Let’s not beat around the bush about it and get straight to the main point: charities have it quite rough when it comes to accepting online donations (online payments). It is a well known fact.
Now that we have said it and it’s out in the open, let’s see how the whole situation looks like in more detail. Let’s consider what can be done to reach a happy ending in the story about implementation of online payments for charities. Because it is possible! (This fact is not as well known as the first one though.)
Alright. Without further ado:
Why Is It So Hard to Accept Donations Online?
Finding a payment provider if you run a charity (a foundation, an association etc.) may turn out quite problematic. There are serious reasons for this, and we’ll talk about them in a moment.
Firstly, there are those who are still unaware of the difficulties they will encounter while processing online payments (of course, they can still accept standard bank transfers).
Secondly, there are those who claim that there is no good way to process money through the Internet, and this prevents them from trying to do it.
Finally, there are those who managed to implement support of this type of payments.
People representing the “unaware of what’s to come” type very often receive a list of conditions to meet (or a straight denial) when they first try to implement online payments. What usually follows is their loud disappointment and lack of understanding. They feel they are treated worse than “normal businesses” and they don’t like it.
The second type contains two subgroups: “let’s give up before we try” and “we tried once and it didn’t work”.
The third type are people who tried, clenched their teeth and made it work somehow.
Because, in fact, it is possible for a charity type project to find a PSP willing to process the funds that this kind of “business” receives online. It’s just a little bit more troublesome than with processing money for a “normal company”.
All of this is because the institutions dealing with finances are treated as more risky than the standard ones, the ones that are offering products and services. Acquirers and credit card institutions very often treat those kinds of endeavors the same way they treat high risk merchants. And, what’s most important, not every acquirer/PSP will want to cooperate with ventures that show signs of high risk.
This is where most of the denials come from.
And why is the high risk designation valid?
It’s because in reality that’s precisely what is going on with Internet donations. They are risky. Anywhere where there’s charity, there’s also a possibility of money laundering; with charity we often have no idea who the benefactor is; practically anyone can become a benefactor and send funds from any part of the world.
The donors rarely sign agreements. There are no rules to go by, the transactions may not have accounting documents attached. No invoice, no bill, nothing.
Very often there is no direct connection between the donor and the recipient of the funds, between the person who gives their money and the foundation. This is where the possibility of embezzlement arises.
Additionally, in this kind of financial activity, the threat of chargebacks is quite large and, sadly, it’s very hard (or sometimes quite impossible) to dispute those chargebacks.
Here’s a possible course of events: somebody pays a foundation, and, after some time passes, wants the money back.
What can a foundation do in such situation? Practically nothing. There’s no service taking place, no product changing hands, no agreement that would clearly state that the donor agreed to pay the sum in question. There’s no proof that could help win the dispute.
Is it possible, then, to process payments (e.g. card transactions) if you’re a foundation?
Yes, it’s possible. It’s not easy, but it’s achievable. It requires a lot of time, a “business model” that has been well thought through and meticulously implemented. And, of course, you need to remember about meeting the additional conditions. A little legwork is necessary, but it is possible, and that’s what matters!
Here, at Paylane we are capable of processing payments for certain types of foundations (the trustworthy ones, no funny business allowed) and we do it successfully.
If you run a foundation or similar project or you are just interested in it and plan to do it in future, feel free to contact us if you have any questions on this matter! We’ll gladly help to make things more clear.