The reason for this is simple: More churches are seeing the value of offering this giving channel. People (especially younger generations) don’t carry cash or checks on them much anymore. Providing an online giving option enables those church goers to make donations and pay for events with credit cards.
Payment processing fees vary with different church management systems
If you’re like many churches that have made the move to online giving, your central means of receiving donations and accepting payments for event registrations may be your church management system. This is a great feature and an incredible convenience—but it also could be costing you more than it should be.
With online donations, a fee is charged every time a donation is made through your system. This is standard practice. Unfortunately, what a lot of church leaders don’t realize is that all systems do not charge the same fees. Some can actually charge a notable amount more than others. These fees add up over time.
This hidden cost can increase the true cost of your church management system—which means a larger portion of your members’ contributions could be eaten up by fees skimmed off the top.
Does your system use interchange-plus or tiered pricing?
The way it works is all processors (or merchants) are charged the same interchange rates from the credit card companies whenever a payment or donation is processed.
Interchange rates – Falling between 0.05% and 3% (depending on the type of credit card), the interchange makes up the majority of each transaction fee. Each credit card has a unique interchange rate that is static for the most part. The interchange fee goes to the bank that issues the credit card.
Tiered pricing – Tiered pricing puts credit cards into a few different collective buckets based on interchange rates (0.5-1%, 1-2%, etc.) with a different percentage fee charged for each bucket. This structure simplifies things, but also sends more profit to the processor.
Depending on which processor your church management system uses, you may be paying reasonable or unreasonable processing fees for your donations. Some church management systems also charge their own fees for every online gift you receive. So along with the interchange rates and processing fees, the system itself takes a cut of any donations you receive through the software.
Are your rates being marked up or are you keeping that money for your mission?
If you haven’t investigated what your payment processing fees and/or ChMS charges are for each transaction, the answer could be an unpleasant surprise. These fees may seem small on the individual level, but they stack up over time to cost you more money. Make sure you’re always getting interchange-plus pricing. With lower processing fees, more money can stay in your ministry.