Payment processing for non-profits might seem like a convoluted and complicated matter. This is far from the case! As collecting donations is the core of fundraising, charitable organizations must understand the electronic tools needed to receive funds. Whether the process is familiar or your non-profit entity is a start-up, keep on reading to learn the 4-1-1 on non-profit payment solutions dialed in for your needs.
What is NPO (Non-Profit Organization) Payment Processing?
In general, payment processing refers to the steps taken when a donor presents a credit card, debit card, or e-check for a virtual donation. Once the transaction is approved, batched, and settled – it reaches the NPO’s bank account. For a successful and streamlined process, a charity needs two tools – a payment gateway and a merchant account.
A merchant account gives you the ability to accept electronic payments via the credit card networks or automated clearing house (ACH). A payment gateway connects directly to your merchant account. It is the front-end tool where payment information is securely keyed in and, in some cases, stored via an encrypted, virtual safe.
Why is Payment Processing Important for an NPO?
In this era, online giving more popular than ever before. Therefore, it makes sense charitable organizations would want to provide a way for donors to support their efforts via an online or over the phone (MOTO) payment. A merchant account is an absolute must to accept an online donation.
Many individuals want to support a cause but don’t have the time available to volunteer or drop off a monetary contribution in person. Your NPO can quickly lose these willing donors if a convenient, secure, and diverse payment solution isn’t made available.
Different Types of NPO Payment Processors
As mentioned earlier, for a non-profit to accept electronic payments from donors, they must work with a reputable payment processor. These service providers offer both the payment gateway and merchant account enabling a charitable organization to accept online payments.
Non-profit organizations have two choices when it comes to choosing a payment processor. You can either work with aggregators or dedicated payment processors. We will explain the differences below.
Aggregators offer a service similar to PayPal and Stripe. When you work with an aggregator, you can process virtual transactions without having a merchant account. The benefits of this include a fast setup.
However, there is a downside to working with aggregators. Your organization will have to share a merchant account with other clients who use the service. Should one of the clients be a victim of fraud, it puts your NPO at risk of losing funds. If you’d like more information on third-party payment processors, check out an additional article here.
Dedicated Payment Processors
A better alternative for non-profit organizations is a dedicated payment processor. They, too, allow virtual transactions, but your charity will do so via a private and exclusive merchant account. Your funds are safe with dedicated payment processors since your merchant account solely processes payments for your charity. Should your merchant account fall victim to fraudulent activities, the service provider will give you the required assistance.
How Do Governments and Non-Profits Conduct Payment Processing?
The first step in government payment processing is picking the right payment processor. Then make a plan as to how you will conduct online payment transactions. Your merchant service provider will guide you in creating a custom solution that perfectly fits your organizational needs.
For newbies, your payment processor will create essential tools such as online donation forms. If you have an established system in place, you will need to work hand in hand with a payment processor whose services can easily integrate with your current tools.
It is of great importance that non-profit organizations ensure that their tools integrate with their payment processors’ services. This provides efficiency, saves time, and reduces the chances of errors being made.
The Kind of Payments Accepted by Non-profits
The more payments your processor can accommodate, the more payment options you will offer your donors. This is why you need to work with a flexible and professional merchant account service provider. All in all, below are the two main payment types your organization can accept:
- ACH Payments – Electronic check payments directly debited from the donor’s checking account.
- Credit Cards – Credit and debit card acceptance, including American Express, Discover, Mastercard, and Visa.
Security Measures You Need to Take for Government Payment Processing
To earn the loyalty of donors, you must first establish trust. Remember, these donors, when making contributions, they are sharing with you their financial details. It is, therefore, imperative for you to ensure their data is handled securely.
You can achieve this by working with a payment processor that guarantees secure payment processing and is PCI Compliant. Below are some extra measures that you can take when it comes to securing non-profit payment processing.
- Put in place a regulation whereby all donors will have to enter the CVV Number when making contributions. This step advances security to a whole new level and minimizes fraud.
- Please use an address verification system that will compare the billing address of donors to that in their banks.
- Coming up with a minimum donation amount. This prevents fraudsters from making your platform a testing ground.
How to Reduce Processing Fees for Government and Non-Profit?
Running a successful non-profit requires you to cut costs and increase savings. This is mostly because the funds and resources are usually limited. Although there are many ways to save on costs, one of the most effective ways is reducing the government and non-profit payment processing fees.
Leading payment processors usually lower the processing fees for established clients. If your current processor declines, you can always look elsewhere. At times, reducing your payment processing rates can be as easy as offering proof of your 501(c). Extending or renewing your contract could also make you qualify for a discount. Always ask for guidance from your payment processor on how to lower your rates.
If you are looking to accept online donations, it is high time that you look for reliable payment processing. For those non-profit organizations that already accept credit card payments, you should probably look at your monthly statements and see your current rates.
Payment Savvy is an innovative leader in non-profit payment processing. Whether a government agency or 501(c) charitable organization, will always provide payment solutions that are scalable, affordable, and Level 1 PCI-DSS compliant. Are you interested in learning more? Discuss your options with one of our savvy squad team members today!