Estimated reading time: 3 minutes, 28 seconds

With school back in session, businesses and nonprofits are already preparing for a fourth- quarter surge. ‘Tis the season for consumer spending...and giving! As the holidays approach, nonprofits should be looking for ways to capitalize their earnings.  According to Nonprofit Source, 30% of annual giving happens during the holiday stretch, and fundraisers, auctions, and donations made in people’s names as gifts are a crucial foundation for nonprofit success. One of the biggest giving days is Giving Tuesday, which this year falls on December 3, 2019, where millions of people inspired through social media and collaboration give to charities across the globe. Giving Tuesday 2018 brought in over $400 million for charities globally. 

In recent years, donating via credit/debit cards has become routine, especially since many patrons can set up recurring gifts or receive incentives for giving. 

But if people are making donations with credit cards, a nonprofit will need a payment processor or a merchant account. No matter which method you use to process the cards, fees will take a percentage of that donated money. It is frustrating to see how much money is hemorrhaged through fees and rates. Understanding processing fees and rates is a complicated process, too, and transparency is the most important quality: What are you paying and to whom?

How Do You Get A Nonprofit Discount On Credit Card Processing?

If you already use a credit card processor, you’ll need to call your processor and ask about 501(c) status discounts. Sometimes a phone call and an extension of a contract can lower fees for nonprofits. But first: Know your rates and fees! You can shop around competitively but only if you know how much you’re paying each month. 

If you’re working with a payment processor such as Square or PayPal, they take a set percentage per transaction, but PayPal has reduced rates for 501(c) status nonprofits and waives fees for nonprofits listed with them as giving partners. 

What Features Should You Look For In A Processor?

If you’re shopping for the best processor for a nonprofit, your first and most important feature is transparency. There are so many amazing choices that there’s no need to settle for any company that isn’t upfront about fees, rates, payment turnaround times, etc. What’s important to you might be singular to your nonprofit, so here are some things to ponder:

  1. Cost: Bottom line, you’re a nonprofit, and every penny matters. There are websites that bill themselves specifically as processing solutions for nonprofits and then charge steep monthly user fees AND pass down all the credit/debit fees.
  2. How To Collect Donations: Do you want to collect in-person, online, or through a donation page? All of those types require different forms of access. If you want all or some of these methods, find a processor that can accommodate the various ways you need to take money.
  3.  How Do You Manage Your Finances?: If you use software such as Quickbooks, you’ll want to look for a processor that can integrate with your bookkeeping.  

Best Credit Card Processors For Nonprofits?

iATS is the leader for nonprofit credit card processing with a simple $0.26 fee per transaction (standard credit card rates apply), and it’s streamlined for nonprofits only. Two other top contenders are Dharma Merchant Services and Payment Depot. Both of those companies have reputations for having competitive rates for nonprofits, so those nonprofits can keep as much of their donation money as possible. A quick runner-up is Payline, which also has discounts for nonprofit use.

Shelbi Wescott is a writer and educator from Portland, Oregon. When she isn't writing about business insurance, she is a published author churning out pages for her science-fiction and mystery books. In 2015, her book After Life won an Honorable Mention for Best YA Mystery from the Library Journal. (It has ghosts. And mystery.) Shelbi has both a BA in English Literature and a Masters in Teaching from Lewis and Clark College.

Merchant Maverick is a comparison site that reviews small business software and services. We also write informative articles about these industries.

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