The A-Z of Payment Processing for Churches
When most people think of church donations, they imagine collection plates being gently passed from hand to hand down pews of close-knit churchgoers, often to the accompaniment of hymn-singing. While this scenario lives on, more and more churches are opting to receive additional offerings elsewhere - and bank card payment processors make that possible.
While it may seem unconventional for religious institutions to employ the means to receive donations via bank card, the level of convenience that results is no doubt highly attractive. It reduces the need of parishioners to bring the right amount of cash, or increasingly-obsolete checks, to the services they attend; payments can even be set up as a recurring bank transfer. The ability of attendees to donate just the amount they want, when they want, from where they want (remotely!) without limitations could potentially increase contributions made to the church. In this article we will discuss the benefits of introducing payment processing to churches, as well as some useful tips on how to do so.
- What is Payment Processing?
- The Benefits of Payment Processing for Churches
- Payment Processing Tips for Churches
- Final Thoughts
What is Payment Processing?
Payment processing occurs when a third-party processor facilitates payment between a business, organization, or charity, and the financial institution involved in that payment. When a credit or debit card is swiped, or payment is deducted from a bank account, a payment processor communicates with all relevant banks to complete the transaction. This decreases the chances of fraud and also ensures that the customer or donor is using a valid card that guards against theft and chargebacks. Here is how the process works:
The cardholder swipes their card or enters information into an online portal to pay for something or set up a donation.
The PoS or payment gateway sends the information to the payment processor.
The processor then transfers transaction information to the credit card network to ensure that all customer details are correct.
The credit card network reaches out to the customer’s issuing bank to request authorization to release the funds. The issuing bank checks to make sure that there are sufficient funds available and that the transaction is not fraudulent then sends a response to the card network to let them know whether or not the transaction has been approved.
The information is then sent back to the payment processor, which requests funds from the issuing bank or financial institution. These funds are then finally transferred to the merchant account and the business or organization’s bank account by way of the payment processor.
And all of this is done in a matter of seconds!
Alex is feeling at peace now that he has all the details on payment processing.
This process allows merchants, nonprofits, and churches (among others) to easily and securely accept credit card payments, debit card payments, mobile wallet payments (think ApplePay, GooglePay, PayPal and SamsungPay), bank transfers, and online payments through whichever website they are affiliated with, if they are affiliated with one - payment processors can be used for only in-person transactions if that is preferable.
The Benefits of Payment Processing for Churches
Payment processors may seem unorthodox, but this technology may be just what your church needs to boost and maintain donations, and even to receive payments for merchandise sales. Here are some ways that implementing a payment processing system for churches can make life easier for everyone.
Ease of Merchandising
Churches can utilize payment processing as a means through which members may purchase merchandise offered by the ministry. Many churches sell products or services to increase funding or cover the costs of charity missions. Some have adjacent coffee shops or gift shops that market t-shirts and other items. Others sell tickets to special events or concerts. A payment processor ultimately makes it easy to purchase these goods, without the limit physical cash may bring (members can get what they want, and how much of it, when they want!).
Let’s be real. Very few people carry cash in today’s world. And it can be a pain to have to run by the bank every week to withdraw money to put in the collection plate. Some parishioners may skip an offering because they forgot to get cash or just did not have the time to grab it. Charity credit card processing can allow members to set up regular, automatic donations, making their lives easier and ensuring that there is no break in the cash flow toward their beloved church.
Payment processing also allows those who cannot attend weekly services to donate. There have always been members who, due to age or infirmity, are unable to get to church. This is even more relevant in the time of COVID-19, when many churchgoers with compromised immune systems are avoiding in-person services. Payment processing allows them to give even if they cannot reach service, by setting up a recurring ACH payment or by donating whenever they want to online.
There are no limits here! If your church is ready to sell goods and accept donations online, payment processors make doing so possible. Remote donating can also be executed this way.
Most churches have a variety of events to conduct and assignments to complete, in the form of mission trips, charity drives, youth group trips, structural repairs, Sunday school activities, childcare activities, among others. It can be difficult to fund all of these missions properly when income is sporadic. With online payments, churches can procure recurring donations. This makes the planning of long-term monetary acquisition far easier for leadership, as the church can have oversight on guaranteed revenue.
Emily is loving all these benefits!
Storing piles of cash in a church building (even for short periods of time) is not the safest way to protect income. With a payment processor, card payments can be taken online and in-person safely and securely. Just do your research to be sure that you are working with a trusted and reputable processor.
Payment Processing Tips for Churches
Now that you have a better understanding of just what payment processing is, and how it can benefit church-giving, let’s take a look at some tips for nonprofit credit card processing, and how to maximize the benefits generally offered to them by companies that sell payment processing software.
Accept ACH Payments
One of the best ways to ensure that an entire donation amount goes toward its intended recipient is to accept ACH payments. ACH stands for Automated Clearing House and it refers to recurring online bank transfers that are deducted from an individual's bank account every month (like your bill payments that are automatically drawn). ACH payments are taken directly from a financial institution, and therefore bypass the many fees that are charged by credit card companies. Even a credit card reader for nonprofits will have processing fees (though often reduced).
ACH payments are free from any fee at all and can save your church money (while making life easier for your donors as well!). As much as possible, encourage your members to implement this bank-to-bank payment when setting up a recurring donation to the church.
Choose a Processor That Integrates Well
Ideally, you want to work with a payment processor that integrates seamlessly into the rest of your management system. For example, when you receive donations you want them to be automatically detailed alongside your other accounting entries without having to add them manually.
Simple and clear bookkeeping is essential for a church, for reasons of transparency, convenience, and consolidation. Having to manually input data from some sources and not others, or a lack of communication between different funds and accounts can lead to human error and confusion. Integrated processing and management systems avoid such problems.
Pro Tip: Opting for an all-in-one church management software, such as Springly, is often the best way to ensure this level of integration between features.
Allow Donors to Cover Processing Fees
Remember those processing fees that we talked about avoiding with the help of ACH payments? Every time a credit or debit card is run through a reader, a small transaction fee is charged by the card company. Sometimes using a credit card cannot be avoided, but if a lot of people are using bank cards, these fees will add up. What may amount to a loss of only a couple of dollars from one member’s donation can easily advance into a loss of hundreds or even thousands of dollars when many people are donating with bank cards.
However, if you have a particularly tight-knit and supportive church community, you can ask each of your parishioners to cover these fees on their transactions. You simply have to find a card reader for nonprofits that offers this option for donors to cover the processing fee. Finding a payment processor that has this feature should be high on your list of priorities, especially if you know that your congregants will want to use their bank cards frequently (think of how often this occurs when they are buying goods from your church).
All it takes is a little research to find a payment processing system that is safe, secure, and suitable. Some options like Stripe, Vanco, EasyTithe, GivingTools, Springly, and other providers have in fact tailored the specs of their payment processors to the needs of charitable organizations. There are pros and cons to every payment processor, but those that offer features and merchant services that align with the specific needs of churches and other charitable organizations should be at the top of your list. You have many tools at your disposal (like this blog!) to help you uncover which ones those are.
Churches, like other charities and nonprofits, have a mission to do good in the world. Unfortunately, many of these institutions limit themselves by only accepting cash and check payments. Start moving away from cumbersome payment methods in order to streamline and maximize donations and offerings, which will in turn allow for more available funds to invest in your church’s vision.
Springly is trusted by over 20,000 nonprofits to help them run their organizations on a daily basis. Try it, test it, love it with a 14-day free trial!