How Nonprofits Can Cut Costs with Low-Fee Payment Processing

Nonprofits play a crucial role in our communities, providing services, support, and advocacy for various causes. However, managing a nonprofit organisation comes with a unique set of challenges, especially when it comes to finances. One significant expense for many nonprofits is payment processing. Whether it’s for donations, membership fees, or event registrations, credit card processing fees can quickly add up, taking a sizable chunk out of the funds that could otherwise go toward furthering their mission.

Fortunately, there are ways for nonprofits to cut costs with low-fee payment processing and even take advantage of free credit card processing for nonprofits. In this article, we’ll explore how nonprofits can reduce payment processing fees and choose the right solutions that align with their financial goals.

Understanding Payment Processing Fees for Nonprofits

Payment processors charge a fee every time a transaction is made. These fees can include a combination of setup costs, monthly charges, transaction fees, and percentage-based rates on donations or payments. While these fees are unavoidable in most cases, nonprofits need to understand what they're paying for and how to minimise the impact on their bottom line.

Here are the key types of fees involved in payment processing:

• Transaction Fees: A percentage of each payment processed (typically 2-3%).
• Monthly Fees: Some payment processors charge monthly maintenance or service fees.
• Setup Fees: Initial costs to set up the payment system or account.
• Chargeback Fees: Fees charged when a donor disputes a charge.

Understanding these fees helps nonprofits evaluate the true cost of their payment processing and seek out more affordable options.

The Benefits of Low-Fee Payment Processing for Nonprofits

While it’s not always possible to eliminate payment processing fees entirely, nonprofits can certainly minimise them with the right tools. Low-fee payment processing can help your organisation:

• Keep More Funds for Your Mission: Lower fees mean more money goes directly to your programs and initiatives instead of being lost to processing costs.
• Increase Donor Satisfaction: Donors who make online contributions or event payments often don't want to see a large percentage of their donation eaten up by fees. Offering a more affordable payment option can enhance their giving experience.
• Simplify Financial Management: Transparent, low-fee processors often come with user-friendly interfaces and reports, helping nonprofits easily track donations and manage finances.

How Nonprofits Can Access Free Credit Card Processing for Donations

Many nonprofit organisations are eligible for special pricing or discounted rates from payment processors, including free credit card processing for nonprofits in certain cases. Some payment processors offer free or low-cost solutions tailored to nonprofit needs, making it easier for these organisations to accept donations without the burden of high fees.

Here are a few options nonprofits can explore for low-fee or free credit card processing:

1. Square for Nonprofits

Square is a popular payment processor that offers competitive rates for nonprofits. For nonprofit organisations, Square often charges a discounted fee of 2.6% + 10¢ per transaction, which is lower than the standard rates for many businesses. Additionally, Square offers a free online donation platform, which can be a huge benefit for nonprofits that want to process donations without any monthly or setup fees.

2. PayPal Giving Fund

PayPal Giving Fund allows nonprofits to accept donations through PayPal, with the added benefit of no fees for eligible organizations. PayPal covers all processing fees for donations made through the platform, which means more of the funds go directly to the nonprofit. However, PayPal’s approval process for nonprofits can take time, and there may be some restrictions on the types of organizations that qualify.

3. DonorBox

DonorBox is an online donation platform that helps nonprofits streamline the donation process and accept credit card payments. While DonorBox does charge transaction fees, nonprofits can enjoy lower fees than traditional processors. Additionally, DonorBox offers an option to waive fees for the nonprofit when donors choose to cover them, further reducing costs.

4. Stripe for Nonprofits

Stripe, another popular payment processor, provides discounted processing rates for nonprofits. Although Stripe charges a small fee per transaction, its transparent pricing structure makes it a solid choice for organisations that want to accept credit card payments online. Many nonprofits also use Stripe’s integration with other platforms, making it easy to manage donations alongside other financial tools.

5. Fundly

Fundly is a crowdfunding platform that allows nonprofits to raise funds with minimal fees. The platform charges a transaction fee of 4.9% + 30¢ per donation, which is considered competitive in the industry. Fundly also offers nonprofit organisations the ability to customise fundraising campaigns and integrate with various payment options.

Best Practices for Minimising Payment Processing Fees

In addition to choosing the right processor, there are several other strategies nonprofits can use to reduce payment processing costs:

• Encourage Larger Donations: Larger donations often come with lower fees in terms of percentage, meaning the more you encourage larger gifts, the more you can save on transaction fees.
• Request Donor Contributions for Fees: Some payment platforms allow you to request that donors cover the processing fees. This can be an effective way to offset costs.
• Use Multiple Payment Methods: Offering various payment methods, such as ACH or bank transfers, can reduce credit card fees and give donors more options.
• Review Your Pricing Regularly: Make sure to review your payment processor’s fees periodically. If better options are available, don’t hesitate to switch.

Final Thoughts

While free credit card processing for nonprofits is not always entirely realistic, there are several strategies that can help reduce these fees to a manageable level. By selecting the right payment processor, taking advantage of nonprofit discounts, and using strategies to reduce fees, organisations can maximise the funds that go toward their mission.

Ultimately, a smart approach to payment processing can save your nonprofit both time and money, helping you focus on what really matters: making a difference in the world.