Sixty to seventy-five percent of the revenue received by our association management clients is by way of credit card payment.
If you can determine the total cost of credit card processing when comparing processors—which is very hard to do—you may find that the company offering the lowest processing rates or fees is not necessarily the cheapest for your association.
The purpose of this article is to provide an overview of what you need to know when selecting a credit card processor for your association—plus, where to find help in making this decision.
Accepting Credit Cards
To accept online credit card payments, you need a shopping cart. A shopping cart is a piece of software that facilitates a purchase. Associations use association management software as their shopping cart. It accepts a member credit card or debit card payment and distributes that information to a payment processor.
The association management software you use will determine the choices that you have for credit card processors, as not all software is integrated with all credit card processors. When selecting association management software, one of the factors in the decision-making process should be the choice of credit card processors.
Cost of credit card processing should not be the sole reason for selecting a vendor. Payfirma offers an overview of Canada’s top credit card processors that includes: the type of user their systems are designed for, its ease of use, customer service capabilities, pricing—plus other pros and cons.
Read the Fine Print
Do read the fine print before signing any credit card processing agreement. A few key points to consider:
- Many processors will ask for a personal guarantee but most will waive this requirement for associations;
- The length of an agreement can vary from one month to as much as five years;
- Longer term agreements can include financial penalties of up to $550 for early termination;
- Longer term agreements may include automatic renewal, unless you provide up to 90 days notice of your intention to not renew your agreement, and;
- How long the processor holds on to your money; some processors hold onto your money for four-days. This can hurt your cash flow and make reconciling your bank statement a nightmare.
In addition to reading the fine print, I suggest that you look at the website for clues about customer service levels. For example, can you call and speak to a help desk during normal business hours or is all customer service web-based?
PayPal is the leading online credit card processor. Most shopping carts are integrated with PayPal. It is also the credit card processor fee leader. Their top fee is 2.9% + $.30 per transaction, unless you are a registered charity—more about fees for registered charities later in this article.
PayPal Payments Standard also has “no startup costs, no termination fee, and no monthly fee.”
PayPal Payments Pro has a monthly fee of $35 that allows your association to accept payments on the phone using a virtual terminal. You can compare PayPal’s two options at paypal.com/ca/webapps/mpp/compare-business-products?locale.x=en_CA
Credit Card Selection Resources
While preparing to write this article I discovered Merchant Maverick. It “is a comparison site that reviews and rates credit card processors, POS software companies, shopping carts, mobile payments services, and small business software.” Most of their resources are free and include:
- A series of eBooks such as their 46-page Beginners Guide to Payment Processing designed to provide you with “every last bit of [information you need] to understand and consider in order to make informed decisions;”
- Blogs such as The Best Online Credit Card Payment Processing Companies, and;
- In-depth reviews of credit card processors with comments from users.
They also publish an e-book Cost Analysis Workbook: Never Overpay for Credit Card Processing – the cost is $99.
Solutions for Larger Associations
If your association credit card revenue is more than $100,000 per year, then Schooley Mitchell might be a solution to consider when selecting a credit card processor and/or learning if you can lower your existing credit card costs.
Schooley Mitchell, on a contingency basis, will compare your current cost of credit card processing with what their clients are paying across Canada. If they find a way to reduce your costs, then in return they receive 50% of the savings—no savings, no cost to you.
Options for Registered Charities
If your association is a registered charity, then you may be able to obtain a lower credit card processing fee.
Some credit card processors indicate on their website that their fees are lower for registered charities while others do not advertise lower rates but may provide them if you ask. If your association already accepts credit cards, check with your processor to see if you are receiving the registered charity rate.
PayPal and CanadaHelps are ideal solutions for many registered charities:
- PayPal’s processing fee for registered charities is 1.6%, plus $.30 per transaction; this is a 45% discount, and;
- “CanadaHelps is a charity and social enterprise with a mission to provide small to medium sized charities with online fundraising solutions,” including online receipts for 3.5%.
So, in summary the keys to low-cost and high-value credit card processing are:
1. Be sure to read the fine print.
2. Consider all the fees associated with a processor.
3. Be familiar with other elements such as withholding times and customer service levels.
4. Be sure to ask for a registered charity discounted rate.
Strauss event & association management has no business relationship with any organization mentioned in this article. The costs and fees in this article were correct when this article was posted on June 28, 2018.