[thelist] Payment gateway for a non-profit?

[David Kaufman]

Hi Max,

Max Schwanekamp <lists at neptunewebworks.com> wrote:
> On the topic of payment gateways -- Aside from PayPal, does anyone
> happen to know of a good solution to use for a US 501(c)(3)
> non-profit organization to accept online payments?

Yes!

> ...At this point,
> the typical setup fee + 2.5%/txn + more fees rate has stopped the
> organization from using online payments for donations and such.
>
> Google gives lots of hits of course, but I'm wondering if someone has
> a specific recommendation.  The main criteria are simply minimal
> costs and maximum reliability.  It can be a true gateway or a hosted
> payment service a la 2Checkout.

E-Online data has a special merchant account for 501C3's that apparently
can't be beat:
https://www.e-onlinedata.com/nonprofit

No monthly minim charge?  That alone is huge -- *everyone* charges a
hefty minimum, usually $30 - $50/month, which makes this great for those
slow months.  Plus, no "gateway"/"virtual terminal"  charges (IMO just
more names for baseless monthly flat fees).  This is really a
pay-only-when-used payment processing service.

And it is Authorize.net under the hood (E-Online data is an
authorize.net reseller) so the technology and service is solid, and the
API, third-party shopping cart and custom development support is all
there.

As evolt's treasurer, I found this while looking into donation options,
but evolt is so non-profit we cannot even afford 501C3 status :-)  but
although I've recommended it a few times to a few folks on a few mailing
lists, I haven't heard back from anyone whether they signed up, or how
they liked it.  So... IF YOU TRY THEM, POST BACK HERE TO LET OTHERS HEAR
HOW IT WENT!

I know there are a lot of high-pressure lowlife unscrupulous merchant 
account salesmen out there who do nothing but resell and take a cut, 
because I'd started set up a couple of ecommerce clients in prior years 
earliest after looking at what other professionals were using and 
recommending... at that time CyberCash was king (pre ~2001).  Then 
Verisign bought them and screw that.

Since then Authorize.net has emerged as the payment gateway of choice
for web developers.  Merchants can sign up directly with Authorize.net
and cut out all the middlemen, but their "retail" prices are not cheap
(as you've noticed).  This is presumably because Authorize.net does not
want to hold the hand of the newbie online merchant.  Setups can be
tricky.

Your own bank (or your client's bank) will most likely either strongly
recommend, or outright insist, that you must use *their* payment
processing service, usually a take-a-cut reseller.  Ignore that.
Previously many brick and mortar banks would wrongly tell you that you
*can't* do e-commerce with your checking account at their bank, simply
because they didn't allow online transactions (also called "card not
present" or "MOTO" Mail-Order/Telephone-Order) on the merchant accounts
*they* sold.  What they never told you was that you don't have to
"change banks" or move your organization's checking account to use a
credit-card merchant account from another institution.  Truth is *every*
merchant account transfers the net payments (usually daily, after a few
days' delay) into *any* U.S. bank account, so you're free to purchase
merchant account and payment processing services from any reseller who
can "close you" and the money wires into the old checking account just
fine.

The sticky bit is knowing who's reselling and adding no value and who is
a legitimate link in the technology/business chain (merchant banks,
issuer banks and clearing and settlement processors).  Authorize.net is
a "payment gateway".  Read the "How it works" diagram on their site:

http://authorize.net/resources/howitworksdiagram/

I've helped a couple of online merchants setup with Authorize.net.  In
one case, I helped them open an Authorize.net account directly with
Authorize.net who assured us they worked closely with the client's bank,
Citibank.  Citibank assured us they worked with Authorize.net just fine,
then later a Merchant Account sales rep from Citibank called the client
and scared/pressured them into opening a second merchant account with
them, implying that "they had to".  Time went by before this sales rep
forwarded us the Merchant ID of the new account they "had to" use.
Turns out it was just another Authorize.net merchant account, resold by
a third party taking a nice percentage (not Citibank) but sold through
and *by* a sales rep calling himself a Citibank rep who had the account
information (and, by his timing, a referral) to show that if he wasn't a
Citibank employee he was at least Citibank's "partner" (maybe a
subsidiary).  Later as they detailed the fees the merchant had to pay,
other company names turned up, making my client suspect more levels of
resale were in place, and that we had more layers of the onion to peel
back.  But these turned out to be those payment processors, settler and
clearing institutions between Authorize.net and "The Interchange" on
that diagram -- IIRC it was Wells Fargo and FNC-something?  I forget.

Point is there's lots o money to be made by agents, and lots of distance
Authorize.net can put between themselves and end users which makes them
happy because your reseller is your first point of questions, support
and complaints, all of the points that Authorize.net would prefer to
outsource.

Anyway so I heard of E-Online data as they were (and still are) the
"preferred e-commerce partner" of my web hosting provider, pair
Networks.  And though I can see that pair *does* take a piece of the
action if I sign up for EOD through their link on pair's site (the rates
quoted are slightly higher than if I clear my cookies and go to EOD's
site directly...sigh) I like pair and have used them for years and trust
their recommendations and oo I would tend to trust E-Online Data.

Then again, as you can see from the length of this post, I'm a paranoid 
conspiracy theorist at heart, and would probably sign up direct and pay 
the higher rates, if it was for myself, just to reduce the 
finger-pointing and layers of "I'll get back to you" when things go 
wrong.  As things tend to do... :-)

-dave