One of my friends recently confessed that he felt bad about not having any cash to put into the church collection on Sunday mornings. She states, “I never carry cash anymore… I pay all my bills online. I don’t even write checks… and I forget or am too busy with the kids to get cash before Sunday service…”
As electronic services continue to change the financial landscape, fewer people carry real money. More churches are realizing that to stay alive they must modernize and promote technologies that make giving easier. A well set up merchant account is a great tool churches can use to encourage donations.
Having a merchant account allows churches to accept credit or debit card payments from church members. Giving or tithing by credit or debit card is simple for members of the congregation, and research shows that having the ability to accept payment cards can significantly increase the volume of financial donations to faith communities, many of which struggle to make ends meet
There are several benefits to setting up a merchant account for your church. With a merchant account your church can:
• Accept donations online on your church website
• Accept debit and credit cards by having a debit machine on site
• Process cards with a wireless terminal or mobile device – ideal for bazaars/fundraisers
Another great benefit of having a merchant account is that it allows your church to accept “recurring” payments. Congregation members can set up automatic monthly giving plans on their cards each year, month, or week as they see fit.
Other advantages of investing in a direct business account for your church include:
• Lower transaction fees as a non-profit organization. A good representative can access reduced or waived service fees for your church.
• Your church’s name on credit card statements: If your church has a real or direct business account, the church’s name will be on the donor’s statement and on all receipts. This facilitates tax receipts. If you make an online donation to a charity through a ‘third party processing’ service, very often it is the processor’s name that will appear on your receipt.
• Control – With a direct business account, you control the direction and deposit of funds into church accounts. There are no middlemen or anyone else controlling the timing and flow of your deposits.
• Convenience – Donated funds and gifts through a merchant account are deposited into your bank with the push of a button.
Depending on how your congregation and the group in general feel about the idea of mixing payment cards in a spiritual setting, certain issues of concern may arise.
For example, a church in Vancouver was uncomfortable with the idea of encouraging debt through the use of credit cards and opted to use a debit machine programmed to accept only debit cards. The machine sits on a stand inside the church in a cozy private hall. There is always a constant stream of people using the machine before or after service to get paid.
Other churches encourage the use of credit cards to facilitate donations to various ministries and even promote their payment card service in newsletters and Church newsletters. A number of churches in Ontario disclose monthly service rates and fees to their parishioners through advertisements.
With so many options and variations on business accounts for churches, it can be confusing which approach might be best for your congregation. My typical advice would be to take into consideration the needs of your church plus the size and sophistication of the congregation and staff.
A large church with a strong finance department, a large number of financially supportive parishioners, and good community outreach can do well with a full-service business account. A smaller church may find it easier and more cost-effective to set up a ‘debit only’ machine that is easily accessible to parishioners.
Costs and fees
If your church merchant account is properly set up as a non-profit, your monthly service fees can be as low as $15 or $20 per month up to $40 or $50 depending on the processing company or the bank you choose. Generally, your rates should be fairly low and should reflect more of the “interchange cost plus” pricing model, meaning your rate would be only a fraction higher than the rate the credit card company charged the bank initially. Definitely stay away from ‘tiered’ fee pricing if you can. For example, if the provider offers you a rate of 1.70% “plus”, that is indicative of tiered pricing.
Equipment such as terminals, mobile card readers, etc. they can be bought, leased or rented. Team relaxation is often the preferred approach. Direct purchase of equipment is the most cost-effective solution for churches with sufficient funds.
The process to set up a merchant account is quite simple. There are several payment processors that provide this service for churches. Once you have chosen the ‘best fit’ for your parish, simply complete the application and establish the merchant account. After that, the rest is easy. If you’re setting up online donations, you can easily add a secure payment link with an attractive graphic to your web page.
If you go with a terminal or other hardware, once the merchant account is established, the hardware is programmed for you and shipped to your church. In almost all situations, the equipment is configured to be ‘plug and play’.
Regardless of the solution you choose, each provider company has a customer service department with agents who are available to help guide you over the phone.