Thursday, April 25, 2013

Non-Profit Merchant Account Tips

I feel like I've been around the block with merchant accounts. This is especially true for non-profits and online donations – I've been working in this field for a number of years. If you want to accept donations online and you want to do it without giving PayPal a big chunk of it, merchant accounts are the way to go. You'll need a platform or a good programmer, but those are pretty easy to come by these days (wink, wink).

If you're a non-profit the risk you pose to the financial world is low giving you a little leverage when securing a merchant account. Here are few tips for those who are looking:

  • Say 'no thanks' to contracts - The merchant service provider doesn't really need you to sign a contract. They just don't want you to leave and who can't blame them, that's how they make money. But you don't need no stinkin' contract. There is too many providers who will give you a good deal on a merchant account without one. Plus, you need an out if they decided to raise their prices on you one day (which happens, sometimes without warning).
  • Opt for 'interchange plus' pricing - There are a few pricing options out there. Interchange plus usually ends up being the best deal because they give you wholesale rates plus a little overhead added on. In this case, if a donor uses a debit card that has a really low discount rate (say 0.5%, thanks to the Durbin amendment) then your saving a ton of money. Other common, not-as-good options include 'tiered' and 'ERR' pricing. You might say that tiered pricing is credit card processor lingo for 'round it up and I'll keep the change' and ERR pricing is synonymous for 'round it up and add some extra just in case'.
  • Ask for an itemized list of fees - The merchant world is all about fees, fees and more fees. And merchant service providers, generally speaking, do their best to hide fees. They do this so often that even when they're trying to be transparent, they're still hiding fees. It is really crazy and one of the few industries that can somehow get away with it (not sure why that is). When you get a merchant account quote, tell them you want to know about them all: gateway fees, statement fees, PCI compliance fees, IRS fees, Visa/MC fees, AMEX fees, discount rates, per-transaction fees, per-auth fees, batching/settlement fees, .... everything!
Hope this helps and if you have any questions, reply below.