Online fundraising brings in millions of dollars for the nonprofit industry every year, and the numbers continue to grow. But along with accepting all that money come concerns and issues surrounding the electronic payment process. Nowadays there are so many options it can be difficult to decide which online donation tool or payment processing method is right for your organization.
Understanding what to consider when choosing a payment processor is important. Answer these six questions and you’ll be well on your way to finding the right solution.
What do you need? As with any type of major technology decision, start by listing your needs before you get caught up in all the sales and marketing mumbo jumbo. Of course each tech company will each try to convince you they have the perfect solution—but first you have to determine what type of solution you need. Do you want to accept recurring payments in addition to one-time transactions? If so, are both types of transactions supported in the software or tool you’re considering? Also, consider which payment methods you’d like to accept. All major credit cards seem like an obvious choice, but you should decide whether you want to accept ACH (also known as direct debit or pre-authorized debit) as well. Another thing to consider is protection against credit card fraud. If you’re conducting online transactions, ask which fraud prevention tools are supported by the payment processor.
What are the contract terms? Some processors have strict terms and restrictions relating to their services, so read the fine print before you agree to anything. There may be hidden (and expensive) setup or early termination fees. Also, some payment processors will claim that the credit card data related to recurring transactions doesn’t belong to your nonprofit, which is not true. If you don’t make this clear from the beginning and you later decide to switch processors, it can be a headache to contact all your donors and ask for their payment details again.
Are they PCI compliant? Data security is a huge issue, so it’s critical to know that your payment processor handles transactions with strict attention to security. Payment Card Industry (PCI) Data Security Compliance (DSS) is an important requirement and you should only consider working with a processor that is clearly PCI compliant. Note: Only companies based in the U.S. are required to be PCI compliant so if you look outside the country for solutions, be sure to scrutinize very carefully.
Do they offer good customer support? Some payment processors offer a limited level of customer support (primarily email) and some will charge for additional support. If you want to have live customer support reps available for questions and phone calls, be sure to specify that in the beginning. You don’t want to sign up with a payment processor that leaves you high and dry once your tool or system is implemented.
Also, find out whether your organization’s name will appear on the credit card statement. Having your name (and not the payment processor’s name) will help reduce potential chargebacks which occur when a customer disputes a transaction on their credit card statement. Chargebacks can be a time-consuming hassle.
How long will it take to get your money? This can vary widely from provider to provider. Some payment processors remit funds within a day or two (business days) while others do so weekly, monthly or only when you request it. Keep in mind that ACH transactions typically take longer to be deposited than credit card transactions. A lengthy holding time can cause delays in the funds being released to your account, so determine what a payment processor’s remittance schedule is right upfront.
What are the rates and fees? When comparing fees, also consider pricing structures. It’s difficult to draw comparisons between payment processors if their rate structures are different. For the best deals, look at companies that have experience working with nonprofits. They understand the online donation process as well as the nonprofit industry and will typically structure their rate and fee schedule in a way that’s clear and easy to understand for most organizations.
Bottom line: Don’t be afraid to ask questions and be deliberate when deciding on a payment processor. How you handle your online payments and donations—as well as the potential waiting time for your funds—can become either a nightmare or a dream, depending on the choice you make and what’s right for your nonprofit.