E-Payment: Everything Non-Profits Need to Know

Anyone who wants to receive online donations must also deal with the topic of e-payment. But don’t worry, it’s less complicated than it sounds and it’s worth it. After all, the payment process is the last step the donor has to take before your organization receives the donation. If this process is confusing, inconvenient, or doesn’t work properly, donors will drop off in frustration and usually won’t try again.

The same applies if only a few payment options are offered. For example, if you only have a PayPal button on your donation page, you are excluding many potential donors right from the start. While it is possible to donate without a PayPal account, it is limited. Few people know this, and it is very unlikely that someone will use this option if PayPal is not their preferred payment method. A wide range of payment options also appears very professional, strengthens trust in your organization, and gives your supporters the opportunity to use their preferred payment method.

– What is e-payment?

– E-payment on desktop and mobile devices

– What is a Payment Service Provider (PSP)?

– E-payment options

– Donations via e-wallet / digital wallet / cyber wallet

– Donations via direct debit

– Donations via instant transfer

– Donations via direct transfer

– Donations via credit card

– Donations via Amazon Pay

– Single and recurring donations

– Individual purposes

– Security in electronic payments

– What happens after the online donation for the non-profit?

– Transaction costs and accounting

– Ongoing updates

Let’s start from the very beginning: What exactly is e-payment?

E-payment means “electronic payment.” Sometimes synonyms like online payment or cyber payment are used. E-payment is the umbrella term that encompasses all electronic payment methods.

Sometimes you also come across the term “convenience payment.” “Convenience” means “comfort” – this term emphasizes the high ease of the payment process. Your donors are also (online) consumers and have become accustomed to convenient payment methods in online shops. Non-profits should provide a broad mix of payment methods similar to e-commerce to increase the conversion rate and their online donation volume.

E-payment on desktop and mobile devices

E-payment usually works on all devices. However, what is convenient on a desktop PC with a keyboard can be a nuisance on mobile devices: e.g., filling out long forms on mini keyboards or switching between browser pages, email inboxes, or apps. Therefore, not every payment method is comfortably usable on mobile devices.

Current trends also indicate that e-payment will increasingly adopt a “mobile first” approach. Payment methods designed for mobile use are undoubtedly on the rise. For more information, read our article on how mobile internet usage has changed and will continue to change mobile donations..

The Payment Service Provider (German: “Zahlungsdienstleister”) is the company that integrates payment methods (e.g., PayPal, credit card, Amazon Pay…) from third parties – for example, in an online shop or a donation form. The PSP also takes care of the security of payments and fraud prevention. So, when talking about a PSP, it refers to the company that provides you with the payment methods.

In FundraisingBox, many payment methods from different providers are available, so for our customers, we are the PSP. Naturally, we take care of the maintenance and management of the interfaces to these payment methods. Users of FundraisingBox only need to create an account with the desired providers once and then do nothing more.

These payment methods include, for example, PayPal, Apple Pay, and Google Pay. Since the latter two are primarily (though not exclusively) used on mobile devices, they are also referred to as “Mobile Payments.” They basically work like a wallet. With PayPal, you register with your email address and a password, and you can link a credit card or a bank account, which is then charged via direct debit. For the actual payment, you only need the login details of your account. The transaction is then handled in the background, so donors do not need to take any further actions. Here you can read how to open a PayPal account for your non-profit and link it to FundraisingBox.

With Apple Pay and Google Pay, the payment process is very simple: After entering their details in the donation form, the donor selects one of these Mobile Payments and confirms the transaction with a tap on the phone and a second authentication factor (e.g., fingerprint).

A major advantage of this payment method: The donation lands relatively quickly in your organization’s account, and the payment process is very convenient for donors. For automatic and secure processing, payment service providers charge a transaction fee.

The classic direct debit is still one of the most popular payment methods among donors. Only the account holder and the IBAN need to be provided; the BIC is no longer required within the EU. Then, as a non-profit, you need to take care of the SEPA-compliant collection: A SEPA Pre-Notification is needed, which is a message to the donor informing them that their donation will be debited on a specific date. A SEPA mandate must also be created and archived, which can be done quickly and easily in FundraisingBox. The organization can then debit the donation, for example, via online banking or bank software.

This process is much easier with automated direct debit procedures. FundraisingBox customers have access to the “Wikando Direct Debit.” Here, we automate the submission to the bank. The idea is that the donation lands in the non-profit’s account without any further action. Through automatic, personalized emails, all SEPA requirements can be easily and conveniently met. Here you can find an overview of the direct debit types in FundraisingBox.

Direct debits can be received both online and offline (e.g., via a paper form at a benefit event or as an insert in a mailing). Different processes often arise in practice, leading to data silos. Additionally, donors are used to direct debit donations being collected quickly. To ensure your direct debit donations online and offline involve as little work as possible, do not cause data chaos, and quickly land in the organization’s account, you should consider switching to a (semi-)automated procedure – e.g., with FundraisingBox.

To use this payment method, donors only need a bank account with online banking. During the payment process, the donor enters their online banking login details and confirms the transaction with a TAN, which is usually sent to their phone. The provider – e.g., Klarna – then conducts the transfer on behalf of the donor and simultaneously informs the recipient about the transaction.

To use Klarna in your donation forms, an account with Klarna is required. This is currently free for non-profits. Here we describe how to open a Klarna account and link it to your FundraisingBox: Open Klarna Account and Link with FundraisingBox.

It also counts as e-payment when donors use your IBAN to transfer directly to your donation account via their online banking. However, non-profits often face the problem that these donations only appear on the bank statement and not in the database/CRM. The consequence: These donations must be manually imported or even completely entered by hand. This takes time and is usually not much fun.

In FundraisingBox, we have created a solution for this problem: Bank Sync. By linking your bank account with your FundraisingBox, these donations flow automatically into your CRM after a brief manual confirmation.

If a donor selects a credit card as the payment method, an interface to the bank that issued the card is established during the payment process. The donor then authorizes the payment by entering the credit card details and a second authentication method – e.g., an additional SMS code. The bank then approves the payment, and the organization receives the donation with a slight delay in their account.

To receive donations via credit card, an organization needs an account with a corresponding payment service provider. In the case of FundraisingBox, this is, for example, Stripe. Here we describe how to open a Stripe account and link it to FundraisingBox.

Amazon Pay is also a very convenient payment method. Amazon customers already have their payment information stored in their customer account, meaning they do not need to enter any additional information for the donation. Donations via voice command to Amazon Alexa are also possible. Unfortunately, Amazon Pay is not yet available for all non-profits, but some of our FundraisingBox customers can already use it. It is therefore assumed that Amazon will soon make this payment method available for all non-profit organizations in Europe.

A single donation can be made with any payment method, while recurring donations are currently only possible with certain payment methods: unrestricted by direct debit and credit card, and under certain conditions by Amazon Pay and PayPal. Since credit cards have an expiration date, the donor must be contacted before the card expires and asked to renew their donation. In FundraisingBox, there is another practical alternative: Credit card details are automatically updated.

In our experience, many non-profits struggle to process recurring donations via payment methods other than direct debit. This is due, for example, to the lack of process structures or working programs that are not designed for it. Recurring donations, however, are an enormously important and stable source of income for organizations. It is also a matter of professionalism to be able to offer recurring donations via different payment methods. FundraisingBox is a reliable partner in this regard.

So much for the theory. But what do the various payment methods mean for the necessary work in the background?

Both how a donation appears on the bank statement and whether it automatically lands in the account or not depends on the payment method:

Automatic Direct Debit, Klarna, and eps (Austria): These donations go directly into the organization’s account. On the bank statement, you can see the donor’s name and the donation amount (although this also depends on the bank’s “settings”). Generally, transaction costs are deducted in advance; when using our payment method “Wikando Direct Debit,” they are collectively charged afterward.

PayPal: Donations via PayPal usually first appear as a balance in your organization’s PayPal account, from where they can be transferred to your bank account. On the bank statement, you will see the total amount minus transaction costs and PayPal’s name as the sender. On the PayPal statement, you can also see the donors’ names.

Credit Cards: These donations are also collected but automatically transferred to the organization’s account. As with PayPal, the bank statement shows the total amount minus transaction costs and the name of the payment provider (e.g., Stripe). The payment provider also provides statements where you can see the individual donors’ names.

Non-profits using the FundraisingBox CRM have it easy: All donations—regardless of the payment method—are consolidated and displayed with all relevant information. Additional statements from payment providers are no longer necessary. And since you can create unlimited users in FundraisingBox, your accounting department can also benefit from this advantage!

Some payment providers charge transaction fees that are automatically deducted. For example, if someone donates €100 via credit card, your non-profit receives the donation amount minus transaction costs, e.g., €96.40. Therefore, the donation amounts in your CRM may differ from the actual donations received in the accounting department. This naturally creates work for the accounting department, but it can be simplified through “reconciliation.”

Reconciliation means that your CRM matches the donations received with your bank account. This allows it to transparently and clearly display the actual donation amount received and the transaction costs. This will soon be possible in the FundraisingBox CRM. 😉

Payment service providers are continuously working to simplify and enhance online payment processes. Therefore, new payment methods are constantly being introduced to the market. Some of these become widely adopted and even occasionally “hyped.” To ensure your non-profit is always up-to-date, it is advisable to offer new payment methods in your online donation forms as soon as possible. This way, you provide all options to young, adventurous donor groups and strengthen the trust that your non-profit is modern and professional.