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How do you choose a payment processor for your nonprofit?

By Murad Bushnaq
May 31, 2022

Two women talking in front of a computer

Whether you’re a nonprofit professional with decades of experience or thinking about starting your own organization, you know how crucial donations are for fueling a nonprofit’s ability to deliver on its mission. One of the most recent trends we’re seeing in the fundraising world is digital-first fundraising. In this approach, nonprofits launch campaigns exclusively online, rather than using digital tools as a secondary source of revenue. 

Not only were online campaigns convenient and necessary during the brunt of the pandemic, but they were also incredibly lucrative. According to Double the Donation’s roundup of fundraising statistics, online giving has grown by 12.1% over the past year. Given how convenient it is  to donate and purchase merchandise online, it’s safe to say that online transacting isn’t going anywhere anytime soon. 

Nonprofit payment processing: A quick overview 

Creating an easy online giving experience requires nonprofits to invest in and effectively leverage a number of tools. But the tool that is of paramount importance is a payment processor, a backend tool that safely and securely facilitates online payments and donations between donors and nonprofits.

Here’s how a payment processor works: 

  • A donor uses their credit or debit card to make a payment on your nonprofit’s website. 
  • Their payment is sent through your nonprofit payment processor’s payment gateway to be validated by the donor’s card association and bank. 
  • If the transaction is approved, it is processed by your payment provider and your nonprofit collects the funds. 

There are two kinds of payment processors to choose from: aggregators and dedicated payment processors. Aggregators, which use one merchant account for many organizations, are cheaper to use but are less secure. On the other hand, dedicated payment processors create merchant accounts for each organization, providing an added level of security. This is why they’re the preferred choice for many nonprofits. 

Still, there are hundreds of options within these two categories to choose from. Let’s look at four tips to help you decide on the best solution for your organization’s needs. 

1. Consider your budget. 

First and foremost, have a clear understanding of how much money your organization is willing to invest in a payment processor. On top of standard processing fees, some providers charge additional fees for setup, training, contract closure, and early termination. Likewise, the card processing fees that banks charge to your nonprofit aren’t always apparent upfront. 

Sticking to your budget from the beginning and asking questions about any hidden or additional fees and charges will set you up to make a smart investment that will yield no surprises. 

2. Get recommendations. 

As you start looking for a payment processor, you’ll need to do quite a bit of research. On top of Google searches, check out more in-depth reviews from trusted sources, like TrustRadius or Software Advice

Additionally, there are many roundup-style lists that allow you to compare various options side-by-side. Morweb’s list of the top nonprofit payment processors showcases 10 different options, listing strengths and weaknesses, as well as the cards and currencies each accept. Lists like these can serve as great jumping-off points for narrowing down your choices and launching into more research. 

Also reach out to professional colleagues for recommendations. For example, if you have connections with leaders at another nonprofit you know relies heavily on their online donation tools, ask about the payment processor they use and what their experience has been with their provider. 

3. Examine each processor’s policies.

As you drill down into the specifics of each payment processor you’re considering, remember to thoroughly examine each company’s policies. Here’s what to look out for: 

  • Any hidden charges or fees 
  • How each company handles customer service
  • The complexity of the sign-up process
  • Data portability policies
  • Hold period policies 

Many of the most popular payment processors are built for for-profit businesses, and their policies aren’t always conducive to nonprofit needs. For example, some payment processing customer service representatives may not be able to address nonprofit-specific issues, like how to collect different kinds of donations or migrate donor data from your processor to your nonprofit CRM. As you consider each processor, make sure the provider is willing to customize the experience for your organization and that their policies make sense for your fundraising purposes. 

4. Look for a solution that offers CMS integration.  

Your payment processing tool should be able to integrate with your nonprofit’s content management system (CMS). This integration will allow your nonprofit to accept donations directly through your website and avoid sending your donors to third-party platforms to make donations. 

This will make the donation process fast, easy, and convenient for your supporters, and alleviate any concerns they might have about trusting a third-party platform with their personal and financial information. Plus, they’ll stay on your website longer, which may encourage them to engage with other content about your work!

These four quick tips for choosing a nonprofit payment processor are all you need to kickstart your own organization’s research and shopping process. As you follow these tips, you’ll be on your way to creating an easy, efficient, and secure donation experience for the community that supports your cause.