As online charitable giving becomes more widespread, it's more vital than ever for nonprofit software providers to partner with a secure, reliable payment processor who can help them develop and maintain long-term nonprofit relationships.
Though working with an aggregate payment processor might seem like the easiest way to get started with online fundraising, ultimately, these types of processors come with a number of challenges for their partners, nonprofits, and donors.
Aggregators present a major issue for nonprofit software providers who can be lumped in with the actions of the payment aggregator (even though they don't have control over them).
As a nonprofit software provider, your relationships with nonprofit organizations are the most important thing your business has. That being the case, you’ll want to advise your clients on a payment processing solution that won’t cause headaches.
Because it can be difficult to understand the nuances of payment processing, we’ve broken down 5 common myths about how payments are handled in the nonprofit sector.
Myth #1: Aggregator and merchant accounts are basically the same.
TRUTH: Aggregators and merchant account providers will both process your payments, but they will do so in very different ways.
Aggregators store all their clients' funds in one shared pool. That means that thousands upon millions of transactions are all stored in one account, leading to an increased risk of fraud and an entirely un-individualized payment processing experience.
Dedicated payment processors provide individual merchant accounts for all their clients. Not only is the payment processor able to be much more flexible with their partners, but they're also typically able to process payments much more securely and quickly, too.
Myth #2: Aggregator and merchant accounts give your nonprofit clients the same amount of support.
TRUTH: Since aggregate payment processors are processing so many transactions within one collective account, there’s simply no way for the processor to supply merchants with a high level of personal support or attention.
The only way to establish a truly valuable partnership and receive the individualized attention you need is to set up your own merchant account through a dedicated payment processor.
Myth #3: Aggregator and merchant accounts both offer the same level of security and fraud prevention services.
TRUTH: Because of their shared nature, aggregators inherently deal with more fraud than individual merchant accounts.
Additionally, because aggregators can’t give their partners individualized support, they’re much more likely to freeze or terminate a partner’s account if suspicious activity is detected.
A merchant account provider, however, has the ability to contact the merchant directly if they notice unusual activity. That means these accounts generally will experience significantly fewer interruptions.
Myth #4: Aggregator and merchant accounts are both perfect for clients of any size.
TRUTH: Aggregators often have lower processing limits, meaning that they likely won’t be able to grow with their partners.
Merchant account providers, however, can scale their services to meet their partners’ needs.
Myth #5: Aggregator and merchant accounts will both make it easy for your clients to receive donations.
TRUTH: As highlighted by recent events, aggregators' complex structure and relationships with their sub-merchants may make it difficult to ensure that a nonprofit's hard-earned donations end up in the right place.
Merchant account providers prioritize your clients and allow them to easily understand how many donations are coming in and where the money is going.
While aggregators and merchant account providers suit different nonprofit needs, merchant accounts will provide your clients with a host of benefits, including:
• Individualized support.
• Lower risk of fraud.
• Fewer interruptions to processing activity.
• Higher annual processing limits.
• No chance of rerouting funds.
• Shorter processing times.
• Full control over funds.
Ultimately, while an aggregator can get the job done, the best way to ensure that your clients have a positive experience with you and your software is to work with a dedicated merchant account provider.
To learn more about merchant account providers and our partnership program, contact iATS Payments, the only payment processor who specializes in nonprofits.