Accepting donations on your website starts by choosing a payment gateway that works with your online donation forms. But what does that mean for you?
What is a payment gateway?
The most popular way to collect donations online is to accept credit card payments on your website. The tool used to process credit cards online is called a payment gateway.
In the past, you needed to set up a merchant account with your bank to accept credit cards — in person or online. Fortunately, those days are behind us.
Payment gateways, like PayPal, have led the way for businesses, individuals, and nonprofits to accept online payments or donations. There are other payment gateways, too, like Stripe, Authorize.net, Square, and GoCardless.
You cannot accept credit card donations online without a payment gateway, no matter which donation plugin you use to raise money. Without a payment gateway, your GiveWP forms will look beautiful, but they will only be useful for things like offline donations.
Why do you need a payment gateway?
As a nonprofit, you can always accept offline donations (people mailing you checks or handing you cash). But the majority of donors would rather give immediately and easily online than struggle to connect with you in person or via traditional mail.
According to Double the Donation, about 55% of donors from all generations prefer to give online with a credit card.
In 2021 and beyond, you really do need a payment gateway so you can accept donations on your website. Otherwise, you’ll miss out on key opportunities to meet your annual fundraising goals.
What about security and PCI compliance?
The best thing about a payment gateway like PayPal, Stripe, or 2Checkout is that they take on the security surrounding PCI compliance. More importantly, they assume the risk.
“Payment security is paramount for every merchant, financial institution or other entity that stores, processes or transmits cardholder data. The PCI Data Security Standards help protect the safety of that data. They set the operational and technical requirements for organizations accepting or processing payment transactions, and for software developers and manufacturers of applications and devices used in those transactions.”
– PCI Security Standards Council
As long as you work with a reputable payment gateway, like PayPal, you will have nothing to worry about.
“Payment gateways have been leading the way and pushing security.”
– Chris Teitzel of Lockr
How much does PayPal take from donations?
One of the biggest things blocking nonprofits from starting to accept online donations is the cost associated with processing fees. First we’ll cover the basic fees for accepting credit cards online and then we’ll share how you can lower them.
Payment gateways always have processing fees. The PayPal fee is just one of your options.
A payment gateway transfers money to your nonprofit organization’s bank on your behalf. Your credit card processing fees go to supporting the costs of labor and maintaining the company’s infrastructure.
So how much are PayPal’s fees?
The short answer is that PayPal fees are thirty cents and 2.9% per domestic transaction, according to their website. If you’re an official nonprofit (meaning, you have the 501(c)(3) designation from the Internal Revenue Service), you can sign up for discounted PayPal fee rates.
“PayPal offers discounted transaction rates for confirmed 501(c)(3) charities for most products, only 2.2% + $0.30 per transaction with no monthly fees. We also offer consistently low rates for all other nonprofits, along with no extra fees for setup, statements, withdrawals, or cancellation.”
– PayPal’s Online Fundraising & Donation Platform | PayPal US
International Donations and Conversion Fees
Charities with international reach my incur larger fees, depending on how your online donation forms are set up. But there are ways to offset these as well so don’t let that stop you from accepting international donations.
The fees for international donations are fairly small. PayPal charges an additional 1.50% based fee for each international transaction. Many other payment gateways have a similar fee. Stripe charges 1% for each donation made with an international credit card in addition to a 1% conversion fee if a currency conversion is required.
However, don’t let these fees deter you from accepting donations worldwide if your cause is a global issue. Our Currency Switcher add-on has a variety of settings that you can use to offset these costs if needed.
Or, you can use multiple payment gateways on your forms so that you can process payments easier from different countries.
What is the breakdown on payment gateway fees?
PayPal was an early leader in the online donation industry. But it’s not the only payment gateway you can use. As a nonprofit, you have many options to accept online donations.
Every payment gateway has their own set of fees and work in varying countries. A few even have discounts for registered nonprofit organizations to take some of the burdens off of fundraising.
Here are some of our top gateways and their associated fees:
- PayPal – 2.9% + 30¢ per transaction
- PayPal Pro – varies depending upon volume. $30 monthly plus a minimum of 2.9% + 30¢ per transaction
- Stripe – 2.9% + 30¢ per transaction
- Authorize.net – 2.9% + 30¢ per transaction plus $45 setup fee and $25 monthly
- Square – 2.9% + 30¢ per transaction
- 2Checkout – pricing depends upon your country but is 2.9% + 30¢ per transaction for the United States
- Razorpay – 2-3% depending on which type of credit card is used
How can you make the most of your payment gateway, despite the fees?
The best way to counteract the fees from your payment gateway is to use GiveWP with the Fee Recovery add-on. It allows you to reduce or even eliminate your credit card processing fees by asking your donors to cover the small extra cost. Most importantly, it does this with compliance in mind, by giving your donors the option to choose to cover the fees rather than making the selection mandatory.
You can also maximize your online fundraising success with the Recurring Donations add-on. Recurring donations allow you to gain more sustainable income and increase your annual fundraising revenue over time.
However, not all payment gateways allow for recurring donations, so make sure you look for the following symbol on the add-on page. PayPal and Stripe both work with Recurring Donations.
Which payment gateways does GiveWP support?
PayPal is one of the most widely known payment gateways as a brand, but by far not the only one. We have several payment gateways available for online donations.
You also have the option to use Stripe in the free core plugin, but any donations processed through Stripe will send us a 2% transaction fee, in addition to your Stripe processing fees. This fee covers the support necessary for that particular feature of our software. But when you purchase ANY add-on or pricing plan from us, the 2% fee is no longer applied.
Our current list of payment gateways includes everything we’ve mentioned so far in this article and more. We continuously add to our library of payment gateways as more become available. So make sure you check our add-on library whenever you need to find one that works for you.
Upgrade Your Payment Gateway
PayPal Donations and Stripe are both free with GiveWP core. But you get so much more when you upgrade to a pricing plan, including priority support. Our Plus Plan and above includes premium add-ons, like Recurring Donations, Fee Recovery, Tributes, Form Field Manager, and Funds and Designations. Book a demo with our team to learn more or get started raising more money right now with a Pricing Plan.