How Local Churches Can Use a Merchant Account for a Financial Boost

One of my friends recently confessed to feeling badly about not having cash to put into the church collection plate 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 the Sunday service… “

As electronic services continue to change the financial landscape, fewer people carry actual money. More churches are realizing that in order to stay alive they must modernize and promote technologies that facilitate giving. A well set up merchant account is a great tool that churches can use to encourage giving.

Having a merchant account allows churches to accept credit or debit card payments from church members. Donating or tithing by credit or debit card is simple for congregation members – and research shows that having the ability to accept payment cards can significantly increase the volume of financial gifts to faith communities, many of whom struggle to make ends meet.

There are a several benefits to setting up a merchant account for your church. With a merchant account your church can:

• Accept donations over the Internet on your church’s website
• Accept debit and credit cards by having a debit machine on site
• Process cards with a wireless terminal or mobile device-great 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 donation plans on their cards each year, month or week, as they see fit.

Other pros to investing in a direct merchant account for your church include:

• Lower transaction fees as a non-profit organization. A good rep may be able to access reduced or waived service fees for your church.

• Your Church’s Name on the Credit Card Statements – If your church has a real or direct merchant account the church’s name will be on the donor’s statement and on all receipts. This facilitates tax receipts. If you donate online to a charity through a ‘third party processing’ service, quite often it is the processor’s name that will appear on your receipt.

• Control – With a direct merchant account, you control the direction and deposit of funds to church accounts. There is no middleman and no one else controlling the timing and flow of your deposits.

• Convenience – Donated funds and gifts through a merchant account are deposited to your bank with a push of a button.

Depending on your congregation and the general group feeling around the idea of mixing payment cards in a spiritual setting, there are certain issues of concern that may arise.

For example, one church in Vancouver felt uncomfortable with the idea of encouraging debt through the use of credit cards and opted to go with a debit machine programmed to only accept debit cards. The machine is placed on a stand inside the church in a cozy private vestibule. There is always a steady stream of folks who use the machine before or after the service to give collection.

Other churches encourage credit card use to facilitate giving to various ministries and even promote their payment card service in Church bulletins and newsletters. Several churches in Ontario report the rates and monthly fees for the service to their parishioners by way of announcements.

With so many options and variations in merchant accounts for churches it may be confusing as to which approach may be the best for your congregation. My typical advice would be to take into consideration your church’s needs plus the size and sophistication of the congregation and staff.

A large church with a strong finance department, a large amount of financially supportive parishioners, and with good outreach into the community may do well with a full service merchant account. A smaller church may find it easier and more cost effective to simply set up for a ‘debit only’ machine easily accessible to parishioners.

Costs and Fees

If your church’s merchant account is set up properly as a non-profit organization, your monthly service fees can be as little as $15 or $20 dollars per month to as much as $40 or $50 depending on the processing company or bank you choose. Your rates should generally be quite low and should be more reflective of the ‘interchange cost plus’ pricing model which means that your rate would only be a fraction higher than the rate that the credit card company charged to the bank initially. Definitely stay away from ‘tiered’ rate 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 can be purchased, leased or rented. Equipment easing is usually the favored approach. An outright equipment purchase is the most cost effective solution for churches with sufficient funds.

The process to set a merchant account is really quite simple. There are several payment processors who provide this service for churches. Once you have made your choice as to the ‘best fit’ for your parish, just complete the application and establish the merchant account. After that the rest is easy. If you are setting up for online donations, you will be easily able to add a secure payment link with a nice looking graphic to your webpage.

If you are going with a terminal or other physical equipment, once the merchant account is established, the hardware is programmed for you and shipped to your church. In almost all situations the equipment is set up to be ‘plug and play’.

Regardless of which solution you choose, each provider company has a customer service department featuring agents who are available to help guide you over the phone.