Nonprofit Payment Processing: The Ins and Outs

Passion may be a key player in determining a nonprofit’s success, but without the necessary funds to make it happen, your nonprofit will only get so far in making a difference.

That’s why in order to gain real traction with donors, your nonprofit must first set up a reliable source to accept online donations. In other words, they need a payment processing system, which simply refers to the digital behind-the-scenes steps that transfer a donor’s funds to a nonprofit’s account.

Payment processing is essential to helping your organization develop new fundraising opportunities ranging from mobile giving solutions and merchandise sales to online event registration and ticket sales.

To help you get a firm grasp on all that nonprofit payment processing entails, this article covers the following key questions on the subject:

How payment processing works.Accepted types of payments.How to implement payment processing.How to choose a payment processor.How to ensure security in payment processing.

Let’s start with the basics: how payment processing works.

How to Ensure Security with Payment Processing

Unfortunately, it’s not enough to just secure a payment processor; your nonprofit must also be prepared to protect your new online donations from fraud.

This precaution is all too crucial because if a nonprofit fails to take active measures against fraud, it can face some serious damage that’s often impossible to bounce back from, including:

Ruined reputationChargeback fees to credit card companiesRefunded stolen donations to rightful owners

Thankfully, there are a number of ways for a nonprofit to avoid these dangerous pitfalls, namely by setting up these go-to ACH and credit card fraud prevention policies:

Work with a PCI-compliant processor.Make use of AVS.Be wary of large donations.Be wary of minimal donations, too.Stay vigilant during holiday fundraising.

Let’s jump in!

1. Work with a PCI-compliant Processor

The beauty of a PCI-compliant processor (PCI stands for Payment Card Industry) is that they are already informed about nonprofit donation systems, which means they are also armed with several fraud prevention tools.

This software certification is essentially your first line of defense because it manages all of your nonprofit’s data, which means that it can also detect and handle any breach in conduct. Afterwards, the system can then retaliate against the thief by subjecting them to fees or revoking their online payment processing altogether.

Furthermore, a PCI-compliant processor can also keep your nonprofit’s donation page up to date with the latest security regulations from the payment card industry. Overall, this incredible software certification will grant your nonprofit peace of mind in tricky security situations.

2. Make Use of AVS

Another way to check for credit card fraud is to use an address verification system (or AVS) issued by your payment processor.

This tool makes sure that the address a donor lists on a donation form matches with the address they have on file with their bank or credit card company.

If the two addresses do not match, then the payment processor will notify the nonprofit immediately of potential fraud. An AVS can also ask for the security code on the back of a credit card to ensure extra security.

3. Be Wary of Large Donations

Most people don’t know that one of the main reasons why nonprofits are targeted by thieves is because they provide an easy testing ground for stolen credit cards and e-checks.

Basically, a thief will check if a stolen credit card or ACH account works by making large donations to nonprofits through them. This makes it easy for the thief to then contact the nonprofit, insist it was a mistake, and demand a refund either on a different card or check that they can walk away with.

This scam has since issued so many problems in recent years that nonprofits are now advised to double check large donation amounts in order to confirm if they’re legitimate or not.

4. Be Wary of Minimal Donations, Too

Likewise, a scammer can also test a stolen credit card or ACH account by donating miniscule amounts to nonprofits.

However, this problem can be easily solved if the nonprofit sets a minimum donation standard to avoid suspiciously small offerings.

Another more technical approach to detecting these scams involves velocity checking. This technique requires the nonprofit to thoroughly examine the number of transactions from one credit card, bank account, or donor in general. If you notice a pattern of small donations in a short timeframe, they may be coming from a fraudulent source.

5. Stay Vigilant During Holiday Fundraising

The holiday season from November to December is typically the busiest time of year for nonprofit donations.

Unfortunately, this also means that it’s the busiest time for credit card thieves to unleash new scams. While this doesn’t mean that a nonprofit should let paranoia ruin the celebratory season, it’s still important that in the midst of all the fundraising success, a nonprofit remains aware of any fraudulent threats.

Above all, there’s no telling how or when fraud will strike your nonprofit. What it comes down to instead are the security measures you’ve put in place and, in times of crisis, how well you maintain grace under pressure.

This all just goes to show that investing in a payment processor can do so much more for your nonprofit than help with online donations.

This multi-purposeful tool can also protect you from fraud, secure your funds in one personalized account, and sync with other fundraising software to form one master donation system that fuels all aspects of your organization.

In short, having a brilliant payment processor can make all the difference in helping your nonprofit thrive and survive in the digital age.

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