Nonprofit Credit Card Processing – A Guide

In today’s digital-first donation ecosystem, the friction between a donor and their contribution must be near zero. As we navigate the industry going forward, the shift toward “invisible payments”, including digital wallets and one-click credit card processing, has made understanding payment infrastructure a prerequisite for nonprofit growth.

Maximizing social impact requires more than just passion; it requires financial efficiency. This guide breaks down the mechanics of credit card processing, the latest fee structures, and how your organization can minimize overhead to keep more funds on the front lines.

What is Nonprofit Credit Card Processing?

At its core, credit card processing is the technology and financial sequence that allows a merchant (your nonprofit) to accept payment information, verify funds, and settle the transaction into a bank account.

The Key Players in Your Donation Flow

To optimize your strategy, you must understand the six entities involved in every “Donate” button click:

1. The Donor (Cardholder): The supporter initiating the gift.
2. The Merchant (Nonprofit): Your organization receiving the funds.
3. The Acquiring Bank: The nonprofit’s bank that receives the deposit.
4. The Payment Processor: The system (e.g., Stripe, PayPal, iATS) that moves the data.
5. The Payment Network: The digital rails (Visa, Mastercard, Amex, Discover).
6. The Issuing Bank: The donor’s bank that authorizes the credit.

How it Works: The 5-Step Authorization Cycle

In 2026, these five steps happen in less than two seconds:

1. Submission: The donor enters their details via your online form or mobile wallet.
2. Authentication: The processor sends the data to the payment network to request authorization.
3. Verification: The issuing bank checks for fraud and available credit, then sends an approval (or denial) back.
4. Clearing: A temporary hold is placed on the donor’s funds.
5. Settlement: The processor batches the transactions, deducts fees, and deposits the net amount into your acquiring bank.

The Strategic Benefits of Modern Payment Processing

Beyond simply “taking money,” a robust processing strategy acts as a catalyst for donor retention.

• Higher Average Gift Size: Psychological studies in 2025 continue to show that donors are more likely to give larger amounts via credit than cash or check, as the “pain of paying” is lower.
• Recurring Revenue Stability: Digital processing allows for “Set it and Forget it” monthly giving, creating a predictable MRR (Monthly Recurring Revenue) for your mission.
• Global Reach: Accept contributions in multiple currencies, allowing your impact to resonate with an international audience.
• Trust and AIO Visibility: Using secure, PCI-compliant processors improves your site’s “E-E-A-T” (Experience, Expertise, Authoritativeness, and Trustworthiness), which is a key ranking factor for both Google and AI search bots.

Navigating The Fees

One of the most important things to take into consideration when it comes to nonprofit credit card processing is that no matter what there will be fees. 

There are a variety of different fees that come with credit card processing. Firstly, there is the interchange rate.

The interchange rate is not dependent on the credit card processing system, but rather the credit card company/bank of the donor. There are two different charges that come with the interchange fee.

Despite the advantages, nonprofits must consider the associated fees:

Interchange Fees

Interchange fees are a fundamental component of credit card processing costs. These fees are determined by the credit card networks, such as Visa, MasterCard, and American Express, and vary based on the type of credit card used by the donor.

Typically, an interchange fee comprises two parts: a percentage of the transaction amount and a flat fee per transaction.

The percentage component depends on several factors including the type of card (credit, debit, or premium), the card issuer, and the specifics of the transaction itself—whether it’s processed online or in person. For example, premium credit cards often incur higher interchange rates due to the additional rewards and benefits they offer to cardholders.

The flat fee is a set amount that is charged along with the percentage of each transaction. This fee remains constant regardless of the transaction size, adding a fixed cost to the processing of each payment.

Interchange fees are designed to cover the costs of handling credit card transactions, fraud mitigation, and the risks assumed by the issuing bank. For nonprofits, understanding these fees is crucial as they directly impact the net amount received from donations. By choosing the right payment processor and understanding the fee structure, nonprofits can better manage these costs and maximize their fundraising efforts.

Assessment Fees

Assessment fees are another important component of the costs associated with credit card processing. These fees are charged by payment networks such as Visa and MasterCard and are calculated based on the total volume of transactions processed by a merchant.

Unlike interchange fees, which vary by card type and transaction details, assessment fees are more straightforward and proportional to the amount of money processed.

For nonprofits, assessment fees are a fixed percentage of the total transaction volume. This means that the more donations a nonprofit processes through credit cards, the higher the total assessment fees will be. The specific rate is set by each payment network and typically remains consistent across all transactions, regardless of the type or amount of the individual transaction.

These fees are used by the credit card networks to cover the costs of maintaining and improving their payment infrastructures, ensuring secure and efficient processing of transactions, and providing customer support and fraud monitoring services.

For nonprofits, managing the impact of these fees involves understanding their structure and factoring them into the overall cost of accepting credit card donations. This knowledge helps in budgeting accurately and choosing payment processing solutions that offer the most financial efficiency.

The assessment fee is also a fee that is associated with the donor’s individual credit card. Assessment fees/ rates are specific to Visa and Mastercard.  If you want to learn more about interchange and assessment fees, check out this article by Main Street Merchant Solutions.

Markup Fees

Markup fees represent additional costs imposed by the credit card processing service itself, separate from the interchange and assessment fees set by the card networks. These fees are typically charged as a percentage of each transaction processed. The purpose of markup fees is for the processing companies to cover their operational costs and to make a profit.

Generally, the markup fee will be between 2%-3% of the donation amount no matter what processing system you use.

This is why it is important to take the markup fee into great consideration when selecting a credit card processing system.

Factors that can influence the rate include the volume of transactions, the average transaction amount, the perceived risk level associated with the nonprofit’s activities, and the additional services provided by the processor, such as customer support, fraud protection, and technology solutions.

Markup fees are an area where nonprofits have some room to negotiate with processors. By comparing offers from different processors and leveraging their transaction volumes, nonprofits might secure lower rates, thereby reducing the overall cost per donation.

Flat Fees

Flat fees in the context of credit card processing refer to a consistent, fixed charge that some processors levy on a monthly basis for the use of their payment systems. These fees are not dependent on transaction volume or the dollar amount processed; rather, they are static charges that must be paid regardless of how much or how little is processed through the system.

This type of fee structure can include charges for accessing the processing platform, customer service support, monthly account maintenance, and the use of specific features, such as the ability to handle recurring donations or to provide detailed reporting tools. The rationale behind flat fees is that they help cover the ongoing costs of providing these services, maintaining secure transaction environments, and ensuring system reliability and uptime.

For nonprofits, flat fees can be both a benefit and a drawback. On one hand, if a nonprofit processes a high volume of transactions, a flat fee can be more economical compared to variable fees that scale with transaction amounts. On the other hand, for smaller nonprofits or those with highly fluctuating donation patterns, flat fees can represent a significant overhead cost.

It’s important for nonprofits to carefully consider their expected transaction volume and the specific services they need when choosing a processor.

Some may find that a flat fee structure simplifies budgeting, as it makes expenses predictable. Others might opt for processors that charge exclusively based on transaction volume to avoid paying for unutilized capacity.

By understanding their own needs and the details of the fee structures offered, nonprofits can choose a payment processing solution that minimizes costs while maximizing the funds available for their core mission.

If you’re interested in learning more about different fees associated with credit card processing, check out this US News and World Report Guide. 

Counteracting Fees

Do not let these fees prevent you from taking advantage of the benefits of processing credit card donations. First, make sure that you set up your credit card processing system account 100% correctly.

While this may seem obvious to say, small mistakes in setting up your account can amount in fees down the line. Additionally, many credit card processing systems are flexible in their fees.

If you are set on a certain processing system, then we would recommend you reach out to that organization and attempt to negotiate. Another method for decreasing transaction fees is to reduce the risk of fraud as much as possible.

We would recommend looking into an Address Verification Service.

An AVS is recognized by most payment networks, and the certification prevents fraud and can bring your transaction fees down by 1% or more. 

One suggestion that we would recommend in order to entice donors is to offer to cover the credit card processing fees on donations made to your organization.

If you are an organization that has the capital to be able to cover these fees this can prevent donors from being put off by credit card processing fees.

If you are a smaller organization that is more reliant on donations we would suggest that you restrict your online donations to debit cards in order to ensure that your nonprofit is receiving one hundred percent of the donation.

If you are interested in other digital fundraising tools that could be beneficial for a nonprofit that may not be ready to process credit cards, Charity Charge has created a list of 5 Ways Technology Can Elevate Your Fundraising Strategy.  

Credit card processing options:

Stripe for Nonprofits: Best for organizations with custom-built websites. They offer a discounted rate (typically 2.2% + $0.30 for 501(c)(3)s) and world-class security.

PayPal for Nonprofits: The gold standard for trust. With a 1.99% + $0.49 rate for registered charities, it remains one of the most cost-effective “out-of-the-box” solutions.

iATS Payments: Specifically designed for the nonprofit sector, iATS integrates seamlessly with major CRMs like Salesforce and Raiser’s Edge, making it ideal for mid-to-large sized organizations.

Conclusion

Overall, credit card processing may not be the correct choice for every nonprofit. But, while there are processing fees that deter both nonprofits and donors, there are also benefits to accepting donations via credit card.

Donors can receive cashback and points when they donate their credit card, and the convenience of accepting credit card donations can increase the number of donors that your nonprofit could receive.

After outlining the factors, steps, benefits, and fees, your nonprofit should now be able to make the choice of whether credit card processing is the right choice for your nonprofit.

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