Setting up a payment processing system for your nonprofit is relatively simple, thereby making your life quite comfortable. There is no more collection of money at the door, from the mail, or running to cash checks at the bank. Furthermore, you can accept online payments for almost everything, such as:
• Donations and major gifts
• Membership fees
• Automatic recurring payments
• Event fees
• Member dues, etc.
Many people are not aware of the nitty-gritty that is included in the backend processes, which occur when an online donation has been made. Lucky for you, we have got the primary bases covered.
What is a Payment Processing?
Nonprofit payment processing is a broad term, which takes into account all the activities involved in online payments and donations, to get accepted. Payment processing is a seamless procedure in which funds are moved from the donor’s bank account to the recipient’s bank account without much hassle. For this process to become successful, nonprofits ought to have a couple of tools, especially the following:
• The payment gateway. This completes the first step of the transaction by ensuring there is no fraudulent motive from the donor. Their payment information and methods are verified to ensure they are valid.
• The merchant account. This is a bank account that withholds the funds during the verification process. In a nutshell, the money is being housed after it is sent from the donor and before it is received by the recipient’s bank.
The Difference Between a Payment Processor and a Donation Tool
Payment processors and donation tools work nearly in the same way but are different in nature.
As mentioned, a payment processor is more like a ‘behind the scenes’ tool. The nonprofit can easily collect online donations. Some payment processors have gone the extra mile to provide you with a donation form that you can brand as your own and use it to collect funds.
However, that is not the primary function of a payment processor, and not all of them have online donation forms. Their basic task is to securely capture the donor’s payment information before translating it into a gift to your organization.
A donation tool, as the name suggests, helps organizations in collecting donations. The styles may vary (donation forms, merchandise sales, crowdfunding, etc.), but the concept remains the same.
Many software providers will offer you a comprehensive donation page and seamless integration with your CRM.
Why is the Payment Processing Essential for Nonprofits?
Without a payment processing system, a nonprofit will not be able to receive online funds and donations. Whereas some organizations still get their funds from cash donations and checks, the dawn of a new era has changed the entire system. Today, the majority of nonprofits get their funds online – thanks to the rise of the internet.
Driven by convenience, more donors prefer this type of digital payment as compared to other traditional means. Furthermore, nonprofit payment processing moves funds quicker than cash or check.
If you wish to remain relevant in the competitive nonprofit space, your organization must be in a position to receive online donations.
Payment processors are not just a nice-to-have feature for your organization, but it’s a must-have. They are not only helpful in accepting online donations but also vital for improving your fundraising strategies.
Moreover, you can strengthen your donor relationship by getting a payment processor for your nonprofit organization.