Nonprofit Card Processing Discounts Can Mean Big Savings

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nonprofit credit card processing
Anyone who runs a nonprofit organization knows how important it is to cut costs at every turn. Funds are limited, as are resources. There are many ways to save money, but one that many not-for-profit organizations don’t think of is reducing their nonprofit credit card processing costs.

Being able to accept donations is the lifeblood of a nonprofit, but the days of cash donations are long past. Credit and debit cards are the preferred method of payment for many people, especially if those cards offer their owners some sort of reward for doing so. Plus, the automated nature of card payments can mean lighter administrative workloads (less time spent opening mail, making trips to the bank to deposit funds, etc), which has a positive effect on any organization’s bottom line.

Not only that, but many of these organizations often require flexible solutions that allow them to collect information about donors and sponsors, as well as payment data — not to mention sell merchandise or set up recurring donations.

Fortunately, if you are a nonprofit organization, you can in some cases lower your credit card processing rates just by asking! (Note: You’ll have to provide proof of your 501(c) status.) If your current processor doesn’t want to offer you a lower rate, you should start looking around at some of the other options. Some of our top-rated processors here at Merchant Maverick are particularly friendly to nonprofits.

But first, some background information.

How Does Credit Card Processing Even Work?

Credit card processing fees can vary quite significantly depending on both the company that does the processing and how the company handles processing. Most companies offer either tiered pricing or interchange-plus (sometimes called cost-plus).

Tiered pricing essentially lumps certain types of transactions into broader groups and charges costs based on which group the payment falls into. Typically, you have a qualified tier with the lowest processing rate, a mid-qualified tier with a slightly higher rate, and a non-qualified tier with the highest rate.

Interchange-plus is a much more transparent option. All card payments are assessed a mandatory “interchange” fee. This includes all the fees paid to the banks and credit card associations. Interchange is non-negotiable; everyone pays interchange fees. The “plus” comes from a markup that your processor charges per transaction. It may be a certain percentage; it may be a percentage plus a flat-rate fee; in some cases, it may even be just a flat-rate fee.

Tiered pricing tells you to pay a flat fee based on the tier grouping. Interchange is included in that cost, and anything above that is the markup. The trouble with this is it’s not always clear which tier a payment will fall into, and you can end up paying more than necessary because of it. With interchange-plus, you always know what you’ll pay based on the card type, so it is often a much better deal.

Here’s where things get complicated:

All the various types of cards are subject to different interchange rates. For example, debit cards have a much lower rate than credit cards. Both Visa and MasterCard offer discounted interchange rates for nonprofits. But commercial and rewards cards, as well as American Express and Discover cards, have a higher interchange rate.

On top of that, if you accept payments online or over the phone instead of in person, you’ll likely pay a higher rate. That’s because online/phone payments are processed as Card Not Present, which possesses a higher risk and therefore higher cost to process.

An additional concern is recurring payments. This is a great way to keep a steady cash flow, but it opens up a can of worms because you need to be sure that a.) the cardholder’s data is stored securely, and b.) the information gets updated in a cardholder’s data changes.

How Do You Get a Nonprofit Discount on Credit Card Processing?

If you already accept cards and want to start saving money, ask your processor about ways to lower your rates. It might be as simple as providing proof of your 501(c) status. In some cases, you may be asked to renew or extend your contract, if you have one.

If you want to maximize your savings, then be sure to ask for interchange-plus pricing while you’re at it.

Before you lock yourself into a new contract, however, you might want to shop around and see what some other processors are offering.

A few merchant service providers specialize in working with nonprofits and charitable organizations, including some of our top-rated processors:

All of these processors offer special discounts for nonprofits, though their suites of services vary somewhat. You can learn more about some of these options in our post detailing the best small business credit card processing options available today. Dharma is high on that list.

What Features Should You Look For in a Processor?

The best choice of nonprofit merchant account or credit card processor really depends on your organization and what features you need. You should look at how your organization raises funds now, as well as any future plans for expansion. Some basic questions to answer include:

Do you want to accept donations online? Make sure your merchant account provider gives you the tools to easily set up a “donate” button on your website.

Do you want to offer honorariums and memorials? If so, you need a customizable checkout option that lets you create fields for that data.

Do you want to accept regular monthly donations? If so, make sure your processor supports recurring billing.

Do you want to accept donations in person? A virtual terminal will come free from many traditional merchant accounts, but for PayPal, it’s an additional $30/monthly. In addition to accepting payments through your computer, this will also enable to you to accept payments over the phone. You may need a USB card swiper to plug into your computer as well.

Do you want to sell merchandise in person? Look for a processor that offers affordable terminals, or the ability to reprogram your existing equipment if you are already doing so. If your team travels a lot or a traditional register setup is too unwieldy, look for a merchant account that offers a mobile payments app. (Or consider using PayPal Here or Square.)

Do you want to sell merchandise online? You’ll need a gateway, which some merchant account providers offer for free, and e-commerce software (not often included with merchant accounts) that is compatible with your gateway.

How do you keep your financial records? If you use QuickBooks, look for a processor that offers QuickBooks integration as a selling point.

Finally, remember that in the online space, credibility is crucial. You need to make sure that your merchant gives you the tools to make your website look professional. (In one regard, this is definitely a major advantage to PayPal, which has pretty much universal recognition.)

Certainly, there’s a lot to consider. If you need help choosing a payments processor, contact us!

Alternatives for Accepting Credit Card Donations

A merchant account isn’t the only way to go about collecting donations via credit card, though it’s certainly the one that puts the power in your hands. It also gives you the most flexibility, because many online donation platforms are exclusively for donations. That means you need to find other ways to accept cards for selling merchandise, etc. You should expect to do a bit more marketing to increase awareness and solicit donations, or pay a bit more for these services as a trade-off.

Capital One runs a giving site where cardholders can make donations. The donations are distributed via Network for good, while Capital One covers the cost of the processing fees.

Network for Good also offers custom tools for you to set up your fundraising. However, it’s worth noting these contracts start at $79/month plus 3% of all transactions. That’s notably higher than you’ll pay with a merchant account; however, the value-added tools provided may offset the cost, especially if you only plan to use it for short-term campaigns.

JustGive.org has one of the most robust donation sites for nonprofits. It even allows people to make gifts on behalf of others, and enables memorial gifts. However, it comes with a rather steep 4.5% processing fee; the company will waive the $0.35 flat fee on donations made directly through your JustGive link. There’s even an option where you can allow the donors to pick up the processing costs. However, it’s not something you can host on your own website.

Amazon Simple Pay is a way for nonprofits to accept donations on their websites. Users can contribute by logging in with their Amazon accounts. This is just an extension of Amazon Payments, focused on nonprofits, so you’ll be paying 2.9% per transaction, which is again a rather steep cost.

Facebook has a pilot program where 501(c)(3) nonprofits can set up donations directly through Facebook, and for now, there are absolutely no costs (but that may well change in time). Still, it can be a useful way to obtain donations if you have an active Facebook page.

PayPal Giving Fund is a less traditional option. While PayPal does have a nonprofit discount, this program delivers 100% of proceeds to the registered charity. The nonprofit organization just needs to sign up; PayPal handles all the administration and users can choose which cause the funds go to. This is not unlike Amazon Smile, where Amazon shoppers can direct a portion of the proceeds from sales to go to the charity of their choice.

American Express and Discover both have giving programs where cardholders can donate to Charity and opt to use their rewards points to cover the transaction cost, ensuring that 100% of the donation goes to the charity.

Ready to Start Saving Money on Card Processing Fees?

If you’re already accepting credit card payments for your nonprofit, it’s time to start checking those monthly statements and see what you are currently paying. (Check out our guide here for more information about fair credit card processing rates and how to accurately compare rates.)

Then, start shopping around. With interchange-plus, you should be able to directly compare processing rates. Be sure to look at the average size of your donation when comparing transaction costs. A flat per-transaction fee is most costly for small transactions than a straight percentage, which is something to consider. Don’t forget to factor in monthly fees, either.

Finally, beware of locking yourself into a long-term contract or one that includes an early termination fee (ETF). Many processors have now moved to month-to-month packages or at least waive your ETFs. Beware of independent sales agents and deal directly with a company when you can. And finally, make sure you get everything in writing.

While a percentage point here or there might sound like pocket change, in the long run, the savings from your lower credit card processing fees can really add up. And money saved on credit card processing fees can be directed to more worthwhile causes.

Got questions about nonprofit credit card processing rates? Leave a comment or contact us directly. We’re happy to help!

Melissa Johnson

Melissa Johnson

Melissa Johnson has been writing about payment processing and mobile payments since 2014, and has been quoted in articles for Credit Karma and The Next Web, among others. She graduated from The University of Kansas in 2010 with bachelor's degrees in English and journalism.
Melissa Johnson

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49 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Michelle Stewart Walsh

    Hello Melissa – we’re a small local church that regularly runs fund-raisers: Rummage sales, bake sales and the like. We’d like to be able to accept credit and debit cards at these functions, but we only have a few every year, so would like to keep costs down as much as possible.

    What would you recommend?

      Jessica Dinsmore

      Hi Michelle,

      I’d suggest looking into Paypal or Square. They both work well for smaller non-profits with variable sales volumes. Good luck!

        Steph J

        Hi there! Thanks so much for all the helpful info in this article… we are small nonprofit history museum with 501 c 3 status –we have a small museum store and regularly process tours and sales by credit card. Our current POS is a bit outdated and we are having issues with it. Wondering if this is a good time to also review our merchant services and make a change both in processing and our whole POS system —to be sure we are making the most of ever penny we earn and spend. Wondering what your suggestions are for us? We recently used PayPal Here for our big yearly fundraiser but we definitely still need a point-of-sale for our daily operations (tours, sales, donations etc.). Thanks so much for any advice!

          Melissa Johnson

          Hi, Steph!

          It certainly sounds like you’re at a good point in time to re-evaluate your payment processing and POS setup!

          PayPal Here should work on a daily basis if you don’t need a lot of features. You can add hardware and receipt printers and such. You can also set up donation buttons online for one-time and recurring donations, and you’d be eligible for a discount for those online transactions. As a bonus, PPH is free.

          Vend offers a non-profit discount (30% off) for its POS app as well. And it integrates with PayPal as a processor. If you need some more robust functions, that could be worth pursuing. Vend offers a discount if you pay for a whole year in advance, but you can also go month to month.

          There’s also ShopKeep, which offers custom pricing for merchants. ShopKeep offers its own payment processor with custom rates (but you can choose to use your own processor if you like). You’ll have to contact them for details, but it’s a powerful platform with month to month agreements.

          Another great option to look at would be Dharma Merchant Services. They do offer nonprofit discounts and they give a lot of money toward charitable causes themselves.

          I hope this helps!

            Ariel

            Health Services in an office setting with 501(c)3 status. We are trying to figure out if going with Square or Paypal makes the most sense? We will be taking payments by swiping cards and would love an option for donations on the website or other easy ways. Which would be best? Thanks!

              Jessica Dinsmore

              Hi Ariel,
              I would say Paypal makes the most sense for you, and it’s super easy to set up a donation button. Good luck!

                Carmen Davis

                Our group, non profit, puts on horse shows one time per year. We would like to accept credit cards with little to no fees. Any suggestions?

                  Jessica Dinsmore

                  Hi Carmen,
                  I’d suggest looking into Square or Paypal Here. They are both non-profit friendly and mobile, which seems convenient for horse shows, and neither have monthly fees. Best of luck!

                    Kim Carroll

                    What would you recommend for a school PTO with 501c3 tax exempt status? It would be used for spirit wear, school event tickets and food & drink sales at functions.
                    Any help will be greatly appreciated.

                      Melissa Johnson

                      Hi, Kim! I would probably look at PayPal in your case. You’ll get all the tools you need with no monthly fees, which is great if you’re doing only a small volume each month.

                        Sandra

                        Non profit Inc. 501 c 3 New Charitable Assistance program. Building a web page awaiting my bank to setup a donation system in the future. Have a bank account established. Please advise for growth of the foundation to include sales of products. fees and/or percentages and no termination for transfer to another service. security is another area of interest. We are only at projections so little income and need much to grow.

                          Melissa Johnson

                          Hi, Sandra! I think if you are just starting out with a low volume, PayPal may be the best option for you! You’ll be able to set up single and recurring donations with just a few clicks, plus create an online shop and swipe cards in person at fundraisers, and you’ll be eligible for the nonprofit discount.

                            Debbie Burkhart

                            We are a 501C3 supporting a music program at a high school and run two big events an a few small ones. GoPayment had been great up until they stopped letting us use older readers forcing us to buy new at about $20 each and we need atleast 15 for the large marching band event. Any ideas who would help on the card reader side?

                              Melissa Johnson

                              Hi, Debbie!

                              I would consider looking at PayPal, though Square may also be willing to work with you on the hardware front! You’ll have to contact sales directly and ask, however. Generally, discounts on hardware aren’t offered by default, even for nonprofits! But you really should consider upgrading to some chip card hardware to reduce your own potential liability.

                                Mike Rolf

                                Thanks for the info. Pay Pal looks pretty good for our nonprofit but I see they only mention credit cards for processing. We recently had a fundraiser with a big silent auction. We currently use Swipe but we had about 15 upset people when our iPads were not able to process debit cards. We are a small nonprofit that takes in less than $100,000 in Credit/debit donations. Thanks for any suggestions.
                                Thank you,
                                Mike

                                  Jessica Dinsmore

                                  Hi Mike,

                                  That sounds very frustrating! We don’t know much about Swipe, but Paypal seems to be a good fit for your needs. Paypal Here can process debit cards on the credit networks, just like a credit card, so the customer experience remains the same regardless of their method of payment. I hope that helps!

                                    Brenna

                                    Thanks so much for this helpful article and for the follow-up questions and responses!

                                    I have worked for straight-up non-profits in the past, and we’ve always used Network for Good, ActBlue, and other donation processors of that type. However, my new gig is with an historic mansion that is a non-profit, but also makes money from for-profit activities such as weddings, lectures, concerts, and the like. We’d like to be able to take both donations and payments online, as well as in person. We’re relative small. Would Square be the right way to go to meet this for-profit/non-profit hybrid’s needs?

                                    Thanks!

                                      Jessica Dinsmore

                                      Hi Brenna,

                                      Square is a great option for nonprofits, but for your situation, I think PayPal is your best bet. They will offer you a nonprofit discount, plus recurring donation buttons. PayPal’s recurring donation buttons are easy to set up, plus you can send invoices and accept payments in person. Best!

                                        Cathy Freeman

                                        We just applied for non-profit status. We are a group of patients with a rare incurable cancer and are looking for donations to fund researchers who’ll study our rare disease, help get tumor tissue to researchers to create cell lines and assist patients. We have both a facebook site and a website. In our first year we facilitated $130,000 in fundraising through a researcher’s nonprofit lab (using his Foundation’s status). This year we are going creating our own non-profit so we can fund other researchers as well. I doubt we’ll every get the amount we raised last year again thus it would be a low volume donation site. I first thought Paypal but then realized there would be two fees, Paypal’s fee plus the credit cards fee. I expect most donations to be by credit card. I use Square personally for my husband’s concerts but it has a high percentage per transaction fee. Thus looking for a credit card non-profit that a donate button on our website would link to with the least percentage fee per transaction as well as no monthly fees since we’ll probably go months with no donations. Trying to save lives and often our disease first is seen in teenagers, SDH Deficient (a Kreb’s Cycle inherited mutation) that leads to three different cancers, Gist (what I have), Paraganglioma (what my father died of) and renal cell carcinoma. Thank you.

                                          Jessica Dinsmore

                                          Hi Cathy,

                                          Paypal is actually your best option — there won’t be any fees beyond processing rates, and since you are a non-profit you’ll be able to get a lower rate than you would with Square.
                                          Plus you get the option of recurring donations for free! Best of luck to you and your nonprofit!

                                            Kim

                                            Hi, We’re a small nonprofit providing thherapeutic riding for children and adults with disabilities. We’d like to be able to accept donations via credit card, as well as payments for lessons. Occasionally we might have merchandise, such as t-shirts or cups being sold. Suggestions?

                                              Jessica Dinsmore

                                              Hi Kim,

                                              What a great service you provide! I think Square would handle this well. They work great for most smaller non-profits, for both regular donations, as well as fundraising events, etc. They are also easy to use and have no monthly fee. Good luck to you!

                                                Gerry

                                                Hi,

                                                I’ve read your article and many of your responses to comments. We are a small to medium sized church that has some monthly recurring donations plus a small bookstore that accepts credit card sales. We don’t have a dedicated pad or phone that we can attach a reader to, though there is a computer in the bookstore that can be accessed. You recommend Dharma to several folks who seem to be in situations similar to ours but I read somewhere the Dharma isn’t good for smaller organizations. Is that correct? What would you recommend for us?

                                                Thank you!

                                                  Jessica Dinsmore

                                                  Hi Gerry,

                                                  I think with your lower sales volume, you’d be best off with Square or Paypal, however you’d really need to invest in an iPad or tablet for either of them. They both accommodate donations quite simply, and offer the flexibility to accept donations on the go. Just be sure to get the EMV reader regardless of your choice. Hope that helps!

                                                    Jason

                                                    Are there any 3rd party processors that allow you to execute all transactions under your domain, seamlessly? I understand I can do this by working with a company like Authorize.net, but that is a complicated set up. I’m looking for a PayPal or a NetworkforGood type service that can do this.

                                                      Jessica Dinsmore

                                                      Hi Jason,

                                                      I’d suggest checking out our eCommerce reviews, and possibly look into Shopify. We aren’t 100% sure if this is the solution to your problem, but at a minimum, they make it pretty seamless to set everything up under one domain. I hope that helps!

                                                        Annie H

                                                        Hi, we are a non-profit preschool based in California, and we’re looking for a way to accept online tuition payments (around $175-$200/month) for around 75 families. That’s our priority, as our parents have been asking for online payments for awhile now. Also, a mobile on site option would be nice, in case parents want to pay tuition at school, or if they want to purchase tickets to some of our events. Any recommendations?

                                                          Jessica Dinsmore

                                                          Hi Annie,

                                                          I think Dharma Merchant Services (see our review) would meet your needs. They are great for non-profits and come highly recommended. I’d also suggest this article: Nonprofit Card Processing Discounts Can Mean Big Savings.

                                                            Kathi Williams

                                                            We are looking for something other than PayPal Here for vendor events. PayPal Here does not transfer the address of the donor to the main Pay Pal file causing us to have to enter everyone by hand.

                                                            Do you know of any POS card companies that have the integration so we can obtain the address of our donor?

                                                              Jessica Dinsmore

                                                              Hi Kathi!

                                                              I love the work you’re doing! I think Square Customer Directory would be perfect for what you are looking for. Check it out and please let me know if you have any further questions. Best of luck!

                                                                Catherine

                                                                Great Article, Im not sure if I have more or less questions. I have heard that PayPal has a cap on how much money you can move out of the account per month? If that is true, is there a better option.

                                                                It is a non profit.

                                                                  Melissa Johnson

                                                                  Hi, Catherine!

                                                                  As far as I am aware, and as far as PayPal indicates on its website, caps only apply to unverified non-profits. Once you link your bank account and provide the other information, you should be free to move money around as you need/

                                                                  https://www.paypal.com/us/webapps/mpp/brc/nonprofits-and-limitations

                                                                  Hope this helps!

                                                                    Elaina

                                                                    We are a looking to accept credit card transactions at various events such as bake sales, and other fundraisers, etc as well as adding a storefront to our website.

                                                                      Jessica Dinsmore

                                                                      Hi Elaina,

                                                                      I think Square would be perfect for you. Check them out and see what you think. Good luck with your sales!

                                                                        Sherry

                                                                        Our camp would like to take online donations where people can use their credit cards. We also have a camp store that we sell out of and have many parents that would like to pay with a credit card. What’s the best option that would allow us to both?

                                                                          Jessica Dinsmore

                                                                          Hi Sherry,

                                                                          Thanks for writing. I would recommend taking a look at Square; they work well for non-profit organizations in our experience. Paypal would also be worth looking into if Square doesn’t check all of your boxes. Best of luck with your camp!

                                                                            Reema

                                                                            Hi, I am looking for a cheap option for credit card machines for a non-profit organization. We are currently using moneris which is quite costly for us.
                                                                            Please advise! Thanks!

                                                                              Jessica Dinsmore

                                                                              Hi Reema,
                                                                              Square is an excellent choice for non-profit organizations and there are no monthly fees or early termination fees.

                                                                                Kathie Daufel

                                                                                We are a non-profit organization. We perform once a year and we would like to offer the option of buying tickets at the door using a CC. Looking for the best option for us to do this. Any suggestions would be greatly appreciated. Thank you.

                                                                                  Jessica Dinsmore

                                                                                  Hi Kathie,
                                                                                  Square is a great option for non-profits with low/variable sales volumes.

                                                                                    Lynette

                                                                                    Do any of the merchants have a mobile phone app that accepts recurring donations.?

                                                                                      Jessica Dinsmore

                                                                                      Hi Lynette,

                                                                                      Dharma Merchant Services should be able to help with this!

                                                                                        anne

                                                                                        Hi, Can non-profits charge the fee BACK to the person making the donation?

                                                                                        We were thinking of putting a comment on our website that the processing fee would be covered by the donor. $100 becomes $114.50.

                                                                                          Chloe Bahal

                                                                                          Hi Anne,

                                                                                          That’s a great questions. The laws regarding charging the customer vary between the different card networks, so it is hard to say. This article and this article will help you get a better idea of what you need to do to comply. I hope this helps and if you have further questions please let me know.

                                                                                            Julie Elangwey

                                                                                            Hello Melissa, How to reduce credit card processing costs?

                                                                                              Chloe Bahal

                                                                                              Hi Julia,

                                                                                              I think you might find this article helpful. If you have further questions please don’t hesitate to let us know.

                                                                                                Florence Allbaugh

                                                                                                Thank you for your work. It was helpful for us. We are a non-profit providing medical & dental care in developing countries.

                                                                                                  Abraham Amoah

                                                                                                  Please I’ve set up a non-profit making organization site at http://www.christiansonearth.org and I want to see how you can help me to set up a merchant account for donations. Please visit http://www.christiansonearth.org/hell.html or /rapture.html to understand what I mean.
                                                                                                  Thank you.
                                                                                                  Abraham Amoah
                                                                                                  Ghana

                                                                                                    Jessica Dinsmore

                                                                                                    Hi Abraham! Thank you for your inquiry. I’d recommend Dharma for your non-profit needs. Best of luck to you!

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