How do you process credit card transactions?

Here's an update on my experience.  I tried three different merchant accounts services (two were banks) and every one of them did require a personal guarantor for the merchant account. So I caution everyone to read the fine print because they do not explain that upfront (or at least it was not explained to me until I read the fine print - and there is LOTS of fine print when you try to sign up for a merchant account). 

However I did have luck with NPC which is offered through Techsoup.  NPC waived the personal guarantor requirement and we now have a merchant account set up using authorize.net.  The virtual terminal feature which allows me to take payments/donations over the phone is very convenient.

Thanks for keeping us posted on what happened with this--it's always helpful to here back from posters after they've tried a solution. I'm glad you had good luck w/ NPC.

Best,

Megan

In order to accept donations online do you have to register your charitable organization with the Attorneys General in every state?

Dear jenniedb,

Welcome to TechSoup!

As far as I know, that issue is still unresolved.  It was discussed in the "Jurisdictional Issues" section of this TechSoup article.and in this discussion. And here's an old FAQ on the subject from idealist.org.  I haven't seen anything recent that contradicts this.

The general advice I've heard is that if your online fundraising is passive -- just a web site that anyone could give to -- you are not considered to be actively soliciting in other states (although some states have disagreed).  But that changes if you actively begin soliciting those out-of-state donors, even if they originally gave via your web site.  So, if you plan to resolicit your out-of-state online donors, you should look into multi-state filing.  You can cover most states using the Unified Registration Statement at http://www.multistatefiling.org/

Another alternative is to use one of the nonprofit online donation sites like justgive or network for good.  They act as your fiscal agent and say that their clients don't need to register with the states.  I don't know whether that's been proven in court, though.

Since this is a gray area, you would be wise to consult your own attorney.

Robert

Thanks so very much, Robert.  You've helped a great deal--one last question--how is "passive solicitation" defined?

We will follow up with our own legal counsel.

Jenniedb

Dear Jenniedb,

By "passive solicitation" I mean having an online donation form that anyone can find.  The Charleston Principles suggest the following: 

An entity that is not domiciled within a state must register in accordance with the law of that state if:

a. Its non-Internet activities alone would be sufficient to require registration;

b. (1) The entity solicits contributions through an interactive Web site; and

(2) Either the entity:

i. Specifically targets persons physically located in the state for solicitation, or

ii. Receives contributions from the state on a repeated and ongoing basis or a substantial basis through its Web site.

These principles were put together by the National Association of State Charity Officials (NASCO).  Although NASCO is made up of Attorneys General and Secretarys of State, the principles are only advisory.

Robert

We are a low-income legal service provider and prior to my forming this organization I represented many non-profits in private practice and Robert's advice is right on the mark.  Thank you. 

As far as credit card processing we use Pay Simple.  We started with Pay Pal but some donors did not like registering with them and it was not easy to set up recurring payments.  Pay Simple was much less expensive but they are pretty new and we have had problems with their service.  I am currently investigating E-tapestry for seemless integration of on-line giving with a donor database. 

Does anyone have any experience with e-tapestry?

Bruce, Administer Justice, www.administerjustice.org.

I would be interested in knowing your thoughts now regarding NPC in light of the recent offering made available via TechSoup.  Our small nonprofit org is looking to start accepting credit card transactions, both for online & in-person transactions

Just to be fair I know that NPC is a TechSoup partner but the companies but the feature provider on MerchantSeek doesn't require a personal guarantee or Social Security number either.  The processing providers that we work with are very Non-Profit friendly so I can assure  you that NPC isn't the only option for Non-Profits not wanting to sign a personal guarantee.

I think ther 3 that you got in touch with are just ultra-conservative as some processors are.  But the featured providers that we work with only provide proof that you're a 501c3 and you won't have to sign a personal guarantee or give your Social Security Number, and their Virtual Terminal only option is a tad bit cheaper than NPC's (under $10 to tal per month.)

And to dispell the myth, direct banks are not always the best payment system providers.  Often times they're too conservative (as banks can be sometimes) and behind on technology (as banks can be sometimes).  A full time merchant provider that registers with a Visa/MC acquiring bank is essentially on the same level as many local banks (they're both registered ISO's) and that full time provider or processor has more knowledge because that's all that they do.

But I'm happy to hear that you're finding luck with NPC (I'll say that they are better than a local bank), but not the only company that offers a real merchant account for Non-Profits and don't require a guarantee.

Just putting that out there.  Feel free to ask any questions.

Joe (MerchantSeek)

E: msinfo@merchantseek.com

Hey Justin,

I thought  your explanation makes sense. I do have a very little nonprofit organization and do have a pay-pal account. The pay-pal button will take your donors to pay pal website to transact whereas I would like the transaction to take place on my website. What I looking for is to be able to customize my donation page as that of all pages on my website just like yours. I would be glad to learn more from you.

Joseph Jarbah

Hi everyone,

Google has just announced that they'll continue donating Google Checkout (for Google Grants recipients only) through 2010. I thought it would be a good time to write a follow-up post with some thoughts on online fundraising.

Cheers,
Elliot

Great Article!

One thing that wasn't mentioned is that if you need to accept cards at an event away from the office, you can use a virtual terminal on a laptop along with a magnetic card reader. All you need is access to the internet with a broadband card.

This can save you hundreds of dollars. A card reader costs around $100 compared to around $800 for a wireless terminal.

Dan Palmer

Yes, Virtual Terminals are also good options for merchants that already have a laptop and are looking for mobile processing.  Otherwise there are touch-tone, wireless terminal, or even PDA phone processing options out there.  But depending on the size of the merchant there are even "hand-keyed" Virtual Terminal options out there with $0 startup fee, or $85 card readers in case they need to swipe.  Monthly fees for a good real merchant account Virtual Terminal can be from $8.99 to $19 - so Paypal is not always the best option if you want more advanced features (as their Virtual Terminal runs from $25-$35 per month).

Feel free to ask any questions.

Joe (MerchantSeek -  Your payment acceptance source)

E: msinfo@merchantseek.com

Many people may not realize this but ticket sales are consider High Risk for a credit card processing company because of the nature of chargbacks associated with the industry. I'm not familiar with Eventbrite but whenever you have a proprietary web based processing situation the rates are always going to be through the roof.

I'm not sure what you mean by "through the roof" regarding fees. Most processors will offer you a rate for keyed consumer cards which is below 2.5%. It should be easy to get a low cost merchant account.