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The Importance of Nonprofit Payment Processing

Nonprofit organizations (NPO) are organizations that usually pursue selfless goals and advocacies by reaching out to people in need. However, profit is not a driving factor for most NPOs. The people involved in fundraiser activities gain next to nothing and are volunteers. Venues, props, and other paraphernalia in events are also recycled or sponsored.

NPOs survive and acquire funding by asking for donations. To make the process easier for both the donors and fundraisers, it is wise to set-up nonpayment processing for a fast, and secure transaction.

From Donors to Nonprofit Organizations

Nonprofit payment processing enables nonprofit organizations to receive payments from donors. In other words, it is the transferring of funds from the bank account of the senders to the organizations’ chosen receiving methods. Usually, it is done by charging the sender’s debit or credit card, mobile banking transfers, or through online donation forms.

Nonprofit Payment Processing: Steps

Nonprofit payment processing might be confusing and tedious at first, but in reality, it is quite fast and easy. Here are the steps to ensuring a smooth and secure process:

  1. Donors write a check or have their credit or debit cards charged by filling out online web forms.
  2. NPOs would then send requests for payments to the payment processors using a software processor, or a point-of-sale system.
  3. The payment processor sends the transaction details to banks or card associations, which checks the validity of donation. This is done by consulting the issuing bank of the donor’s cards or checks.
  4. The issuing bank then approves or declines the transaction which is relayed to the fundraiser’s card association.
  5. The amount donated is then transferred from the donor’s issuing bank to the organization’s chosen receiving medium.

Setting Up the Payment Process

On the receiving end, the fundraisers are responsible for setting up accounts with the payment processor for a smoother transaction. To do so, NPOs need to accomplish the following:

  • A secure online form or web form where donors enter their credit card or payment data.
  • Merchant accounts to accept the debit and credit card payments. They are also responsible for depositing the donation to the organization’s account.
  • Payment gateways connect the secure online forms to the merchant accounts.
  • Set up bank accounts connected with merchant accounts where the funds would be directly deposited.
  • A secure portal that keeps and manages the data of both the donors and the nonprofit organization.

The Importance of Payment Processors

Nonprofit organizations usually have the purest intentions since the people involved do not gain anything financially when volunteering. However, there are still people who take advantage of the situation. Online frauds and scams are everywhere these days. Hence, it is important to develop the habit of being extra careful in transferring money, no matter how pure the intention is. In nonprofit payment processing, the most crucial part is having a trustworthy payment processor since it handles most parts of the transaction.

To ensure the security of the payment process, seek payment processors who comply with the following standards:

  • PCI (Payment Card Industry Security Standards) compliance
  • Address verification systems
  • BIN (bank identification number) blocking
  • CVV (card verification value) requirements
  • Card number and name tumbling

Each requirement must be met by the payment processor to ensure a scam-free transaction. It will also be the key to the success of a nonprofit organization.


Posts by SpeakBindas Editorial Team.

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