In its broadest sense, merchant services refers to all thing related to being able to accept electronic forms of payment. This might mean being able to take online donations through your website, processing sales from a retail location, or even accepting payment for services rendered. Being able to accept credit and debit cards is pretty important in today’s environment, and nonprofits who don’t take advantage of this may be missing out on a whole lot.
Of course, it’s easy to dismiss the need to accept these types of payment options. Many nonprofits choose to keep costs down by only accepting cash and checks, for example. In the case of online donations and purchases, it may seem easier to simply set up a PayPal account and call it good. In fact, it probably is easier. Unfortunately, it’s likely not as good for the bottom line as one might think.
The biggest argument against accepting credit cards, etc, is that it just costs too much. The fact of the matter is that there are numerous fees that are charged. These might include a per-transaction charge, a terminal-rental fee, a percentage of sales, and more. (Notice I said “and,” not “or.” There are multiple fees involved.)
On the other hand, it’s been shown again and again that those using credit or debit cards will contribute more than those offering cash donations. In addition, there’s just no denying the convenience of being able to type a few numbers into a website and make an immediate purchase or donation. Both of these factors have a lot to do with the staggering increased in online giving in the past decade.
When it comes right down to it, I suspect that even the fees aren’t the biggest turnoff when it comes to merchant services. Instead, I think that the whole process is so overwhelmingly complex that many nonprofits (especially the smaller ones) just choose to skip the hassle altogether. In addition to the fees mentioned, there’s reporting to take into consideration, not to mention a slew of government laws and regulations that must be followed.
I have found, however, that there are some merchant services providers who choose to work specifically with nonprofit organizations and therefore have a good handle on what is needed and how to partner with a nonprofit to get the most out of the whole thing. I’ve been working for a while with one called MinistryLINQ (let me reiterate that for FULL DISCLOSURE purposes: they are a client of mine), which is how I’ve learned a lot of this information. While they seem to have a pretty reasonable approach for working with their clients (most of whom are Christian ministries or nonprofit organizations), I’m sure there are other merchant service providers out there that can also assist your organization in getting what you need.
So, if you haven’t considered accepting electronic forms of payment, you may want to spend a little time with the idea. Look at the research and your needs and determine if you might actually come out ahead by adding a “donate now” button to your website or by selling some products to both market your organization and defray some costs. You may just be surprised to discover that you can up your giving while allowing the merchant services provider to handle 99% of the confusing stuff on their end.
