Setup Fees

These one time initial setup fees never recur and only apply to the initial account setup. This fee should be the total cost to begin service with an online donation provider. Remember to include all startup costs. Some companies break out setup fees into multiple categories like "Account Setup" and "Merchant Account Setup." No matter what they call the fees or how many there are, determine what it will cost to have your organization up and running, ready to take transactions. That is your total setup fee.

Sometimes the best way to ask this question is to drive straight to the point, ask a provider flat out what the total costs are, including every option, and be sure to ask if there are any secondary setup fees that might occur a few months into your service, or even in the second year. These fees should be one time only.

Monthly Fees

Many organizations charge a set monthly fee for service. This fee can be comprised of many different fees, either broken out separately or combined into one. Make sure you ask what the total amount is and if there are any debits from other organizations that the company is not including. Some organizations highlight their own monthly fees while ignoring the extra monthly fees that may be charged by a merchant account provider or other third party service.

Also make sure you know how your organization is going to pay those fees. Are they easily debited from your account with no complicated invoices or will you have to remember to pay an invoice by check or credit card each month?

Per-Transaction Fees

For online donation providers that take percentages of each transaction, the fees are broken down into three distinct categories: Each Company's Percentage, Credit Card Transaction Percentage and Per Transaction Amount.

Each Company's Percentage is the fee that an online donation provider takes from the total amount of each donation for using their services.

Credit Card Transaction Percentage is what each credit card company charges every organization for the ability to accept their particular card.

Per Transaction Amount is usually a fixed fee paid per transaction. Usually associated with merchant accounts and almost always between $0.20 and $1.50. Often it varies based on transaction size and type.

The combination of all three of these fees is the total per transaction fee your organization will pay on every dollar donated. Each online donation provider will calculate this in a different way. Some providers will set a fixed percentage that includes all fees, other providers will set a fixed percentage and fixed per-transaction amount, still others will detail all three amounts.

The best way to determine true cost is to calculate the total cost per dollar your organization will incur for each donation. No matter how an online donation provider divides up their fee, it will always be possible to calculate the total cost for every dollar your organization takes online. By finding this fee, no matter how a company chooses to divide up the per transaction fees, you will have an accurate way to judge the cost of any company.

Cheaper may not be better

Once you have the total cost per dollar of any transaction, consider the security level and feature set of the donation providers in making your decision. While some providers are very inexpensive, they may not have the feature set to provide your organization with the ability to serve your donors, or the company with the least expensive option may be sacrificing security and PCI Compliance to lower operational costs, exposing your organization and donors to increased risk.

Aggregators are often found at the lower end of the fee scale. Companies who do not provide your organization with your own merchant account will have lower fees than gateway providers that provide you with complete control over your own funds.

Also consider which provider streamlines back office and administrative tasks. The provider that can do the most for your organization automatically may be more expensive but far more inexpensive in the long run. Online donations are here to stay, choosing a stable, secure provider with a wide feature set may benefit your organization more than a slightly less expensive but less able or less secure online donation system.