As a church, your priority must always be people. Integral services like credit card processing end up on the backburner, but you know it’s essential to keep up with new payment methods your congregation want to use. You also don’t want to spend your time fixing problems when they occur.
Learn about AHMB’s Donation Automation Partnership Program for Churches
AHMB will recommend the best, most affordable tools that you need to accept all kinds of payments, from checks and ACH withdrawals, to credit and debit cards via phone, swipe or chips.
AHMB takes responsibility for your credit card processing and beyond. With us, you actually get an experienced, consistent point of contact whose primary goal is your uninterrupted payment-accepting tools.
Imagine not having to jump through hoops, waiting on hold to talk to a knowledgable person. Better yet, imagine having months or years of flawless payment processing.
Contact us now to get the ball rolling. We’ll make your choices simple and take as little of your time as possible. Give us a few minutes to discover if your payment processing can be easier.
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There are a number of options for nonprofits when selecting a credit card processor. Although there is little doubt that a nonprofit, that expects more than just a few donations a year, should give donors the option of using a credit card, how a nonprofit does that is not always an easy question to answer. The options generally can be grouped into three categories:
A nonprofit can sign up for a merchant account with any bank or credit card company. The question is how much will the processor/bank charge in setup fees and per transaction fees. Look for programs that have some experience with nonprofits, since the differences between retail and business needs and those of a nonprofit can be considerable.
The benefit of having your own merchant account is that your nonprofit will be the party named on the donor’s credit card statements, and funds will flow directly to your nonprofit’s bank account. The disadvantages are that your organization will need to go through the same credit checks and paperwork as any other business, which may take some time and patience.
- Nonprofit’s name appears on donor’s credit card statements
- Excellent branding opportunities
- Funds flow quickly into nonprofit’s account
- Complicated fee structures
- Wide variance of cost across processors
- Longer time to set up and more legal hoops to jump through
If your organization does not want to apply for a merchant account, choosing a third party processor may be a solution. A third-party processor uses its own merchant account to accept donations for other organizations. The third party processor passes on the donations to the nonprofit, minus a processing fee. There may be some delay in getting the funds into your own account.
One of the downsides of using a third party processor is that often the name that shows up on the donor’s credit card statement is not that of the intended nonprofit. When this happens, it is possible for the donor to be confused and to even protest the charge, sometimes resulting in a chargeback. The question for your nonprofit is whether the possibility of confusion is outweighed by the ease of setting up and managing the account.
Some third party processors specialize in nonprofit credit card processing, have a centralized website that you can refer donors to, offer other services such as sending acknowledgment messages, and website pages that can be branded by your nonprofit. A branded site, however, does not mean that the donor’s credit card statement will carry the receiving nonprofit’s name. Nonprofits using third-party processors commonly include information on the acknowledgment message to the donor about what they will see on their statements.
Popular third party processors charge processing fees that range from 3% for custom service to 4.75% for basic service.
- Quick and easy to set up and manage
- Relatively inexpensive
- Customer confidence in some well-known and widely used third party processors
- Nonprofit’s name may not appear on donor’s credit card statement.
- Possible lag time in getting funds into nonprofit’s own bank account
- Possible need to reenter donor information into nonprofit’s own financial records
What Do I Need to Know About Credit Cards for Accepting Donations?
Question: What Do I Need to Know About Credit Cards for Accepting Donations?
Most nonprofits of any size should be able to accept donations by credit card. Donors love the convenience and perks that they get when they pay with a credit card; and the nonprofit benefits from quick collection of funds.
Merchant Account Fees
One Time Fees
There are frequently fees charged for getting established with a merchant account. They may be called Application Fees, Setup Fees, or Gateway Setup Fees, but they all represent the cost to get started with your merchant account. You may also need to pay for the software or equipment needed to process your transactions. This fee might be an ongoing monthly fee if you sign up for a web-hosted solution, or if equipment is leased.
Monthly Account Fee
Almost all merchant accounts will have some type of monthly fee. It may be called a statement fee, account fee, or reports fee, but it is simply an ongoing cost of having the account available. Some accounts have multiple monthly charges that typically range from $10-30/month. Other accounts may impose a monthly minimum fee instead of/or in addition to the monthly fees.
Transaction Fees & Discount Rate
Usually, there are two components to the cost of processing each transaction: a per item fee (usually between $0.20 and $0.50) and a fee that is a percentage of the transaction amount, called a “Discount Rate.”
The discount rate can vary substantially from one processor to another. It commonly is between 2-4%, based on the type of credit card and the method of processing used. For example, if the discount rate offered is 3%, and you receive a payment of $100 you will be charged $3 as the processing fee. Most of this money goes to the card issuing company such as Visa, MasterCard, etc. (they call this an ‘Interchange’ fee).
It is challenging and nearly impossible to compare these fees since most merchant statements do not present the fees very simply. Sometimes the discount rates are broken down into an Interchange rate and an additional charge from the company that facilitates and sends the transactions to the various credit card companies.
Furthermore, there are many different rates that can apply to a transaction, depending on the type of card used. This is not just if it is Visa, MasterCard, or Discover, but also if it is a Rewards card, Corporate card, Debit card, etc. Other factors affecting this fee include how the transaction is being processed (swiped, keyed in), and even if it passes certain fraud prevention tests such as “Does the address associated with the transaction match the billing address of the credit card?”
Credit card companies say that the different rates reflect the different levels of ‘risk’ for that company. They may feel, for instance, that there is a greater risk to transactions done without the physical card being swiped.
For nonprofits, most transactions are done by phone, by mail, or online, and therefore fall into the category called “card not present” or “mail order telephone order (MOTO)” transactions. MOTO processing rates can vary substantially based on the type of card and your organization’s processing volume, but it will be higher than a physically swiped transaction.
Card types and processing methods often affect the fees charged by dictating if the transaction is treated as a “qualifying” or “non-qualifying.” “Non-qualifying” transactions are charged a higher or additional percentage. Unfortunately, there are no across-the-industry standards for qualification of transactions.
Many large, national organizations have a presence on these sites (for example, see the Social Media page at the American Red Cross