Payment processing is essential for all nonprifit organizations. This is because they highly depend on gifts from various donors to advance their mission. Online donation forms are increasingly becoming popular. Your donor’s personal and financial records need to be protected throughout the entire online transaction.
We have compiled a list of five things you should be aware of regarding payment processing;
The primary terms you need to know
Importance of having a payment processor
Operations of a payment processor
Payment options available
Compliance with PCI regulations
THE KEY TERMS YOU NEED TO UNDERSTAND.
By first understanding the meaning of some primary terminologies used in payment processing, you will be in a better position to effectively manage the payment processor for your nonprofit organization.
Merchant Account
This are merchant services established between a bank and a nonprofit. It enables the nonprifit to receive donations offered from credit or debit cards.
Third-Party Processor
Online donations to a nonprofit organization are made possible by the third-party processor. However, third-party processors own a merchant account that the nonprofit organization can access. It also doesn’t need a partnership with the bank.
Payment Gateway
A payment gateway is a means of securing the donor’s debit and credit card information used by payment processors during an online transaction.
VPN
VPN (Virtual Private Network) encrypts data to avoid unwanted access. This ensures that the donor’s information is secure.
Aggregator
Aggregators handle payments services for relatively smaller companies in the sector.
ACH
ACH (Automated Clearing House) deals with electronic money transfers between merchant accounts and banks. The process takes around 72 hours to complete.
WHY YOU NEED A PAYMENT PROCESSOR
Without a payment processor in place, nonprofit organizations cannot receive gifts, sell tickets and merchandise online, or collect membership fees.
OPERATIONS OF A PAYMENT PROCESSOR
Payment processing system verifies every online contribution from any donor.
Payment Gateway
Payment gateway checks the validity of the credit card. It provided the information on the card and ensures that it is legitimate. After the verification, the transaction can progress.
Merchant Account
The gifts are forwarded to a merchant services account where the nonprofit organization can easily access the donation after several days, according to your predetermined schedule.
PAYMENT OPTIONS AVAILABLE
Credit card processing or debit payments are the only donation options available to all nonprofit organizations.
Debit payments
With debit payments, the donations are taken from a donor’s bank account directly. The transaction charges for debit payments are typically constant. This is unlike credit card payments that usually result in percentage fees and flat fees.
Credit Payments
MasterCard, Visa, Discover, American Express, and other recognized credit cards are ordinarily acceptable to most payment processors.
IMPORTANCE OF COMPLYING WITH THE PCI REGULATIONS
Payment Card Industry (PCI) developed some security measures that were meant to protect both your donor’s data and your organization’s information during an online transaction. Complying with PCI gives confidence to your donors that their confidential data is secure while donating.