatically, and deposited in your account, sometimes in seconds. The online payment processor lets you know right away if there aren’t sufficient funds to cover the transaction, so you won’t have any surprise bounced checks.
Automatic record updates make your payment process even more efficient, removing the opportunity for errors and omissions. Instead of tracking down new addresses and expired credit cards on your own, your payment processor will take care of it.
Today’s donors and members expect to be able to make donations, pay dues, and register for events online. The easier it is for people to give, the more likely they are to actually make the donation. Your donation page should be easy to navigate and simple to use. Your payment process should be clear and seamless.
An online payment processor removes a lot of the burden from donors. They don’t have to remember to fill in a remittance envelope, or write out a check. Instead, they can make one-time payments and set up automatic recurring payments like monthly donations or dues payments in a couple of clicks.
Online payments are about more than convenience. They can also help with donor retention. When a donor makes an online gift, they’re also providing data about themselves. This data is the beginning of creating a meaningful relationship, rather than a single interaction.
If your payment processing system integrates with your donor database, it can automatically create contacts so you can add new donors into your communication streams. Even if you choose a system without that capability, you can import and export their data into your database yourself. That way you can provide regular updates on the impact of their gifts, tell inspiring stories about your work, and eventually, ask for another contribution.
Handling and storing sensitive donor and member information is a big responsibility. With an online payment processor, your organization doesn’t have to see or store any credit card information. All of the data is stored in secure servers and all transaction information is encrypted. Any payment processor should offer PCI compliance, advanced fraud protection, and robust data privacy protections.
Getting Started: 10 Questions to Ask
Choosing an online payment processing platform for your nonprofit can be overwhelming. There are many to choose from, each with their own features. As you’re starting to sift through your options, ask yourself:
- Is this platform compatible with my existing software?
- Does this platform support merchants in my country? What about my preferred currency?
- What kind of fees do they charge?
- What kind of transaction volume do I expect?
- How user-friendly are the platforms I’m considering? What kind of support is available?
- Do payments occur on my website or a third-party site?
- What kind of payments do they support?
- Do they support recurring payments?
- Do they focus on small and/or nonprofit organizations?
- What other features do they offer?
Will your new payment processor play nicely with the existing software on your website? If they’re not compatible, you won’t be able to use the processor without changing your software. Unless you were already planning a complete website overhaul, you can cross incompatible payment processors off your list.
Several payment providers require you to have a merchant account in the United States or Canada, so if you’re outside of those markets, make sure to check before you get too excited about a platform.
If your organization has an international presence, or you have members or donors concentrated in a geographic area, you’ll need a processor that allows your preferred currency. Most platforms can handle a variety of currencies, but some are limited.
For many organizations, this will be one of the most important questions: how much is this going to cost?
All payment service providers charge a fee per transaction. The transaction fee can be a flat charge and/or a percentage of the transaction value. Some payment systems also charge a monthly fee, as well as a setup fee.
How many transactions do you expect your site to handle each month? The percentage fee charged by payment providers is typically a sliding scale that decreases as the number of transactions increase. So, depending on the volume of transactions processed, one payment system might make more financial sense than another.
Will you need a web developer to get the platform working, or is it something the provider does for you? Could you do it yourself? What kind of customer support is available? Consider your technical prowess and resources when choosing a platform.
Will your donors have a seamless giving experience on your website, or will they be transferred to the payment processor’s site? The payment systems that charge setup fees typically allow you to process online payments at your website. The other payment systems will transfer customers to their website for processing. PayPal, for example, uses their online payment form to aggressively promote the use of PayPal accounts while still permitting the use of credit and debit cards.
A one-stop giving experience keeps donors on your website, builds trust, and removes extra steps from the giving process, so consider carefully if you want them transferred to a third-party site.
Most systems allow your customers to use their credit cards – some support Visa and Mastercard but not American Express – and some allow them to use debit cards. With PayPal systems, the payer can choose between using a credit card or their PayPal account.
Most but not all payment systems support recurring payments — the ability to automatically charge fees on a regular, repeating schedule. This is a necessary feature for membership organizations and any organizations that want to run a monthly giving program.
Nonprofits have different needs than other kinds of organizations, and some payment providers recognize this. While others may be able to adapt to your needs, it’s likely that a payment provider with nonprofit expertise will be an easier solution. At the very least, make sure your payment processor is able to handle tax-exempt donations.
Depending on your needs, you may be interested in additional features such as anti-fraud protection and chargeback management. Some features like these come at a price, either an additional fee or a higher percentage rate.
10 Potential Platforms For Nonprofit Payment Processing
Wild Apricot Payments is powered by AffiniPay, a payment gateway that specializes in payment solutions for associations. Wild Apricot Payments were built specifically for nonprofit transactions, support recurring donations, and offer free support and PCI compliance, as well as no set up or monthly fees.
Stripe is the most flexible payment processor on the market. Whether you’re a large nonprofit with different donation streams, or a small club/association, Stripe’s API will easily link your payments anywhere needed.
PayPal is one of the most widely used payment providers, which is their biggest edge. Chances are, most of your potential supporters and customers already have accounts with PayPal, and can make payments with ease. However, it’s not very personalizable and most versions take your visitors off your site. Many nonprofits prefer alternatives.
Authorize.net can do pretty much anything you’ll ever need payment-processing wise. With Authorize.net, you’ll never have an unsupported payment type since they stay up to date on trending payment methods, and even won an award for their outstanding API integrations.
Powered by Chase Bank, WePay offers instant onboarding, easy-to-use tools, and same-day deposits to merchants with Chase accounts.
Transnational offers flexible options, and includes processing for online, mobile, and off-line payments. It has the capacity to accommodate multiple users simultaneously, a big plus if you want to offer online giving options at your in-person event.
IATS works exclusively with nonprofits, so they’ll definitely understand your needs. They offer easy set up and customizable embeddable donation forms. If you’re already using Salesforce CRM, check out Brickwork, the iATS payment app.
With no setup fees, no monthly fees, ever, Donate Kindly promises that the 2.9% processing fee they charge is the only cost associated with their software. Donate Kindly offers custom donation forms and a platform that is easy for both fundraisers and donors to use.
Snowball has online forms and text-to-give options, and gives donors the opportunity to save their credit card information to make future giving even more efficient.
Moneris was founded by RBC and the Bank of Montreal, and has made quite a name for itself as one of Canada’s top payment providers. It offers solutions for website checkout, physical terminals, and mobile payments.
Online Payment Processing is Necessary
While choosing a good online payment processor to meet your needs is important, adding online payment processing to your website isn’t difficult. There are options for organizations of all sizes and budgets. You don’t have to learn to code or even be particularly tech savvy to get most of them up and running.
Online payment processing isn’t just a “nice to have” option anymore, it’s a necessity. But getting started doesn’t have to be stressful. Once you’ve added online giving to your website, you can immediately begin to reap the benefits of efficiency, increased revenue, and donor satisfaction.
About the Author
Sayana Izmailova is the Content Marketing Specialist at Wild Apricot, a membership management software. She has worked at a number of nonprofits and uses her experience to help small organizations advance their missions.