Is Paypal The Best Choice For Processing Online Donations?

This week I posted a question on several LinkedIn groups I belong to and asked the following:

“Is PayPal the best choice for processing online donations?”

Overall the responses, both the in form of messages and replies to group postings were positive about PayPal.  Commentators recognize PayPal as the biggest processor of online payments, is the best known brand among potential donors, and is easy to set up and operate.  However, if more than a basic setup is needed, there were many recommendations about other services that could be used.  Most nonprofits must balance the need to create efficient systems with relatively little funding to do more than the basics.  Given this, I’ve taken the comments and recommendations and synthesized a plan for a nonprofit to set up their online payment processing.

  1. I would recommend creating a brief work flow of the payment process, from donation to thank you letter, from IRS statement to additional donor follow-up. How do you manage those functions now and what are all the things you would have a system do, in an ideal world.
  2. Rate each in terms of level of importance. Is it more important that you get as much as you can from the donation or have a system that integrates with your financials?
  3. With that rating system in hand you can evaluate the various services and determine which one will give you the most for your time and money.

Below is  a representative sample of the comments and messages below as well as a list of the companies I heard from that offer these services.

“The key is whether you want the info to flow into an accounting system or fundraising software. If you are using QuickBooks, PayPal has a basic but unsatisfying export.

If an organization is just starting and raises less than 30K annually in donations via credit and debit cards then PayPal is a good solution. If non-profits raising over that annually, then the non-profit is paying up to 75% more than they need to per donation and then the org has to ask for their money instead of being directly deposited into their account in 2 business days.

Paypal is simple and works well. In fact, we use it for credit card processing in our for-profit business because of its wide acceptance/trust an the fact that the end user doe snot have to have a Paylpal account o use their credit card with it.

Paypal is VERY easy to setup and customize. Thats why they’re so big. IATS is the king of the non-profit space … but you’ll have to dig in or partner with someone to make it as easy.

PayPal is a quick and easy solution as a payment gateway for a any non-profit organization. It does not require a merchant account and special payment processing equipment or the implementation of a gateway.

While Paypal is great “starter” idea, the problem I found with it …is that I have to take the information provided and put it into a database – but I can’t capture customized information. I don’t have time for that, AND I have to identify a database solution.

Paypal is a great option and they are highly trusted in the online transation space. I personally breath easier when I see an online transaction is going through Paypal.

Suggested Payment Processing Sites and Services

  • Click and Pledge
  • Network for Good
  • IATS
  • Blackbaud – NetSolutions, Etapestry, NetCommunity, Sphere, BlackbaudNow
  • Google Checkout
  • Techsoup
  • Kimbia
  • FACTS offers (Donor Services)
  • Online Donations
  • Paperless Trans
  • NY Chairites
  • Aredent Giving Solutions
  • One Shopping Cart
  • Paysimple

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