Guest Post by Kristen Gramigna, Chief Marketing Officer for BluePay, provider of fast, easy and secure payment processing solutions. She brings more than 20 years of experience in the bankcard industry in direct sales, sales management and marketing. Not Your Father’s Charity nor Elsey Enterprises has had any experience with the BlueRay product and does not endorse it in any way.
If you run a nonprofit organization, you probably don’t think of card-based donations in terms of “payment processing.” After all, you’re accepting charitable contributions — not generating e-commerce sales.
Regardless of your organization’s tax status, any transaction made via credit card falls under the larger “payment processing” umbrella. As such, the same best practices and security guidelines still apply.
However, is credit card processing really worth it? Rather than take on additional responsibility, isn’t it easier to stick with more traditional contribution methods such as check or cash? Let’s explore.
Why Payment Processing Is So Important for Charities
The ability to accept credit cards can turbocharge your fundraising efforts. It’s much easier for donors to make an “impulse” contribution via plastic than it is to:
- Call their banks to set up and send wire transfers
- Write checks and mail them at the closest post office
- Visit one of your locations for in-person cash donations
This conversion potential is especially useful when trying to generate onlinecontributions. Credit cards are increasingly becoming the preferred payment option for donors.
These benefits aren’t limited to charitable donations. Credit cards are also ideal for:
- Collecting membership dues
- Selling merchandise online
- Registering attendees for events
In other words, not accepting credit cards can severely limit your ability to raise money and fulfill whatever mission statement defines your nonprofit organization. But as a charity, how do you get started with payment processing?
Establishing Your Nonprofit for Card-Based Donations
To begin accepting credit card contributions, you have two main options.
1. Third-Party Payment Intermediaries
With this approach, you essentially outsource payment processing to a third-party provider that handles all contributions for you. PayPal is arguably the best-known service of this type, but there are countless other platforms that perform the same basic function.
The beauty of outsourcing is that there isn’t a lot of setup involved. You simply register, add a few lines of code to your online giving page, and you’re ready to go.
There are a few downsides to this approach:
- The more intermediaries you add, the more fees you can expect to pay — and these charges can quickly eat away at your fundraising efforts.
- When you use a third-party payment processor, you sacrifice some control. Redirects to off-site payment forms are fairly common. However, it’s still sometimes possible to brand these pages so they look and feel like your site.
- Third-party intermediaries are great for online fundraising, but taking your campaign offline can be challenging. Only a handful of payment processors provide the necessary hardware for in-person contributions.
This explains why many charities explore the next payment processing option.
2. Merchant Accounts and Payment Gateways
Instead of outsourcing your payment processing needs, you bring more of the components in-house. A merchant account allows you to process card-present transactions with a standard reader or through a virtual terminal (on your computer). There also are many mobile readers that allow you to process credit cards at off-site events such as trade shows and conferences.
If you prefer to raise money online, a payment gateway allows you to set up a hosted payment form that can accept credit card contributions through any standard web browser. The beauty of this approach is that you pay fewer fees and maintain greater control. But as the next section explains, using a merchant account and payment gateway also exposes you to more security risks.
What Charitable Organizations Need to Know About Payment Security
With unprecedented amounts of data being sent back and forth across unsecured networks, credit card fraud has become a very serious issue for the payment industry. It’s easier than ever for thieves to intercept and abuse sensitive financial information.
This is why the Payment Card Industry (PCI) has established a set of data security guidelines. These PCI compliance rules apply to any organization that captures, transmits or stores credit card information of any kind — even if you’re a nonprofit.
Although becoming (and remaining) PCI compliant is an important first step, these mandatory security guidelines won’t necessarily keep you safe. This is especially true if you operate a nonprofit. In fact, thieves often single out charities since they usually lack the IT resources to protect themselves from credit card fraud and abuse.
These concerns are compounded when you take your fundraising online, because you’re dealing with anonymous donors whose identities can’t be easily identified. In addition, criminals frequently test stolen credit cards on online giving pages by running small donations.
It doesn’t matter how noble or laudable your cause. If your payment environment suffers enough fraudulent attacks, you could end up paying the same penalties and legal fees as a for-profit business. Worse, it will become harder to raise money in the future if donors lack confidence in your ability to safeguard their payment details.
This is why you should choose a payment processor that provides additional fraud protection through:
- Credit card tokenization
- Point-to-point encryption (P2PE)
- EMV chip card processing
- Hosted payment pages
- Fraud management filters
Finding the Perfect Balance Between Convenience and Safety
According to some studies, four out of five donors prefer using credit cards over other payment methods such as cash, PayPal or direct deposit. So, not providing this option will severely hamper your long-term fundraising efforts.
However, losses from credit card fraud are expected to exceed $12 billion by 2020 — and not following both the mandatoryandrecommended security guidelines could cost your organization dearly.
Finding a balance between convenience and safety isn’t easy. But with careful planning, it’s possible to design a payment environment that maximizes your fundraising efforts and minimizes the amount of fraud exposure you and your members face.