Only five years ago, the idea that a small nonprofit could accept credit or debit card payments at a pop-up or off-site event would have been ludicrous. Today, the ability to accept mobile payments is becoming mainstream for non-profits of all sizes that engage in solicitations, fundraisers and or events in which the payment takes place outside of the nonprofit’s office or website.
Customers Donate More Via Credit Cards
The reason for accepting credit and debit payments instead of just accepting cash or check at off-site events isn’t simply convenience; rather, individuals paying (and making donations) via credit cards spend more. How much more? Estimates range from 12% to 40% more than they otherwise would paying with cash. A vivid example of this phenomenon from the for-profit world was when McDonald’s started allowing credit card purchases, the average purchase went from $4.50 up to $7.00.
These increased transaction amounts are particularly attractive for non-profits, where the cost of attracting and acquiring a new donor remains a fixed expense, thus all of the increased size of the donation returns to the nonprofit’s bottom line.
Despite the clear benefits of accepting mobile payments for nonprofits, the service providers that enable such payments are still relatively nascent in their offerings, and thus no single provider offers a complete solution for all nonprofits.
Three Options for Accepting Mobile Credit Card Donations
To that end, here is a rundown of some of the most popular mobile payment providers and the relative advantages and disadvantages that each offers for nonprofits.
- PayPal: Who hasn’t heard of PayPal for online payments? The company is also a significant player in mobile payments for nonprofits. When you open an account you get a free card reader to use during outdoor events or anywhere your cell phone has service. PayPal offers discounted rates (albeit still expensive) for non-profit organizations that equates to 2.2% + $.30 per transaction. The primary benefit with PayPal mobile payments is that because there are no monthly fees, a nonprofit can use this solution to accept payments at a few events scattered throughout the year, and not worry about having to pay fees during months when they aren’t processing.
- Flint: Similar to PayPal, Flint’s business model is to charge a higher per transaction rate and dispense with any monthly or annual charges. Unlike PayPal, Flint has eliminated all equipment requirements including a cellphone attached swiper. Instead, nonprofits simply have staff download an app on their smart phone and accept payments by scanning a credit or debit card with Flint’s software. Flint doesn’t offer discounted non-profit rates, so you pay 1.95% per scanned transaction on debit cards and 2.95% per credit card transaction, which means that for donations of any significant size, Flint is considerably more expensive than PayPal. The benefit, however, is that you can empower dozens of staff or volunteers to accept credit and debit card payments on behalf of the organization. Thus, in an instance where you wanted a large number of individuals to accept payment, for say a large annual event, but didn’t want to spend $30-50 per volunteer to purchase a mobile swiper, Flint provides the ideal solution.
- Soar Payments: If you plan to accept mobile payments at any significant scale (above say $20,000 per year) then you’ll likely want to create an account with a traditional credit card processor that has robust mobile payment capabilities. The reason, in addition to the fact that you can use a single processor for all your donations, is that the overall rates are significantly cheaper, and the equipment options offered include some that transact much faster. Soar Payments is one such provider that offers discounted interchange plus rates and low monthly fees to nonprofits of all varieties, including charities, pro bono law firms, and other 529 entities. Depending on the volume processed, this can mean debit rates as low as $0.35% and credit as low as $1.6%, a significant discount over the 2.2% charged by PayPal or 1.95% and 2.95% by Flint. The downside, is that these accounts have regular monthly fees (ranging from $10 – $50 per month), and so if there are extended periods in which your organization won’t be processing, you’ll need to call the company to pause those fees. Thus if your campaign is a one-time short-lived effort, it’s best to go with one of the aggregator services.
Although by no means a complete picture, these three mobile payment providers give you representative sample of the types of mobile payment solutions currently available to non-profits. Depending on whether your nonprofit needs a mobile capable payment processor that enables dozens of staff to accept donations simultaneously for a one time event, the ability to accept a low volume of donations with multi-month gaps between donations, or you require a more robust solution and are processing enough volume to justify the monthly fees, will largely determine the best solution for your organization.
In any case, it is quickly becoming an imperative that successful nonprofits be able to accept donations from their donors at the time and place of that donor’s choosing, so as to reduce payment friction and increase the number and amount of those donations. And for those nonprofits that successfully incorporate mobile payment acceptance into their fundraising plan, the financial benefits for a nonprofit are clear and substantial.