Take Action: How To Understand The True Cost Of Your Payment Processor

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With the click of a button, supporters from around the world can contribute to your nonprofit’s mission. This great advantage has helped nonprofits, leading many to start raising more funds online. However, beneath the convenience of online fundraising is an important consideration: the true cost of payments processing.
The more you or your donors pay in fees, the less that actually goes towards your organization’s purpose-driven mission. Some nonprofit CRM and payments vendors aren’t upfront about their fees. You might pay for things you aren’t aware of (or worse your donors are paying fees directly to the vendor that you’re not aware of). Being educated on payment processing fees will help you make more informed decisions in the future.
Let’s explore the hidden costs of payment processing and empower you to make informed decisions when choosing a payments vendor. It’s important for you to ensure that your hard-earned fundraising dollars go to your cause and aren’t swept away through confusing fees.
Payment processing fees refer to fees charged to merchants for processing credit card payments and online payments from customers.
In other words, any nonprofit accepting online payments will pay fees for processing donations through a payment processor. Stripe’s debit and credit payment processing fee is 2.2% plus an additional $0.30 per transaction for non-American Express transactions.
Different payment methods, such as ACH, AMEX, or Apple Pay, may have different fees. For example, Amex® has a 3.5% fee plus $0.30 per transaction. This cost difference can impact a nonprofit’s total paid fees because as you raise money through different payment methods, such as AMEX, you will end up paying more in fees.
In addition to payment processing fees, nonprofits may have to pay a platform fee for their solution of choice. This is a fee charged for the use of fundraising software.
Let’s explore the different ways this fee can be charged or packaged:
What is often missed with the tip model is that the money goes 100% to the software vendor and is not tax-deductible. It usually ends up to be a much higher total cost than alternative options, and can confuse donors. It doesn’t provide the same level of transparency for the donor or the nonprofit using the software platform.
At a quick glance, some payment vendors might seem to provide remarkably low credit card rates, which could seem like the best choice. But sometimes the cost is just paid by the nonprofit in other fees. Many payment processors tack on additional or hidden charges that can erode the final donation amount received by your nonprofit.
These costs include:
Let’s compare the average expenses for a CRM platform versus fundraising platform payments fees.
*CRM Platforms | **Fundraising Platforms | Bloomerang | |
Processing rates
(Debit / Credit) |
2.7% + $0.30 | 2.7% + $0.30 | 2.2% + $0.30 |
Platform rates | $530 flat fee OR
1.7%/transaction |
Flat: 4% OR Tipping: 12% | 1% |
Other fees | $15/chargeback
$0.99/card updated |
$15/chargeback | No hidden fees |
*Average rates across 5 leading CRM providers
**Average rates across 5 leading fundraising providers
The key to avoiding the pitfalls of hidden fees lies in asking the right questions and knowing how to examine your payments vendor. Ask for a detailed breakdown of your fees. Remember to look at the payment processing fee, platform fee, tips or fees covered by donors, and any additional expenses.
When was the last time you looked at your current payment processor’s monthly bill? If it’s been a while, take a few minutes to review so you understand all the fees your organization is charged.
Once you’ve done your homework, ask for support if you need it. At Bloomerang, we’ll analyze your unique costs for you so you can understand what you currently pay or would pay with Bloomerang Payments.
The journey to effective fundraising payment management begins with awareness, but it’s action that drives results. When you can approach payments vendors with clarity, you can take control of your nonprofit’s finances and ensure that your fundraising efforts have the maximum positive impact on their cause.
As nonprofits like yours continue to make a difference in the world, the path to success is paved with careful consideration, informed decisions, and strategic partnerships. By taking the time to understand the true cost of fundraising platforms and payments processing, you can channel more resources into your mission and make a lasting difference in the lives of those you serve.
At Bloomerang, we believe in transparency. That’s why we offer a free consultation to help your nonprofit understand its payment processing costs compared to Bloomerang Payments.
Already a Bloomerang Customer and curious about potential savings? Schedule a session with us to learn more.
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