Ecommerce Credit Card Processing for non-profits

What are the best choices for accepting credit cards for online payments for non profit organizations? Google Checkout, Paypal Payments, and traditional merchant accounts cost analysis, plus all in one donation form with integrated payment solutions.

Paypal costs for 501c(3) non-profits

1.9% +$.30 per transaction for organizations with over $100,000 monthly volume
2.2% +$.30 per transaction for organizations with less than $100,000 monthly volume.
3.9% + $0.30 USD Transaction Fees for Cross-Border Payments – United States

Google Checkout costs for 501c(3) non-profits

Google Grants recipients are eligible to process donations for free until 2010 (need to buy Google AdWords)
Others pay these standard fees:

google checkout non-profit rates

Google checkout vs Paypal for non-profits:

It depends on the size of your organization. If you can only choose one, Paypal would be better due to wider acceptance.

Payment processing costs when included with online donation form generator:

Some web sites specialize in providing an all in one solution for non-profits to collect cash donations, create auction sign ups, or create event registrations.  The theory is you collect more money than you would normally (usually true), so it offsets any higher costs you may pay for the service which ranges from free to $29.95 per month and up plus other fees.

Merchant Services provider costs ie traditional merchant account and internet gateway

These numbers are going to be all over the place. So how can you tell if  you are getting a good deal?
A typical average is 3% effective rate for online credit card processing. This rate varies by target audience and many factors, and can be lower, but generally should not be higher. Non-profit merchant accounts with >3% credit card processing effective rates usually have hidden information, few details, or poor price plan.

View the entire presentation including pros & cons and actual examples of what to look for on your merchant statement. Recommendations are valid whether you have an ecommerce store, online donation form, recurring donor payments, event or one time donation.

Ecommerce Credit Card Processing for non-profits (PDF download)

Fall 2008 Interchange rate increases B2B

Visa & MasterCard both announced changes for October 2008, with B2B companies again likely to feel the biggest negative impact.

Interchange Rate Changes

Corporate Card Level II Data Rate + 0.05%
Business Card Level II Data Rate + 0.05%
Purchasing Card Level II Data Rate + 0.05%
Commercial Card Retail – Corporate – 0.10%
Commercial Card Retail – Purchasing + 0.10%
Purchasing Card – Card Not Present + 0.15%
Purchasing Card Electronic +0.20%
Corporate Card Electronic + 0.05%
Corporate Card Standard + 0.25%

See more about Fall 2008 interchange updates here.

October 2008 Visa – MasterCard Interchange updates

Visa and MasterCard recently announced revised interchange adjustments for Fall 2008. Effective October 3, 2008, all qualifying merchants will be subject to the following revisions:
Visa Revisions Effective October 3. 2008
Visa Fuel Merchants Rate Changes – Effective October 3, Visa will institute one consolidated interchange rate affecting all consumer credit products for Merchant Clearing Codes (MCC) 5541 and 5542. This applies to all consumer credit including Rewards, Signature and Signature Preferred.

Visa Automated Fuel Dispenser Partial Authorization (AFD) Requirements – AFD merchant software providers must now support the ability to receive partial authorization approval amounts, in authorization messages, for all Visa transactions. Merchants should be aware that authorization requests failing to meet this criteria will be assessed an additional fee of $0.01 per transaction, which will be passed through to the merchant.

Visa Commercial Rate Modifications – Effective October 3, Visa will introduce new rate changes resulting in potential impact to all merchant segments. Relevant updates include an increase to Commercial Product Level II and Standard transactions, modifications to Commercial Card Retail and Card-Not-Present (CNP) transactions and an increase to Commercial Electronic transactions. There are no changes to Commercial Product Level III transactions to announce at this time.

New Visa Debt Repayment Fee Program – Visa is introducing a new interchange fee and rate program for domestic debt repayment transactions applicable only to collectible consumer debt on auto loans, credit card payments, mortgage payments and student loans. The qualifying rate will be 0.35% + $0.50 and merchant registration is required. Eligible merchants must be prepared to submit the bill payment indicator, bill payment processing code and the existing debt indicator. Acquirers must register eligible merchants with Visa.

New Visa CPS/Debit Tax Payment Fee – Visa will implement a new interchange rate program for Visa consumer debit transactions submitted by acquirers from a participating tax authority or third-party service provider accepting payments on behalf of the tax authority. Merchant registration is required and eligibility standards do apply.

Visa GSA Government to Government (G2G) Modifications – Visa is introducing a new G2G program and revised interchange rates for government merchants accepting government cards. Qualified Merchants will now be eligible for the interchange rate of 1.65% + $0.10. Merchant registration is required to participate in this program.

Visa GSA Purchasing Card/Large Ticket Modifications – Visa will now allow GSA Purchasing Card and GSA Fleet Card transactions accepted at non Travel and Entertainment (T&E) merchant locations to be eligible for Level Ml interchange. Level II and Level III Commercial Data will continue to be required to qualify for this category.

MasterCard Revisions Effective October 3. 2008
MasterCard Revised Standards for Transaction Presentment Time – Effective October 3, MasterCard is reducing the current first presentment time frame of 30 days to a maximum of seven calendar days from the original transaction date.
MasterCard Revised Standards for Quick Payment Service (QPS) Program – MasterCard will require that all transactions, including QPS, be authorized for optimum interchange qualification in order to meet chargeback requirements.

MasterCard Fleet Merchant Data Quality Modifications – MasterCard will implement additional industry interchange data requirements for fuel transactions supporting fuel addendum detail. As a result, relevant data will be subject to Fleet Data Quality Edits and must be present in transactions to avoid downgrades. This pertains to valid values for fleet transactions including Motor Fuel Product Code, Motor Fuel Unit Price, Motor Fuel Unit of Measure, Motor Fuel Quantity, Motor Fuel Sale Amount, and Driver Number/ID Number.

Specific new interchanges rates affecting B2B.

Visa interchange rates
MasterCard interchange rates

B2B Credit card processing solution- virtual terminal

One of the biggest problems facing businesses that are primarily B2B is paying high rates for card not present transactions. But why? The chart below shows an interchange comparison between card swiped and card not present for business credit cards, the mostly costly of Visa cards you are likely to encounter. The difference is 20 basis points or .20%. However most companies pay 50-100 basis points difference for non-swiped transactions.

April 2008 Visa interchange excerpt

The difference between what you pay and what the cost is, is all profit to the processor. There are several factors that will affect your actual rate, almost all of them relating back to ‘qualified transactions’. What’s a qualified transaction? While the term is identified in the interchange rate tables, for any business that does not have ‘pass through interchange’, what it means varies company to company. Please see past articles for more details about that.

What can you do to reduce your B2B credit card processing costs?
One of the simplest and most effective solutions is to have an account with a VIRTUAL TERMINAL. With a virtual terminal, the business will login to a secure web site and enter the credit card transaction information. You will also be able to access reporting and transaction history, if you are authorized to do so. For example, you can create limited access to the virtual terminal for sales staff, and then allow more robust access for the bookkeeping staff. You’re in control.

Are all virtual terminals alike? NO!
For example, we frequently recommend a robust solution for certain retailers that is completely inappropriate for B2B companies. Why? Because the data that is passed through varies from one virtual terminal solution to the other. It is essential that in a B2B environment to not only set up the account correctly with the proper coding (determined by your processor when your account is opened and extremely critical!!), but to also collect specific data and pass that through the processing system.

For example, an ecommerce store collects all the business contact information including name, address, phone, Credit card number, CVV, exp date etc. But the processor is not equipped to accept all that information. It only takes a few of the fields. WHAM! Instant downgrade to a costlier interchange rate, because Visa has specific rules about what data it wants to allow the ‘best rate’ for that type of credit card. On the surface, it looks as if you’ve done everything correctly. But in the back-end, the merchant is unaware that all their data is not being passed through. All they see is high credit card processing costs.

The same scenario occurs with virtual terminals. Make sure your salesperson has a thorough understanding of how interchange works and the special needs of business to business companies like yours.