Digital Transactions - April 2015 - (Page 18)
April 2015 digitaltransactions
Finding the Payoff
It's not enough to sell payments services to churches and charitable
organizations. They want assurances their unique needs will be met.
t might seem counterintuitive,
but merchant-services profits
are to be had serving nonprofit
But it's not as simple as knocking on doors or harvesting online
leads. It takes more than the typical
approach of a commercial merchantservices business and the ability to
sign up merchants.
It requires a commitment to the
cause of serving nonprofit organizations, which need multiple payments methods, some of which are
not frequently used by most forprofit merchants.
Regardless of the size of the merchant-services company, one thing is
constant: The nonprofit organization
must believe that its independent sales
organization or acquirer has its best
interest in mind.
The rewards in this segment can
be considerable. ISOs and acquirers
catering to nonprofit organizations
may have to put in extra work to
attract and retain merchants, but the
payoff could be a portfolio with lower
attrition that accepts multiple types of
"It starts with the alignment of mission," Kevin Lee, chief executive of
* digitaltransactions * April 2015
Vanco Payment Solutions, an Atlantabased ISO specializing in serving nonprofit organizations, such as churches
and cause-related organizations.
In January, 17-year-old Vanco
merged with Veracity Payment Solutions, which started in 2007. The
merged entity has more than 30,000
clients, including approximately
15,000 churches and nonprofit organizations. Vanco processed more than
$13 billion in transactions in 2014.
Unlike the case with for-profit
merchants, for nonprofits the payment is not an enabler of commerce,
it's the product, Lee says. Donations
are immediate telltales of an organization's message. "Was that fundraising
message impactful?" Lee says. "Was
the sermon impactful? Is the mission
I have in the community really hitting
home with people?"
Executives at Dharma Merchant
Services, a San Francisco-based ISO
that was founded in 2007 specifically
to cater to nonprofit organizations,
such as those advocating sustainability and socially responsible practices,
concur with Lee.
"We know that our organizations
are committed to doing the right things
in the world," says Jeff Marcous,
co-founder and "chief evolutionary
officer." Dharma has approximately
3,500 merchants. "What we see as the
driving force for most of our business
is the reputation we have [for] having
the merchant's best interest in mind,"
Dharma makes annual donations
to charitable organizations based on
a percentage of the net revenue from
Nonprofit organizations differ as
much as for-profit businesses. Some
will want different types of paymentacceptance methods. Others may
require special support. One may need
a payment module to integrate with
its business-management software, or
require mobile card readers a couple
times a year for special events.
"Almost all nonprofits are doing
online sales," Marcous says. For the
first five years of Dharma's run, about
80% of its merchants accepted only
card-not-present transactions, but
since January 2014 that has shifted to
a 50/50 mix, he says.
Vanco's Lee says many have
unique needs. A church has a need to
accept face-to-face payments, but also
may need a kiosk or tablet to take in
"They also need recurring payments," Lee says. "Then they need a
mobile app or Web application to do
that. That same church owns a school.
Now people want to give money to the
church to go to the school. They may
need an invoice for that. They may
need electronic bill presentment."
Table of Contents for the Digital Edition of Digital Transactions - April 2015
Digital Transactions - April 2015
The Gimlet Eye: Good News for Innovation
Trends & Tactics
Acquiring: Finding the Payoff in Nonprofits
Special Report: Six Months And Counting
Strategies: The Centurion's Dented Helmet
Endpoint: Enter the Payment Facilitator
Digital Transactions - April 2015