The Three Types of Fees in Online Giving
When a donor makes a digital gift to your church or faith-based nonprofit, the money passes through a payment processor before it reaches your bank account. Along the way, fees are deducted. Understanding these fees helps your organization make informed decisions about which payment methods to offer and how to communicate costs to your donors.
There are three categories of fees to be aware of:
1. Payment Processing Fees
These are charged by the payment processor (such as Stripe) for handling the transaction securely. They cover fraud detection, encryption, bank network access, and compliance costs. The rates depend on the payment method:
- Credit and debit cards: Typically 2.2% + $0.30 per transaction. For a $100 gift, that is $2.50 in fees.
- ACH (bank transfer): Typically 0.8%, capped at $5.00 per transaction. For a $100 gift, that is only $0.80 in fees. For a $1,000 gift, it is still just $5.00.
ACH transfers are significantly cheaper than credit cards, which is why many giving platforms encourage donors to use their bank account for recurring gifts.
2. Platform Fees
Some giving platforms charge an additional percentage or monthly subscription fee on top of the payment processing costs. These platform fees vary widely:
- Some platforms charge 1-3% of every transaction as a platform fee
- Others charge a flat monthly subscription (often $50-$200/month)
- A few platforms charge no platform fee at all, passing through only the payment processor's costs
For a church receiving $10,000 per month in online donations, a 1% platform fee means $100/month going to the platform on top of processing fees. Over a year, that is $1,200 that could have gone directly to your mission. Choosing a platform with no additional fees can make a meaningful difference, especially for smaller organizations operating on tight budgets.
3. Chargeback and Dispute Fees
If a donor disputes a charge with their bank, the payment processor may charge a dispute fee (typically $15 per incident). These are rare for charitable donations but worth knowing about. Clear donation receipts and recognizable charge descriptions help prevent disputes.
How Fees Affect Different Gift Sizes
Processing fees have a proportionally larger impact on smaller gifts because of the fixed per-transaction amount. Here is how a $0.30 fixed fee plus percentage affects different donation sizes with a credit card:
- $25 gift: $0.85 in fees (3.4% effective rate)
- $100 gift: $2.50 in fees (2.5% effective rate)
- $500 gift: $11.30 in fees (2.3% effective rate)
- $1,000 gift: $22.30 in fees (2.2% effective rate)
For the same gifts via ACH (0.8%, capped at $5):
- $25 gift: $0.20 in fees (0.8% effective rate)
- $100 gift: $0.80 in fees (0.8% effective rate)
- $500 gift: $4.00 in fees (0.8% effective rate)
- $1,000 gift: $5.00 in fees (0.5% effective rate)
The difference is substantial, particularly for larger and recurring gifts.
Should You Ask Donors to Cover Fees?
Many giving platforms offer donors the option to add a small amount to their gift to cover processing fees. This is commonly presented as a checkbox during the donation process, such as: "Add $2.50 to cover processing fees so 100% of my gift goes to the mission."
Research shows that a significant percentage of donors willingly opt in when the option is presented clearly and without pressure. This can recover a substantial portion of your processing costs without reducing the donor's intended gift amount.
A few tips for presenting this option well:
- Make it optional, never mandatory or pre-checked by default
- Use clear, honest language about what the fee covers
- Show the exact dollar amount, not just a percentage
- Do not guilt donors into covering fees
Choosing the Most Cost-Effective Setup
To minimize the impact of fees on your organization's giving revenue:
- Encourage ACH for recurring gifts: The savings compound significantly over time.
- Choose a platform with no additional fees: Only pay what the payment processor charges.
- Offer the fee coverage option: Let donors decide if they want to help.
- Educate your community: A brief explanation of how fees work builds trust and transparency.
Processing fees are a reality of digital giving, but they should not discourage your organization from offering online donations. The convenience, consistency, and accessibility of digital giving almost always outweigh the cost. The key is choosing the right platform and payment methods to keep those costs as low as possible.