Hard Look at Your Payment Gateway
You’ve recruited monthly dues-paying members online or in the field with canvassers. You celebrate the increased financial stability that monthly dues bring your organization. But those hard-earned members are slipping away despite your emails, thank you calls, and post-cards. You’ve spent hours focused on engagement, but not on the bells and whistles (or lack thereof) in your payment gateway.
Donor retention requires a tight operation. The integrity of your fundraisers must be top notch. Your training of fundraisers is essential. Your entire acquisition model can make an enormous difference. And yes, good engagement can matter. But before you look at any of these factors, the first place to look is at your payment gateway.
Membership Drive, the industry leading expert in canvass operations, performed a study of gateway features that will have the biggest impact on your donor retention.
What is a Payment Gateway?
A payment gateway is a service that authorizes payments. It acts as a bridge between your payment portal (typically this is the website you use to collect payment information) and your bank or financial processor. Most importantly, payment gateways keep our transactions secure and your donation collection PCI compliant.
But that does not mean that all payment gateways are created equal.
We looked at several payment gateways to discover which of them are best at retaining your members: Vantiv, SagePay, Authorize.net, VanCo, Braintree, Forte, and Payflow Pro. We sent our survey to Blackbaud about BBMS, their gateway, but received no response.
Secret Features of Your Payment Gateway
Even when you know what you need, choosing a payment gateway vendor can be overwhelming or confusing. There are dozens of vendors, each advertising comparable key features. Payment gateway websites and their potential customers tend to focus on the immediate need: a way to safely process donation transactions. However, if you dig deeper into each vendor, you’ll find that some can be capable of so much more. It’s these ‘extra’ features in your payment gateway which optimize your retention of membership dues.
The following features have the most impact.
Retry Failed Payments in Same Month
This matters. Greenpeace in the U.S. found that they increased their monthly income by about 3% using this technique.
Credit card authorizations can fail for assorted reasons at the payment gateway. Sometimes the card has been reissued. Other times, the card or account does not have sufficient funds available for the payment. Just because the initial charge failed doesn’t mean that the donor has lapsed; not all failed charges are permanent rejections. Before you give up on a perfectly good opportunity to receive a gift this month, you should retry to debit them (several times) before the end of the month. Retrying their donation can allow you to keep them on board without needlessly initializing expensive recapture campaigns.
What does this have to do with your payment gateway? While this sounds like a simple no brainer, not every payment gateway is able to automate retrying donors several times before the month ends.
Automated Payday Giving (Every 2 Weeks)
This is a big deal. This can increase your gifts from each member by 8% or more per year.
Some payment gateways can process payday donations, meaning they are able to automatically draw from a donor’s bank account on their bi-weekly payday. Payday giving is a win-win for everyone involved. It allows small donors to split their donation across the month and expect it to consistently come out when there is money in their account. As a result, organizations win because it increases their donors’ reliability and allows for an extra gift a year because of the switch to biweekly from calendar monthly. Payday giving is still not especially common, so not every payment gateway offers it. Below is a donation page Membership Drive created for the United Home Care Workers of Pennsylvania, offering payday giving on select gateways.
Account Updater (if cards reissued)
In 2009, I was named the Executive Director of Greenpeace in the middle of the financial crisis. When banks began to collapse, several merged. Those banks then reissued their credit cards and blew a $3 million hole in our budget.
Even in normal times, cards expire every three years. Security breaches lead to credit card reissuances on massive scales. Cards get lost. Or stolen. Thankfully, the major credit card companies offer an account updater service for recurring charges. This means that, when the card numbers change, the credit card company will automatically provide their new card numbers or expiration dates to gateways that provide this service. This is invaluable for a monthly gift file full of credit card numbers. But not every payment gateway is connected to the card companies in that way. My experience at Greenpeace was that this feature raised us millions of dollars, with no extra work other than picking the right gateway and flipping on these services. Another organization we work with has found that this increased their donor transactions by roughly 8%, raising them $1.2m more per year.
… more below the study download section…
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Non-Refillable Pre-paid Cards Can Be Blocked
When processing sustainer or monthly gifts, many non-profits choose to block non-refillable pre-paid debit cards, or all pre-paid cards. For organizations recruiting low wage workers or the unbanked, pre-paid cards can be the only method that people have to join. In those situations, using Membership Drive’s Integrity Check tool can prevent canvassers from buying pre-paid cards and using them to sign up several fake monthly members. If members of your target audience do all have bank accounts or credit cards, then blocking pre-paid cards can increase retention significantly.
If you’re canvassing for a political campaign, you encounter problems with untraceable donations. Pre-paid cards are anonymous so, short of checking IDs, there is no concrete way to identify your donor.
1-Click Donation for Previous Donors
Wouldn’t it be great if our donors were able to make impulsive donations the same way they impulsively buy toothpaste on Amazon with one-click?
Welcome to the future. Now they can.
Mobile and online giving continue to see year on year increases, and one click is the “newest” evolution of that trend. While several payment gateways have evolved enough to process this type of donation, not everyone has prepared for it. If one click is part of your fundraising plan, you should be sure it is something your payment gateway vendor can do for you.
Checking Account Verification
Credit cards change all the time. Bank accounts, on the other hand, tend to remain more consistent. EFT and ACH debits are historically the most profitable payment method for monthly giving because of their consistent reliability. The flip side to this is that they can be more difficult to debit initially. Your payment gateway should be able to, at the very least, verify that the banking account information given to belongs to a real, working account.
Beyond these key areas, we would be remiss if we didn't share a few other findings. First, SagePay concerned us because it is easy to use the API login and password to decrypt your credit card numbers and view them again. This exposes your organization to much more risk. You want to send your credit card numbers to your gateway, pay them to securely store them and manage the risk of a data breach, and tell them when to process your payments.
We evaluated VanCo because it is the primary payment gateway that works with the VAN, a dominate CRM in the progressive movement. From VanCo's answers, we found that, unfortunately, the bulk of progressive groups using this gateway lacked the gateway services that were state of the art in 2010.
Finally, we'd be remiss if we didn't mention that you should be sure that your gateway allows you to take your data and continue to charge your donors in a new gateway if you ever switch to a new gateway [thanks to Robert Weiner for pointing this out].
How Do I Know if My Payment Gateway Provides These Things?
Membership Drive has created a product comparison guide for the most commonly used payment gateway vendors to make it easier for you to see where your vendor stands. You can download the guide by entering your info below.
Does your payment gateway currently provide these must have features? Which one do you find most useful?
** Special thanks to Jason Dahlke for calling and surveying the gateways for this white paper.
Download the Study
Fill out the form to the right to download the study.